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The secret of how Wisconsin became a hotbed of innovation

 

The secret of how Wisconsin became a hotbed of innovation

Aug 01, 2019

At first thought, you probably don’t think of Wisconsin as a hotbed of innovation. What comes to mind is more Silicon Valley, Seattle, Boston and New York City — the coasts of the U.S. But what about the Midwest? 

It turns out, Americans been overlooking a lot of entrepreneurs, startups and increasingly innovative companies in this region. Wisconsin, in particular, is cultivating these entrepreneurs and businesses through a variety of strong organizations.  

The startup scene

When people think of innovative companies, they tend to think of startups that are floating creative solutions to fill gaps. Even though startups are filling a perceived need, growth is not a guarantee, so having support from the start can help them not only survive but also expand and mature.

To help, two organizations in Madison are building an ecosystem to support startup and innovation cultures. 

One of those groups — StartingBlock— serves as a hub where technology-focused members and startups can find the connections they need to be successful, whether it’s investors, corporate sponsors or even fellow startups. Both sides of these connections need a startup ecosystem builder like StartingBlock to truly drive innovative ideas into reality, says Chandra Miller Fienen, executive director at StartingBlock.

Her organization’s goals are to cultivate entrepreneurs (including widening the pipeline of people who want to become entrepreneurs), accelerate startups’ growth and drive innovative ideas into reality. And StartingBlock has been successful. In just its first six months, the 37 companies it worked with raised $12.7 million and created 159 jobs.

“Pound for pound, Madison may be the best ecosystem in the middle part of the country,” said the 2018 State of the Silicon Prairie Report by the AIM Institute. The report describes the range of industries in Madison’s startup ecosystem as significant.

And that’s where another Madison-based organization comes in. Like StartingBlock, 100state is a nonprofit that provides a community and home for entrepreneurs, but its scope spans beyond startups in the technology arena. 

“A board member once referred to 100state as a primordial soup of innovation, and that’s something that’s really stuck with me,” says Claudia Seidenberg, 100state’s executive director. “In the entrepreneur ecosystem, we’ve opened ourselves up as a testing and discovery ground for innovation and the development of new companies.”

These two organizations are critical resources for startups looking to succeed in a state that has traditionally been dominated by manufacturing, agriculture and retail. But the road to filling that need required some innovative on their part. 

When both were founded in 2013, their biggest challenge was just demonstrating how community-based spaces could be valuable. 

While awareness and understanding have gotten better, the products 100state is pursuing, the programming it’s doing and the data it’s collecting are all focused on telling the story of how successful community-based innovation and investment is. 

“We’re trying to prove that collaboration and collaborative communities lead to brilliant innovation, both within specific industries and a greater city,” says Claudia. “It’s a long-term investment, but it’s one that will come back to you in spades.” 

100state and StartingBlock are now reaping the fruits of their labor and finally getting to watch Wisconsin become more and more known as a place of exciting innovation. 

In Chandra’s view, the emergence of Madison onto the national radar as a startup and technology city means the rest of the Midwest is poised to benefit, too. “If entrepreneurs and startup ecosystem builders succeed here in Madison, then we can help support entrepreneurial efforts in smaller areas, as well as build a vibrant startup ecosystem regionally, from Chicago to Madison to Minneapolis to Des Moines, and compete with innovation we see on the coasts.”

Staying relevant through innovation

For Wisconsin, innovation is vital to its economic future, and the reality is that it must come from more than just startups, and it must come from more than just hotspots like Madison and Milwaukee.

Though it’s an independent nonprofit, the Wisconsin Technology Council sprang out of an opportunity for a state organization to help foster connections in the technology scene and to act as an advisor to the governor and legislature.

The primary reason for our work is being a voice that can come up with creative ideas and present them to policy makers in a way that they can embrace it,” says Tom Still, the president of the Wisconsin Technology Council. “That policy part of our mission is much more of a marathon than a sprint. We try to do this in a very bi-partisan way, realizing that an idea that didn’t make it past the finish line in one budget cycle or session may come back in the next session or the one after that.”

Understandably, he doesn’t get discouraged when things don’t happen overnight. In fact, his organization’s biggest challenge is actually capital formation. 

You wouldn’t know it looking at the statistics. In Wisconsin, there was a 90% increase in venture capital funding from 2017 to 2018. Plus, new venture funds have opened, including the UnityPoint Health Ventures Innovation Fund ($100 million to invest in early-stage growth startups) and Wisconn Valley Venture Fund ($100 million to invest in healthcare, technology, manufacturing and financial services).

