Seeds, Bees, and Startups: Scenes From The WI Entrepreneurs’ Conference
Another Wisconsin Entrepreneurs’ Conference has come and gone.
The 12th annual installment, held at the Alliant Energy Center in Madison, featured plenty of rock stars in the state’s innovation scene, from representatives of hot startups like Propeller Health and EatStreet, to investors like Wisconsin Investment Partners and the Golden Angels Network. Gov. Scott Walker and his presumed Democratic challenger in this year’s election, Mary Burke, made brief appearances. The winners in the Governor’s Business Plan Contest were crowned, which you can read more about by clicking here. There was even a startup pitch by an entrepreneur who’s not yet old enough to drive. (More on that later.)
Here are my favorite moments from the Wisconsin Technology Council’s two-day event:
—Follow the money: It should come as no surprise that perhaps the most packed session at the conference was a panel featuring four institutional investors from around the Midwest who collectively manage more than $800 million in venture capital. About 85 entrepreneurs and stakeholders attended the standing-room only talk, many waiting in line afterward to hand their business card to Yumin Choi of Boston-based HLM Venture Partners, Chris Olsen of Columbus, OH-based Drive Capital, Greg Robinson of Madison-based 4490 Ventures, and Jim Schultz of Effingham, IL-based Open Prairie Ventures (pictured below).
The panelists held a lively discussion covering everything from the impact of cloud computing on investing—it’s no longer essential for tech startups to be located near the computing giants in Silicon Valley, Olsen said—to the Midwest’s startup hotbeds. Olsen thinks Madison ranks in the top three, behind Pittsburgh and Chicago, for talent density, while Schultz thinks Wisconsin and Michigan are the region’s most active in trying to build an innovation ecosystem.
—The value of experience: The most provocative proclamation came from Olsen, previously of Sequoia Capital, who said his new fund generally prefers to invest in first-time entrepreneurs because they have fresh perspectives that aren’t colored by past startup experiences. His team calls repeat entrepreneurs “retreads” because they tend to follow the “playbook” from their past successful ventures. “There’s nothing better in our minds than someone who’s never done it before,” Olsen explained.
But Choi pushed Olsen on this strategy, asking if that means he wouldn’t invest in the second startup from a successful entrepreneur in Drive’s portfolio. Olsen replied that it’s certainly possible. Schultz, meanwhile, said his fund—which focuses on agricultural technology and life sciences—only invests in seasoned entrepreneurs. “If you’re experienced, don’t go to Chris,” Choi joked, drawing laughter from the audience.
—Seed funds: Wyman Winston, the executive director of the Wisconsin Housing and Economic Development Authority (WHEDA), stopped by to promote two of his agency’s upcoming startup funding initiatives. First, WHEDA plans to put another $4 million into the Wisconsin Equity Investment Fund, bumping it to $10 million total. The fund is backed by a federal grant awarded in 2011. WHEDA will seek matching dollars from venture capital and private equity firms for investments in small businesses in low-income areas statewide, according to the request for proposals.
The second initiative is a micro-equity fund that would invest up to $400,000 in Milwaukee startups—no more than $25,000 per seed deal. WHEDA would again seek private investment partners to help back the fund. The amount could be increased to $750,000 as more funds become available, said Mike Powers, a WHEDA business development official.
The agency is seeking proposals for both initiatives through the end of June, Powers said.
—The “one-month rule”: Madison serial entrepreneur Mark Gehring drew applause from the crowd when he called for Wisconsin investors to self-impose a one-month deadline for vetting a potential startup deal. If a startup has to wait more than four weeks for an answer from a potential investor, “you’re handicapping a company you may eventually invest in,” Gehring said. He has helped raise $20 million across the startups he’s been involved in, including Propeller Health and UltraVisual Medical Systems. Gehring said it’s possible to raise money in Wisconsin, “it just takes too long.”
In Propeller’s case, the company ended up taking West Coast money because investors there moved more quickly than the Wisconsin investors that Propeller had met with, Gehring said. He thinks the problem is there’s less competition for good deals in Wisconsin, and investors here are “more gun shy.”
—An eighth grader’s “buzziness plan”: Jonah Thompson will be a high school freshman in the fall, but he’s already a business owner with a growth plan. The student at New Glarus Middle School, southwest of Madison, won the Wisconsin Yes! business plan contest with T Boys Honey, a beekeeping startup. He was honored at the Wisconsin Entrepreneurs’ Conference.
The self-taught beekeeper has been in business for five years, according to his Facebook page, and he said he has four contracts with local farms that hire him to maintain hives there so the bees will pollinate their crops. He’s doing his part to reverse a national trend—the U.S. bee population has declined 50 percent since 1950, he said at the conference. Thompson sells honey and candles made from the wax, but his long-term goal is to develop software to help farmers predict crop output if they get pollination help from his bees.
He’d eventually like to purchase a military truck to transport the bees, so he doesn’t have to use his mom’s Subaru. But first he needs to turn 16 so he can earn a driver’s license.
—Corporate innovation: Critics will say that big companies are where innovation goes to die. Renaissance Learning CEO Jack Lynch’s speech at the conference centered around how his Wisconsin Rapids, WI-based edtech company—which has more than 900 employees—is trying to stay on the cutting-edge by applying lean startup methods to new product development.
Part of this strategy involves the efforts of a satellite office in the San Francisco Bay Area, where employees follow the lean startup process by coming up with new ideas and quickly testing hypotheses to see if the project shows commercial promise. Renaissance Learning has grown from one reading software product when the company was founded in the mid-1980s to about 20 educational software products today, Lynch told the crowd.
“The thing about this [lean startup] process is you have to fail,” Lynch said. “You learn from that and then you build again.” But Renaissance Learning staffers are still trying to adjust to lean startup principles, and the company doesn’t utilize those tactics as much as it could, he added.
—Exit spark: An unsolicited email to a big company CEO couldn’t possibly get a deal done, right? Apparently it can, at least in the case of Chad Sorenson, co-founder of the former Middleton, WI-based startup Sologear. The company had developed the ethanol-based FlameDisk as a grilling substitute for charcoal. When its leaders started sniffing out potential suitors, they emailed the CEO of BIC, which makes lighters.
That message was the spark for BIC’s eventual acquisition of Sologear in 2011, Sorenson said on a panel at the conference. “I don’t know if he responded,” Sorenson said of BIC’s CEO. “He probably forwarded it on to the right person. That’s how it started.”