Building Community, VC Funds, and $1B Businesses at Forward Festival
“We’re not here for the weather, obviously, but for the community.”
That was Andrew Foxwell speaking at last week’s Forward Festival in Madison, WI, about why the Wisconsin native and his wife, Gracie—after stints in Washington, DC, Chicago, and driving 30,000 miles exploring cities nationwide—decided to put down roots in Wisconsin’s capital and build their social media advisory company Foxwell Digital here. He spoke on a panel that I moderated, on the topic “Location Matters.”
In some ways, Foxwell’s statement about community is a microcosm of both the annual entrepreneurship festival and Madison’s startup scene as a whole.
Yes, the city has myriad challenges that can’t be controlled or likely won’t change any time soon, such as a lack of later-stage venture capital located within the state and, as Foxwell noted, harsh winters that sometimes make it difficult to recruit talented people here.
But for all that Madison lacks, panelists said it also has plenty of assets—the University of Wisconsin-Madison, Epic Systems, and a relatively low cost of living and of doing business, to name a few. Perhaps just as important as all of those tangible traits is an unquantifiable one: the tight-knit community that Foxwell and others referenced throughout Forward Fest.
Take the six-year-old festival itself, which usually attracts more than 2,000 people to a smorgasbord of entrepreneurship events focused on things like healthcare technology, female entrepreneurship, video games, university spinouts, venture capital, and even food-related startups. Rather than seeing each other as competitors (at least explicitly), entities like Capital Entrepreneurs, 100state, the Greater Madison Chamber of Commerce, Gener8tor, Doyenne Group, and others hosted events throughout the eight-day festival. I can’t say for sure, but I doubt that most cities have the type of culture that can pull off that kind of collaboration between most of the top local business groups and startup organizations.
Forward Fest wasn’t just eight days of patting each other on the back, either. Hard questions were raised about what Madison can do to ensure that minorities and other underrepresented groups play a role in the ascent of local high-tech businesses; how UW-Madison can continue cultivating entrepreneurship and be held accountable as an economic engine; and how to overcome the Midwestern humility that at times may lower company expectations and keep founders from celebrating their successes.
None of those problems have obvious silver-bullet solutions. But there were some ideas floated to boost the startup community.
One that stood out to me came from HealthX Ventures managing partner Mark Bakken, who proposed a new mechanism for directing State of Wisconsin Investment Board (SWIB) money toward local startups. SWIB manages more than $100 billion worth of assets for current and retired state of Wisconsin employees, as well as other state funds.
Bakken suggested that SWIB ask its constituents if they would like to earmark 1 percent of their funds for investing in Wisconsin startups—money that could either be invested directly in companies by SWIB or given to Wisconsin venture funds (such as Bakken’s fund and others) that would be required to put that money into Badger State startups, he said. The result would be an infusion of at least $1 billion in early-stage capital.
Although SWIB already invests in Wisconsin companies, including by backing Madison-based 4490 Ventures, Bakken thinks his proposal could provide a significant boost to the state’s startups and potentially its economy, if the money is invested wisely.
Here are a few more highlights from various Forward Fest events I attended:
—Bold business predictions: Peter Qian didn’t win the chamber of commerce’s “Pressure Chamber” pitch contest, but he arguably delivered the most confident pitch. Qian’s data analytics company is a year old, but he has already raised $1.8 million from investors and said his business will pull in $1.2 million in revenue this year. Qian is already looking past millions with an “M” to billions with a “B.”
“I want to build a billion-dollar company here in Madison,” Qian declared during his presentation, adding that he’s hiring.
Baird Capital partner Michael Liang later asked Qian if he’s raising more capital from investors. Qian drew a big laugh from the crowd when he deadpanned: “I want to build a billion-dollar company; I probably need more money.”
—Thanks, but no thanks: At the same pitch competition, Redox co-founder Niko Skievaski told the crowd that his one-year-old healthcare IT startup has already gotten an eight-figure acquisition offer—which the company turned down.
Redox has more than 100 customers, has raised about $400,000 from investors, and is seeking more capital, Skievaski said.
—More exits: It was mentioned a couple of times that the Madison area needs more classic startup success stories. For example, a venture-backed company gets acquired or goes public, and helps to replenish the startup scene because its executives and top employees take their winnings from the exit and go on to invest in and/or start new companies.
One hindrance has been companies that leave Wisconsin and achieve an exit elsewhere, as was the case with SurveyMonkey and Silver Spring Networks, to name two examples.
One possible solution? Lure successful Madison natives back home, said Capital Factory founder and executive director Josh Baer, who flew in from Austin, TX, to speak during the festival.
Some Madison serial entrepreneurs might feel like they can’t pass up opportunities in Silicon Valley. But after they sell a company (or three) elsewhere, perhaps they could be convinced to return to Madison and do the same thing here, Baer suggested.
—Madison vs. Chicago: Chicago has a more active startup community than Madison, in terms of the number of companies being launched, the amount of venture capital invested, and other metrics. But on a relative basis, given how much smaller Madison is, Gener8tor co-founder Troy Vosseller thinks “Madison is punching above its weight class,” he said during a Badger Startup Summit panel discussion held on UW-Madison’s campus during the festival.
Furthermore, there are some things Madison has that Chicago lacks, said Great Oaks Venture Capital partner John Philosophos. For one, he thinks Madison has more “intellectual capital” because of the research juggernaut that is the UW-Madison. But that puts more pressure on the university to help foster a stronger startup community here, he added.
It’s hard to measure the impact of discussions like that one and others at Forward Fest. But if bringing the startup community closer together was one of the festival’s goals, it just might have succeeded.