But though Wisconsin has come a long way, there still isn’t enough angel and venture capital at play. A lot of companies can find that first round of angel investing, but it’s often more difficult to find Series A financing and above. 

So what’s the solution? Awareness, Tom says. 

“If you think about California and its tech hubs, the distance between San Diego and San Francisco is 500 miles. The distance between Chicago and Minneapolis is 400 miles, and much of that is in Wisconsin,” he points out. “For many people around the country, they may not think of us as a state that has a lot of diverse technology assets, but we have a lot that really deserves more attention. Raising awareness of the upper Midwest is a challenge, but it’s also a great opportunity.”

It’s not just the wider U.S. that’s sleeping on Wisconsin. Changing perceptions also means widening awareness in the state itself, as well as focusing on more than technology companies and startups. 

The Wisconsin Innovation Awards is helping expand that base by awarding innovation in different sectors like education, government, nonprofits, arts and manufacturing — not just in technology startups and biotech. 

The companies that are now considered established Wisconsin staples were once innovative startups, too, says cofounder and board member Joe Boucher. “Looking at our state’s history, if you go back to what the foundational businesses were, those were innovative ideas at the time. Whether it’s SC Johnson or Harley-Davidson, they were doing innovative things back when they were founded. If Wisconsin is going to continue to grow and prosper, we have to innovate and create, or we’ll fall behind.”

Tom agrees that established companies must innovate to survive changes in the market. 

The U.S. economy, and the Wisconsin economy being no different, is driven by constant change. Economists refer to it as creative destruction, the notion that older ideas, products, services and even companies are challenged from below by new companies, ideas and innovation,” he says. “This process of creative upheaval makes the economy more vibrant, creates more jobs and opportunities, and sometimes creates markets we don’t expect.

That upheaval, and the resources supporting innovation, have resulted in a greater diversity of companies emerging — and a greater diversity of ownership. 

The Wisconsin Innovation Awards has seen impressive diversity in its winners, which are chosen through a blind process. Joe notes that it’s a sign Wisconsin continues to move in the right direction, and it’s something his organization is very proud of.

Strategic partnerships to create change

Partnerships can be key to everything. Each state — and each community within a state — has its own unique innovation ecosystems, which can only survive and grow because of partnerships between innovators, investors, incubators, community-builders, government stakeholders and more. 

StartingBlock, 100state, the Wisconsin Technology Council and the Wisconsin Innovation Awards are just four examples in a state filled with collaborators.

One thing the four all have in common is that they’ve pursued corporate partnerships to help them work toward meeting their missions.

“It’s not just about starting a company. You need to find customers for your products, and that’s developed in collaboration with more established companies,” Chandra says “Partnerships are a way for these established companies to perceive disruptive risks to themselves by seeing the problems startups are grappling and engaging with.”

For the Wisconsin Innovation Awards group, corporate partnerships (like the one it has with Wipfli) help make sure it’s not overlooking innovative organizations. Matt Younkle, co-founder and board member, says, “A group like Wipfli is connected to a lot of businesses and types of sectors around the state. They have visibility into their clients and who’s doing unique, creative and successful things, which helps us make sure we have statewide coverage.”

For growing companies, corporate partnerships also mean experienced advice. 

“Entrepreneurs need a lot of things: money, time and the right technology. But they also need people who can help them manage and grow their companies,” says Tom. “There are a lot of great ideas that wind up on the sidelines because they weren’t paired with great managers, governance and the right view of how to manage the business. I think what Wipfli brings to that mix is that combination of been-there-done-that experience and an outlook of what it is that young companies really need.”

The Wisconsin Technology Council also relies on its board of directors, which is 54 members strong, to provide different viewpoints of the entrepreneurial world. 

As Tom puts it, everyone has a hand on a different part of the elephant, and together, they can identify the trunk, ears, feet and tail to create a complete picture. It helps not only with the success of their organization but also with the success of the Wisconsin economy as a whole.

All four organizations know it takes collaboration, new ideas and continuous improvement to keep growing Wisconsin as a hotbed of innovation and spreading awareness of its capabilities. But with their differing missions, abilities and reach, you could say they, too, each have a different hand on the elephant.

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Brian Gaumont
Brian R. Gaumont
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