WI Syndication Group Seeks More Investor Team-ups to Spur Big Exits

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leaders from many of the state’s leading venture firms, including Venture Investors, the state’s largest and oldest VC firm; angel networks, such as N29 Capital Partners; the Wisconsin Economic Development Corp.; Gener8tor, a Wisconsin-based organization that runs programs that train and invest in startups; and various corporate venture groups. A typical syndication committee meeting draws between 20 and 60 people, according to Einhorn and other members. The meetings are usually held in conjunction with business conferences in cities such as Milwaukee, Madison, and Green Bay, WI, Einhorn says.

John Neis, executive managing director of Venture Investors, says he has attended two of the syndication committee meetings. He calls the initiative a “healthy thing” for Wisconsin, especially considering all the new funds popping up. Spontaneous networking opportunities are rarer in the state than in denser innovation hubs on the coasts, he adds.

“This is not Sand Hill Road,” Neis says, referring to the famed Silicon Valley road filled with VC firms. “We don’t go out to lunch and bump into our venture capital colleagues.”

The syndication committee meetings have helped N29 Capital Partners, a three-year-old angel investment group based in northern Wisconsin, get to know investors in other parts of the state, says co-founder Nicole Justa. The meetings haven’t led to any deals for N29 yet, but understanding the interests of other funds—particularly larger ones that might invest in N29’s portfolio companies at later stages—could pay dividends down the road.

“We don’t have a lot of VCs, if any, up in our area,” Justa says. “So, I need to travel and network with these people.”

As the syndication committee matures, one of the keys will be “to make sure it’s not creating groupthink” among the state’s investors, Neis says. He thinks one model that works well involves an investor showing up to a meeting with a signed term sheet, and asking for co-investors on the deal.

“It’s a little more difficult talking about deals that nobody’s committed to,” Neis says. “The goal here is collaboration, not collusion.”

Einhorn says the committee doesn’t have any codified rules. But everyone is expected to refrain from discussing deal specifics during the meetings, he says. And there will be unspecified “ramifications” if anyone attempts to “steal” a deal from another member, he adds.

But members aren’t required to discuss deals they have in the hopper. Einhorn says it’s been a challenge to get people to share, and he’s working with members to brainstorm ways to encourage people to open up more.

“I think it’s always going to be a challenge for people to share what their good deal flow is, until they get more comfortable with the actual goals of what this is,” Einhorn says.

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Jeff Bauter Engel is Deputy Editor, Tech at Xconomy. Email: jengel@xconomy.com Follow @JeffEngelXcon

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