In a move that signals its continued interest in emerging markets in the Upper Midwest, the State of Wisconsin Investment Board announced Thursday it will commit up to $80 million to Northgate Capital through SWIB’s Venture Capital Catalyst Portfolio.
Northgate Capital is a global private equity firm headquartered in Danville, Calif., with more than a decade of best-in-class investment and fund partnerships. The commitment allows SWIB to access and invest in Northgate’s top-tier venture capital fund relationships.
It also enables SWIB to pursue a Midwest and Wisconsin development strategy, as identified in past SWIB reports and other independent studies on the region’s largely untapped venture capital investment opportunities.
“After months of due diligence, SWIB has selected Northgate Capital based on its access to top-performing funds together with its ability and willingness to assist SWIB with relationship building and a Wisconsin and Midwest development strategy with top-tier venture capital funds,” said Chris Prestigiacomo, SWIB’s Private Markets Group portfolio manager.
“We believe the current venture environment offers an unprecedented opportunity to access top-tier funds and invest into a climate with favorable valuations. Both should translate into higher future returns that meet SWIB’s fiduciary duty to the Wisconsin Retirement System beneficiaries,” Prestigiacomo added.
SWIB has more than $85 billion in assets under management, including nearly $79 billion in trust funds of the Wisconsin Retirement System, which provides benefits to more than 570,000 current or former employees of state agencies, the University of Wisconsin System, school districts and most local governments. The Wisconsin Retirement System is the ninth largest U.S. public pension fund and the 30th largest public or private pension fund in the world.
Tommy Vardell, managing director of Northgate Capital, said the fund is looking forward to working with SWIB.
“SWIB is a forward-thinking and sophisticated institution which has invested in private markets for over 40 years, and they also happen to be at the epicenter of some very compelling technologies,” Vardell said. “We are happy to extend our venture ecosystem to include the innovation and investment discipline that SWIB offers.”
Spurred by its own 2010 analysis of potential deals in Wisconsin and the Midwest, as well as changing fund-raising patterns among some of the nation’s top-performing venture firms, SWIB announced early this year it would set aside up to $80 million in a portfolio designed to engage one or more “top 30” funds.
The commitment to Northgate positions SWIB to work with a major coastal investment firm and its networks – and to connect those networks to Wisconsin fund and emerging companies.
“While there’s no guarantee the desired investor-to-company matches will happen, the odds of pulling more venture capital dollars into Wisconsin should rise as top global investors see the quality of emerging companies here and throughout the region,” said Tom Still, president of the Wisconsin Technology Council.
“Together with its relationship with Northgate, SWIB’s knowledge of the local venture community should help to open doors to capital sources outside Wisconsin for local companies,” Still added.
The Tech Council recently published “Building Companies & Jobs: The Case for a Venture Capital Program in Wisconsin,” a report that identified gaps in the state’s current venture capital capacity.
SWIB’s venture capital initiative started in 2000. Since then, it has committed a total of $200 million to venture capital investment through its Wisconsin Private Equity Portfolio, which focuses on venture capital partnerships active in Wisconsin and the Midwest. Venture capital firms with active commitments from SWIB include Venture Investors and Baird Venture Partners, which invest in companies engaged in biomedical and other life sciences, business services, enterprise software and applied technology.