Madison-based American Family Mutual Insurance Co. has been investing in startup companies since 2010, which makes it one of the most experienced corporate venture capital investors in Wisconsin.
It started with a Madison startup called Shoutlet, a social marketing software platform that had been helping American Family’s insurance agents communicate with clients. The property and casualty insurer decided to invest in Shoutlet, which according to SEC filings raised about $5.5 million from at least three investors in 2010. American Family got a return on its investment in 2015, when Shoutlet was acquired by Austin, Texas-based Spredfast.
“They needed to raise venture capital and we sort of did a one-time, ad hoc team back in 2010,” said Dan Reed, managing director at American Family Ventures. “That’s part of how an insurance company makes money, and we’ve been making investments in venture investment funds since 1983. It’s an asset class we’re familiar with as a company, but we hadn’t been making direct investments in startups until 2010.”
In 2013, the company officially formed its venture capital division, American Family Ventures, with a $50 million fund and a planned five-year investment horizon.
Within two years, American Family had seen such promise from the Ventures investments that it upped the fund to a whopping $200 million. The insurer has now made 47 investments (seven of which are in Wisconsin), about seven of which it has exited successfully.
Of course, a couple of those companies it invested in haven’t survived, but that’s a hazard of the game.
American Family is one of several Wisconsin companies that have begun taking equity stakes in entrepreneurial ventures over the past several years to meet their strategic goals, help a fledgling firm, obtain talent and, hopefully, make a return on their investments.
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