MJS: Wisconsin ‘Angel’ Investors Getting Earlier Starts

Shortly after selling agricultural machine maker Miller St. Nazianz Inc., John W. Miller jumped into a riskier endeavor: start-up investing.

“I could have gone anywhere after selling the company, but I decided I wanted to stay and build more in Wisconsin,” said Miller, who sold Manitowoc County-based  Miller St. Nazianz in 2014. “I’m only 42, so I still have some interest in taking an informed gamble on things.”

Miller’s attitude, along with his appetite for start-up investing, is increasingly common in the state, particularly in the Milwaukee area. He is among a growing number of younger “angel” investors who are sorting through the state’s youngest companies so they can put money into those that appear to be the most promising.

Their names are new to much of the public. Adam Berger, Mark Grosskopf and Mia Moe don’t have the visibility of their more established counterparts. But with every investment, they’re becoming more known.

“The next generation of business leaders in the community is emerging and they’re making their mark by investing in our best and brightest through angel investing,” said Joe Kirgues, co-founder of gener8tor, a Wisconsin-based accelerator and training program for start-ups. “Because of the efforts of people like this, we think that Milwaukee is actually ahead of its peers when it comes to the size and capability of its angel community relative to many other communities in the Midwest.”

Many of the area’s newest angel investors, like Berger, say they started out watching and learning from more established angel investors like National Business Furniture founder George Mosher and Tom Shannon, CEO and a founder of BrightStar Wisconsin, a nonprofit that makes venture capital investments.

“I’m just trying to get my feet wet, lay the bread crumbs of positive experiences, so I can do this in a big way later in my life,” said Berger, who is partner and vice president of sales at Doering Fleet Management and a member of the BrightStar Wisconsin board.

Berger said he has made five investments since April 2015, with an eye toward creating a small, diverse portfolio rather than pumping a lot of money into one deal. One of the five has been a gener8tor-trained company, he said. Another, Somna Therapeutics, is a Milwaukee company with Medical College of Wisconsin roots that sells a device to resolve acid reflux symptoms.

Grosskopf has also made a handful of investments after being invited to hear pitches from gener8tor’s first class in 2012.

Starting a company takes an enormous amount of commitment, energy and “intense discipline,”  said Grosskopf, chief executive officer and owner of New Resources Consulting, which helps large companies deploy their technology, and two other companies.

When he evaluates start-ups, Grosskopf said he tends to favor discipline over brilliance.

“You need a little bit of both, but certainly I would take someone hard-working over brilliant,” he said. “There’s just a lot of heavy lifting that needs to happen.”

The new angel investors are definitely investing to make profits, not donations to charity, said Rob Barnard, CEO and founder of Black Maple Capital, a Milwaukee hedge fund. But investing locally makes you feel good, he said.

“A lot of times when you’re dealing with big markets, it’s a very impersonal exercise,” Barnard said. “With these companies, you’re dealing directly with the people responsible for making them work or not work, and you can really make a difference with them.”

Milwaukee lags the national scene in terms of entrepreneurship, but the climate for start-ups is much healthier now than it was a decade ago, Barnard said. He says gener8tor has been a big part of that, with training that produces polished companies for investors to evaluate.

Wisconsin Women’s Business Initiative Corp., Brightstar Wisconsin, Wisconsin Economic Development Corp. and American Family Ventures have all played a role as well, added Berger, who says he’s working to launch an angel investment group for younger investors.

Angels benefit in many ways when they work with start-ups by learning about new uses of technologies like artificial intelligence or software-as-a-service systems, for example, said Moe, the daughter of the founders of Renaissance Learning, who held several positions with the Wisconsin Rapids education technology company. Her parents and family held nearly 70% of Renaissance Learning’s stock when it was sold for $440 million in 2011.

“Not only are you keeping up-to-date, you’re working with some of the top talent,” Moe said.

And in some cases, the angels’ investments are helping to attract more companies to Milwaukee. Gener8tor has lured three start-ups to the area through its training classes: Bright Cellars, a monthly wine club; Lumanu, whose software platform finds ambassadors for word-of-mouth marketing campaigns; and Exit7c, whose mobile app functions like a digital fuel card at gas stations.

But to continue that trend, the area needs to better connect its larger companies with their emerging counterparts, Moe said.

“We’re going to create a community here with established companies and start-ups,” she said. “Otherwise you’ll see them come in and start to shiver, and then you’ll see them leave.”

Link to the article: MJS

About the BrightStar Wisconsin Foundation Inc.

BrightStar is a 501(c)(3) non-profit foundation created to facilitate job creation and increase Wisconsin’s economic activity by deploying donated funds into equity stakes in early-stage, rapid growth companies. This new approach will enable the formation of new investment capital in Wisconsin through charitable donations to the foundation.