For Stronger Investment Deals, Venture Beyond Wisconsin

For Stronger Investment Deals, Venture Beyond Wisconsin
Rebecca Ryan

Did you buy girl scout cookies this year? I did—Thin Mints and Peanut Butter Sandwich cookies. Who’d I buy from? A friend’s daughter! Because when friends ask me to help, donate or volunteer, I try to say yes. You probably do, too.

Psychologists confirm what you already know in your guts: that reciprocation—helping each other—is key to healthy, long-lasting friendships. Or as my neighbor Dean would say, “If you want good friends, be a good friend.”

In Wisconsin, this reciprocation thing is tying us in knots. At least in one critical area: working with others beyond our borders to fund our local startup scene. Venture capitalists, or VCs, like to do deals with each other. They like to reciprocate. They call it syndication, but it’s really just being a friend. I ask you to come in on my deal and down the road you ask me to come in on yours.

Wisconsin doesn’t ask others to join their deals. And they don’t get asked to join others’ deals. And it’s starving our startups.

I’m looking at a map that shows the connections between VC firms that have done two or more deals together in health care. The map shows a large cluster of firms that work together in Ohio. There, seven VC firms syndicate together regularly. Anchored by Case Western Reserve and the North Coast Angel fund, they syndicate with five other funds in Ohio, Pennsylvania and California.

That last part is important; by some estimates the west and east coasts have eighty percent of available VC money. In other words, having relationships with the coasts is critical.

Where is Wisconsin on this map? Small and isolated. We have only three funds listed, with very weak ties between them, all in Wisconsin.

We’re not connected to the coasts, where most of the money lives. We don’t invite others to our deals. And because of the laws of reciprocation, we don’t get invited to others’ deals.

, one of our great local serial entrepreneurs, puts this in context: “It’s great to have local money in your first round [of fundraising], but if you don’t have outside money in your second round, it sends a dangerous signal, like maybe this company isn’t worth investing in.”

By doing deals only with locals, our startups and our economy are paying the price.

Take at SOLOMO. SOLOMO’s a terrific product, born right here in Wisconsin. It has the potential to give marketers exactly what they want, location-based information about customers, while also giving you and me what we want: privacy. This product is so on trend it’s painful. And (wild speculation) if SOLOMO were born in the Bay Area, everyone would be talking about it.

But SOLOMO wasn’t born in the Bay. It was born here. In Madison. Where VCs have few, if any, relationships outside of Wisconsin. So while Liz is knocking on doors in California, she’s basically cold calling. It’s like sending a Girl Scout into a foreign country and expecting her to break records for cookie sales. California VCs won’t take Liz’s meeting because (and I’m generalizing here) they don’t have any relationships with their peers in Sconnie. Because we don’t syndicate. This is a critical, structural issue.

I moved to Madison the same year that Tom Still left his newspaper job and became executive director of the Wisconsin Technology Council. The Council was going to change things; it was going to get Wisconsin on the map as a place where good stuff happens. It has achieved many of those goals, but now I wonder if we’ve been focusing on the noise and missing the signal?

We can start here. Now.

Billionaire investor , who lives just down the road from us in Chicago, has been to Madison only twice and he likes what he sees. But as Pritzker told hundreds of Madison business owners and entrepreneurs at the Chamber’s neXXpo event in April, “We need you to tell us about what’s happening here.”

It’s time for Wisconsin to stop playing the island in a game where connections to the coasts matter. The partners are there, waiting for us.

Who’s in?

Rebecca Ryan is the founder of Next Generation Consulting. Email her at