Oct 6, 201510:31 AMInside Wisconsin
with Tom Still
Shattering some of the myths about Wisconsin’s startup economy
(page 1 of 2)
All businesses must labor, to one degree or another, under a certain amount of mythology.
Some are general myths, such as “We’re good friends and work well together, so let’s form a partnership!” Some are more specific, such as “I’m a great cook. I should start a restaurant!”
The startup and scale-up worlds in Wisconsin are no different in most ways. Not only are there widely held beliefs that apply to particular types of startup businesses, but some apply to the entrepreneurial sector overall, as well as Wisconsin as a place to start and grow a business.
Here was my attempt to dispel a few of those folklores at the recent Healthcare Innovation Pitch, which was held in Milwaukee’s renovated Ward4 incubator and sponsored by a coalition of academic research and medical technology groups.
Myth No. 1 – “All entrepreneurial ventures are pretty much alike, so why isn’t there a template for success to be followed by all ‘treps?’”
The main fallacy here is that not all startups are alike. Some are traditional “mom-and-pop” businesses that launch on Main Street and intend to succeed there, often without a huge amount of growth capital or employees. Others are “lifestyle” businesses in which the owner turns a hobby or avocation into a way to make money while still having fun. “Social” entrepreneurs are those who turn a passion — environmentalism, education, or helping children — into a business that pays the bills while doing well by others.
In the tech world, startups most often view themselves as “gazelles,” meaning they want to grow quickly and leap ahead of the competition, creating a lot of value and jobs along the way. Those are the trickiest to fund and grow, which brings me to…
Myth No. 2 – “There isn’t enough angel and venture capital in Wisconsin for the great emerging companies here.”
The best companies will find funding if they look hard enough, make the right pitch, and persuade investors they can get a strong return on their dollars. Next month’s Wisconsin Early Stage Symposium in Madison is a prime example of companies putting their best foot forward for investors, who will hail not only from Wisconsin but well beyond.
While Wisconsin isn’t California, Boston, or even Minnesota when it comes to venture capital, recent statistics show the gap is closing. In 2013, 86 Wisconsin early-stage companies raised about $130 million in angel and venture capital. In 2014, 113 Wisconsin companies did so and the total dollars more than doubled. So far, 2015 appears to be on track. It’s not easy raising money but the climate is improving for companies that demonstrate market value.