StartingBlock Reaches Funding Goal, Moves Closer to Groundbreaking
StartingBlock Madison, a still-to-be-built entrepreneurial center just east of downtown in Wisconsin’s capital city, took another major step forward this week. The nonprofit organization says it has met its $3 million fundraising goal and, with that piece in place, can continue working toward a groundbreaking planned for later this year.
The City of Madison contributed half of the $3 million total, says Scott Resnick, executive director of StartingBlock Madison. The remaining $1.5 million, raised by StartingBlock itself, came from about 80 Wisconsin-based groups and individuals, he says.
Three of the key contributors were the Wisconsin Economic Development Corp. (WEDC), which pitched in $402,000, Madison Gas and Electric, and American Family Insurance, Resnick says. The insurer has been a driving force behind the StartingBlock project, which has been discussed and planned for since 2012. (American Family first said it would help finance the project in 2014.)
“We want to assertively and thoughtfully lead the way to meet the changing needs of our customers and communities, and StartingBlock helps us achieve that,” Jack Salzwedel, American Family’s president and CEO, says in a prepared statement.
American Family says in a news release that it will provide StartingBlock with 50,000 square feet in a new, eight-story building the company is constructing—to be called “The Spark.”
Another new building, which will be known as Cosmos, is slated to be constructed on an adjacent lot. Cosmos will initially be four stories tall, but could be built up further, Resnick says. It will be a mixed-use building with commercial tenants and a 2,500-seat venue for live shows, he adds.
(A note on terminology: Xconomy has reported previously that StartingBlock will be part of the Cosmos, but it now appears that “Cosmos” describes only the mixed-use building, rather than the entire project.)
In addition to the two new buildings, there are plans to construct a 600-stall parking garage less than a block away, Resnick says. The total cost of the three structures is likely to be between $50 million and $65 million, he adds.
“I believe this will be a beacon for entrepreneurship throughout the state of Wisconsin, and the entire Midwest,” he says.
Resnick says he and others working to get StartingBlock built have received “letters of interest” from 27 organizations, many of them startup companies, that are interested in moving into the space once it opens. That’s expected to be in late 2017 or early 2018—a little over a year after construction begins, he says.
Certain tenants will be able to rent office space at subsidized rates. WEDC has pledged $350,000 for rent subsidies, Resnick says.
Some groups that are known for working with early-stage companies in Madison have been named as likely StartingBlock tenants. They include the Doyenne Group, which focuses on helping startups led by women and people of color, and the accelerator Gener8tor. Gener8tor’s office in Milwaukee, the other city where it has held programs, is in Ward 4, which many members of Wisconsin’s startup community have said is StartingBlock’s closest analog.
Resnick says there isn’t much sense in revealing every last organization that’s expressed interest in moving in. One reason is that a certain share of startups inevitably shut down after a few years.
“Or, in some other cases, [companies] may outgrow the space that we have available for them prior to opening,” he says.
One of the goals with StartingBlock seems to be increasing the number of high-growth companies in and around Madison, and getting more investors to notice that companies there are attracting venture capital. Resnick points to two “anchor” institutions you’ll often encounter when tracing the footsteps of successful startup founders in the area.
“There are exciting opportunities stemming from innovative technologies that are coming out of the University of Wisconsin and opportunities provided by having Epic Systems right in our backyard,” he says.
Some key steps that remain before the groundbreaking can happen are finishing designs for “The Spark” building, executing development agreements, and getting approvals from the city, American Family says.