By Tom Still
APPLETON, Wis. – Joe Kirgues, the co-founder of Wisconsin-based gener8tor, captured the dynamic nature of a healthy startup economy when he sized up how many jobs are tied to “graduates” of the nationally acclaimed business accelerator.
Speaking Thursday to a Tech Council Innovation Network crowd in Appleton, Kirgues said “about 2,000 people woke up and went to work today” for a gener8tor alumnus company in Wisconsin or elsewhere.
Gener8tor has seeded 54 companies that have since raised $120 million in follow-on funding. That impressive record helps explain why the accelerator now ranks among the nation’s top 15 just five years after it was formally launched.
Young companies create jobs – lots of them. Mature companies can create jobs, too, not only directly but indirectly through supply chains and capital infusions that help emerging companies grow and succeed. Wisconsin needs both.
The chance to lure Foxconn Technology Group to Wisconsin is not just about securing 13,000 direct jobs over time and twice that many indirect jobs, but changing the business landscape in a way that will spur ideas, products and companies yet to be imagined.
“I believe that it will also have a positive impact on entrepreneurship,” veteran venture capitalist John Neis told an Assembly committee when it met this month on the proposed Foxconn deal.
“It will likely be the foundation for a cluster of activity and leadership by our state beyond Foxconn as a supply chain grows around the company, and talent and expertise is attracted and trained,” said Neis, managing director of Venture Investors LLC. “From that, we will see spin-out opportunities as new ideas are developed, becoming a magnet for new investment in the state.”
A ready example on the multiplier effect cited by Neis is GE Healthcare. It has 6,800 employees in Wisconsin as well as 870 Wisconsin-based suppliers, which supports another 21,000 jobs. GE Healthcare contributes about $8.1 billion in direct, indirect and induced total production output to Wisconsin each year.
With operations in Waukesha and Madison, the company has collaborated with the UW-Madison and is one reason why the campus is a leader in medical physics. Many former GE executives left to eventually lead entrepreneurial companies, such as TomoTherapy (acquired by Accuray), NeuWave Medical (acquired by Johnson & Johnson), Exact Sciences, Healthmyne and more.
“Opportunities of this scale (Foxconn) present themselves with rarity…. It is creating good jobs for our skilled manufacturing workforce, and it is teaching them new skills that strengthens their ability to compete in today’s economy. If we allow this to slip away, we may not see an opportunity of this scale again anytime soon,” Neis said.
He added a caveat, however, that ties into why Wisconsin needs startups and groups such as gener8tor to help them on their feet.
“Creating 100 companies that each employ 100 people over a decade doesn’t produce the splashy headlines and political capital as an announcement that a company is going to come here and create 10,000 jobs in a decade,” Neis said.
Yet the total number of jobs is the same, he added, and those young firms may become acquisition targets – bringing other major companies to Wisconsin – or independent success stories such as Verona-based Epic, which grew from two founders to 10,000 workers.
The size of the Foxconn incentive proposal, which would be spread over 15 years, has triggered sticker shock among some members of the Wisconsin Legislature. However, Foxconn will only capture those $3 billion in incentives in a prorated form as it invests $10 billion in capital and hires workers, not before.
Wisconsin needs Foxconn for what it will add directly to the state economy and for what it will do to spark entrepreneurial activity over time. Those effects won’t show up on a spreadsheet right away, but expect the long-term benefits to reach far beyond the official job estimates and tax revenue costs.