By Tom Still
MADISON – On Sand Hill Road in Menlo Park, Calif., which is the venture capital version of Wall Street, the talk these days is of a “boomlet” in deal-making. Technology firms that only a few years ago were lucky to get a meeting with a venture capitalist are now entertaining multiple offers to finance deals. The New York Times reported last week that one company, XenSource, had seven solid investment offers in three weeks.
Most Wisconsin companies should be so lucky. While the good times may be returning to the Silicon Valley, history suggests relatively few deep-pocketed venture capitalists will find their way to the Upper Midwest.
Then again, history need not be repeated if Wisconsin companies are better prepared to make the sales pitch when opportunity knocks.
Policymakers have long asked why Wisconsin cannot attract more private equity investment, such as venture and angel capital. The answer from investors themselves has been relatively simple: Wisconsin is a great state for generating technology ideas, but barely average at creating tech companies with business plans that stand a chance of paying off over time.
A lot of work has gone into changing that equation. The Legislature worked with Gov. Jim Doyle to pass a 2004 law that created 25 percent tax credits for venture and angel investors who put money into designated start-up companies. That same law led to the formation of the Wisconsin Angel Network, which is helping networks of high-net-worth investors make connections with a pipeline of deals. The Governor’s Business Plan Contest has identified dozens of investment-worthy firms, more experienced CEOs are being drawn to Wisconsin, and coaching opportunities for start-up executives have grown.
One such forum is the Wisconsin Early Stage Symposium, to be held Oct. 19-20 in Madison. Its goal is to give start-up companies a short course in being “venture ready.” (See www.wisconsintechnologycouncil.com/events/earlystage for details.)
The symposium grew out of the former Wisconsin Life Sciences & Venture Conference, which worked under various names over 20 years to connect companies with investors. Venture capitalists found different ways to screen prospective investments, however, so the conference was reborn with an instructional emphasis.
Up to 60 companies will be able to take part in a workshop run by VentureQuest LTD, a Denver-based firm that specializes in helping companies prepare to attract investors.
The firm has more than 20 years experience helping organizations commercialize technology and bring new products and services to market. Founders Courtney Price and Mack Davis have authored a dozen books on using innovation to create new revenue sources for businesses and commercializing technology. Their program has been called “the best entrepreneurship training in America” by the Kauffman Foundation in Kansas City, and they have developed customized, proprietary systems used by more than 200,000 professionals in business environments worldwide.
The program designed for the Wisconsin Early Stage Symposium is titled “Venture Readiness Tools for Commercialization Success.” It details how an idea evolves into a business plan, introduces a six-step commercialization process, and includes a software-based “New Venture Readiness Assessment.”
This online self-assessment tool provides entrepreneurs with a benchmark score regarding their business practices and investment readiness. It is structured so that different raters may contribute their perspectives of the venture’s business practices and their effectiveness. It provides a benchmark new venture evaluation that pinpoints both strong and weak areas so entrepreneurs can better focus their efforts to become “investment ready.”
During the Madison conference, entrepreneurs will develop an action plan to move their new venture to the next stage of business growth based on their software score. There will also be an “Elevator Pitch Olympics,” judged by investors, to see how the companies deliver their message.
There is no Sand Hill Road in Wisconsin when it comes to venture capital. But the region has willing investors, and even more would be willing to check out the right opportunities. If investors call, early-stage companies need to be ready to tell their stories.