It’s no surprise that Detroit’s civic problems would resonate most clearly with people around the Great Lakes region. And in Milwaukee, the discussion has been pretty pointed at times—questions about the city’s urban poverty, how Detroit’s bankruptcy might affect Milwaukee, and whether state policies could drive public employees into the suburbs.
One thing they definitely have in common: a desire to foster a new, innovative slice of the local economy, built on high-growth technology companies.
Loren Peterson, a managing director at Venture Investors—a venture capital firm based in Wisconsin with an office in Ann Arbor, MI—says he suspects Milwaukee and Detroit might have more similarities than differences, particularly when it comes to each city’s status as a hub of innovation.
“One difference is, we don’t have a billionaire who’s financing anything,” Peterson says, referring to the efforts of Quicken Loans founder Dan Gilbert in Detroit. “Tech startups in Milwaukee tend to be broader-based. We’re not focused on IT so much.”
It’s worth noting that Venture Investors has invested in at least one Detroit startup, but none in Milwaukee.
What Milwaukee has that Detroit doesn’t is proximity to Chicago, Peterson explains. The Amtrak route that connects the two cities, which are about 80 miles apart, is one of the most heavily traveled in the country.
Peterson says Milwaukee’s strengths are in water technology, pointing to the Great Lakes Water Institute at University of Wisconsin-Milwaukee, and therapeutic devices and healthcare IT, thanks to the strong presence of GE Healthcare and the Medical College of Wisconsin.
He also says that, while both cities struggle to attract talent, Wisconsin and Michigan are both places where natives often want to return when it comes time to raise a family.
Jim Adox, who manages Venture Investors’ Ann Arbor office, says that Michigan and Wisconsin have something else in common: each state is home to one of the nation’s largest public research universities. Both the University of Michigan and the University of Wisconsin in Madison spend more than $1 billion each year on research that can later be spun off into cutting-edge startups.
“[U-M and U-W] dominate their local economies and are major players in the local entrepreneurial scene,” he says.
According to Adox, the cities that house those schools—Madison and Ann Arbor—are strong in life sciences, medical devices, and material sciences. A key difference between Madison and Ann Arbor, he points out, is that Madison is also the state capital, which keeps state government much more in tune with what’s happening in Madison’s entrepreneurial ecosystem.
“Here, the Michigan Economic Development Corporation (MEDC) is doing a good job of trying to bridge that gap,” Adox says. “They’re focused on bringing news back to Lansing. In Madison, it happens more naturally. People run into each other and network. Both are smaller states when it comes to venture capital, and you need state government working closely with entrepreneurs to max it out.”
Adox says both U-M and U-W have leading tech transfer offices, but he feels Madison has a leg up with the Wisconsin Alumni Research Foundation (WARF). Adox says WARF has a lot of resources to get U-W startups off the ground.
“They can invest hundreds of millions in their own spin-offs, and they can also co-invest,” Adox explains. “It’s very meaningful. U-M doesn’t have the same kind of coordinated effort.”
Adox, who is also chair of the Michigan Venture Capital Association, notes that in the last couple of years, Michigan has surpassed Wisconsin in national venture capital rankings. In 2012, Michigan was ranked 15th in the nation, while Wisconsin was ranked 23rd. Five years ago, he says, they were much closer to one another. Adox attributes the 2006 launch of the first of Michigan’s statewide fund of funds as a turning point.
“That fund really helped drive the growth of venture funds in Michigan and attracted out-of-state capital—that’s where Michigan really accelerated past Wisconsin,” he adds.