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Capital Midwest Eyes $150M for 3rd WI VC Fund

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Einhorn Associates, the merger and acquisition services business started by his father, Stephen, in the 1970s. The son helped lead a new business for the company, brokering venture investment deals for startups. Four years later, Einhorn, his father, and business partner Alvin Vitangcol decided to start their own venture fund and get on the other side of the deal-making table. “We realized there was no capital and awesome opportunities,” Einhorn recalled.

Capital Midwest’s second fund included money from local foundations and dozens of wealthy individuals, and its biggest investor was Einhorn’s brother, David, a New York hedge fund manager known for short-sale bets against Lehman Brothers and Allied Capital, The New York Times reported.

To reach its third venture fund goal, Einhorn and his team will have to convince enough deep-pocketed backers that there are indeed plenty of viable startups in Midwestern states like Wisconsin. That’s an idea that is starting to win more believers from coastal tech hotbeds like Silicon Valley, such as the two former Sequoia Capital partners behind Ohio-based Drive Capital, and Greg Robinson, the former Silicon Valley investor who relocated to Madison last year to run 4490 Ventures.

It’s way too early to call this a sea change in Midwest venture capital. But as more VC funds pop up in America’s heartland, Einhorn thinks the increased competition is a good thing for the startups and his firm, which prefers to syndicate deals with other investors when it can.

“The goal is to build up the entire [Midwest] network,” Einhorn said. “We are all for many, many funds being in this area. The more collaboration you can do with quality investors is extremely helpful.”

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