And is Wisconsin the best place to start a business?
All new businesses face challenges, but startups with big ideas walk a particularly precarious path. Accelerators aim to offer a trail map and a new pair of boots. These outfits provide a small amount of seed capital to a handful of budding startups with the goal of incubating them into companies with enough swagger to pull in a larger chunk, potentially millions, from venture capitalists.
A Deep Dive Inside Milwaukee’s Startup Scene
A big player helping startups in the Midwest is the highly competitive Gener8tor incubator, which was founded in Milwaukee in 2012 and has expanded to Madison, Beloit, Minneapolis and Detroit. Three times a year, it invests up to $140,000 in five startups and surrounds them with mentors, technical experts and connections to investors. The Wisconsin Economic Development Corp. has a “Seed Accelerator” grant program aimed at drumming up more such programs.
While many accelerators are exclusive, Startup Milwaukee aims to gather everyone under a big tent, with events where startups pitch themselves to scores of investors and fellow entrepreneurs. “Milwaukee is a very siloed city,” co-founder Matt Cordio says, “and to have a real culture of innovation, we need to have people break through those barriers and focus on helping each other.”
With an assist from the now-defunct accelerator 94 Labs, Cordio in 2011 founded Servique, a startup intended to be an online marketplace to conect homeowners and contractors. Servique “failed pretty quickly,” he says, but of the 24 businesses in his “class” at 94 Labs, about half still exist. “It really created a network of entrepreneurs.”
Is Wisconsin’s business climate sunny enough to nurture newbies?
We asked the founders of two local startups — one so high on Milwaukee that he moved his company here from Boston, and one who has “entirely bootstrapped” his startup, getting no outside funding.
By Larry Sandler
Richard Yau CEO, Bright Cellars Inc. The big factors for us were availability of talent, availability of capital and a great support network. We were hiring a type of person (who) was otherwise going to move to Boston or San Francisco; our first hire here was a software engineer who had already accepted a job offer in Silicon Valley. Milwaukee’s definitely not a hot spot yet for venture capital (but) we were fortunate because our lead investor was CSA Partners, based in Milwaukee. I would say the level of mentorship, per capita, is higher than anywhere else we could be.
Craig Sweeney CEO, Shift Savings Inc. The main issue we have here (is) risk aversion. A startup contains considerable risk to the founder, the team and the investors. Wisconsin-based investors are looking for more of a proven opportunity. (With) organizations like Startup Milwaukee, The Commons, Gener8tor, you do have a momentum. We still have a far way to go in relation to other entrepreneurial ecosystems around the country. I think it’s getting better, though. Organizations like Northwestern Mutual and Aurora are starting to do their part to increase that ecosystem here.