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Three Wisconsin venture capital funds that startups, and investors, should know

By Nick Williams – Reporter, Milwaukee Business Journal

Dec 6, 2019, 3:58pm EST

On Thursday at the University of Wisconsin-Milwaukee Accelerator Building in Wauwatosa, the founders and managers of three fairly new Wisconsin-based venture capital funds discussed the state's investment ecosystem and how their funds are looking to invest in pre-revenue and early-stage companies across the state.

The event was hosted by the Wisconsin Technology Council.

The funds – Bold Coast Capital, Winnow Fund and Forward Capital Fund — are the newest funds under the Badger Fund of Funds umbrella and are expected to generate more deal flow in the state.

In 2013, the state of Wisconsin awarded $25 million to establish the Badger Fund of Funds, which raised an additional $5 million from the private sector and agreed to create six to eight venture capital firms across the state. Running the program is Santa Fe, New Mexico-based Sun Mountain Capital, which specializes in regional investment programs, and Kegonsa Capital Partners.

The Badger Fund of Funds supplies a certain percentage of capital into the new funds and the rest of the money is raised from private investors. Other Badger recipient funds include the Idea Fund of La Crosse, the Winnebago Seed Fund and the Rock River Capital Fund.

Bold Coast Capital

Founded and led by Ross Leinweber, this Milwaukee-based, industry-agnostic fund is looking to invest in young companies in Milwaukee, Madison, Chicago and the Fox Valley. The fund is looking to raise between $10 million and $12 million for investment deals. Leinweber worked in trading for several years. While some startups tend to focus on making products that solve current issues, ideas that have high success rates are those that are anticipatory, he said. With that, investors in Wisconsin need to be comfortable in thinking "outside the frame," he said.

Winnow Fund

Managed by Richelle Martin, this Madison-based fund is focusing on pre-revenue startups built around product ideas created by college students in Wisconsin. The fund has already secured more than $3.5 million in funding from investors toward a goal of $10 million, according to a recent filing with the U.S. Securities and Exchange Commission. The fund will ultimately put $8 million into investing. Martin was previously the assistant director of the Office of Industrial Partnership at UW-Madison.

Forward Capital Fund

This Milwaukee-based fund is focusing on young companies in advanced manufacturing. Dan Voell, the fund's managing director, is looking to raise between $10 million and $12 million. The themes within advanced manufacturing include automation, mechanical engineering, and internet connected products, he said.

In 2018, $280.7 million was raised by 121 early-stage companies based in Wisconsin, a record for any one year. In 2017, companies raised $231 million and in 2016, raised $276.2 million, the previous all-time high. Since 2014, startups in Wisconsin have raised $1.21 billion.

Of the money raised in 2018, 43.9% went to health technology companies, followed by IT companies, which received 25.8% of those funds. Investors from Chicago, Boston, New York and California were identified in roughly 49% of deals in which the investors are known.

The number of deals made by women-led or women-owned businesses shrunk more than 2% when compared with the year-ago period and more than 5% since 2016.