For Wisconsin Entrepreneurs By Wisconsin Entrepreneurs
Can a seed-fund incubator succeed in the Midwest?
Over the past few years there has been a growing trend in the creation of seed-fund incubators. For those of you that haven't heard of them, the general model is that the seed-fund will provide an applicant on the order of $5K, and $5K per founder for under 10% equity in the company. In return, the company gains entry into an incubation program which provides resources (office space, servers, legal, marketing, etc.) and mentors to help them get off the ground. At the end of the program, companies get to present in front of an audience of investors.
The trend started with Y-Combinator in Mountain View, California, whose success has spurred the creation of TechStars in Boulder and Boston, DreamIT Ventures in Philly, LaunchBox Digital in D.C., ShotPut Ventures in Atlanta, Capital Factory in Austin, and most recently NextStart in South Carolina. This model obviously can't be sustainable across the entire United States. Yet, I've thought a lot about whether or not one can succeed here. I'm in Madison but I'm curious what everyone's thoughts are about it, and where the best location would be if it ever happened.
The trend started with Y-Combinator in Mountain View, California, whose success has spurred the creation of TechStars in Boulder and Boston, DreamIT Ventures in Philly, LaunchBox Digital in D.C., ShotPut Ventures in Atlanta, Capital Factory in Austin, and most recently NextStart in South Carolina. This model obviously can't be sustainable across the entire United States. Yet, I've thought a lot about whether or not one can succeed here. I'm in Madison but I'm curious what everyone's thoughts are about it, and where the best location would be if it ever happened.
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Replies to This Discussion
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Permalink Reply by Thanh Nguyen on -
Please my respond in your LinkedIn question.... The short answer is YES. We have enough startups and entrepreneurs in Midwest to make this happen.
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Permalink Reply by Chris Nwakalo @CIKN on -
I personally believe that from the perspective of a person on the outside looking into this state, most would say, "what does Wisconsin have to offer other than agriculture and bio-science?
Now that i have lived in this state for over 6 years and have seen some of the many creative, entrepreneurial people who were either born here or have adopted Wisconsin as their home. I must say that this place should have its own Y-Combinator orTechStars(which is probabaly one of the coolest incubators ive seen). Madison would have to be my guess of the location but it would definitely work. It could be the mecca for creating start-ups, drawing in talent from all over Wisconsin and the Midwest!
I also think that a collegiate type incubator would be of some benefit also. Cornell University has a good example of this with their "Student Agencies eLab" http://www.news.cornell.edu/stories/April08/elab.incubator.kh.html .
Young people like myself here in Wisconsin have great ideas today. These students just need more programs that offer mentorship, a conducive environement, and some early stage funds to get things started here. Think about it?? If there was more of an investment in helping young collegiate students start-up here, think about the ROI the state would get with more of these young people headquartering here instead of moving their ideas and business to your Bostons, your Silicone Valleys, and other already established places.
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Permalink Reply by Dale Beermann on -
I definitely agree that, as a state, we need to be investing more in student entrepreneurship (Propel is working with local school districts to improve this). I'm not sure that this means a seed-fund incubator would work though. There is, in fact, a student incubator here in Madison that is run by SIFE: http://sife.rso.wisc.edu/sbi/. I think programs like that have huge potential and I hope that we can see them spread to the other campuses.
Generally, I think that the midwest could benefit from a program like this. However, despite the number of amazing entrepreneurs I've met here, they're offset by a general mentality in the midwest that doesn't understand entrepreneurship. I had it described to me like this once: In California, if you leave your job to start a company, people congratulate you and say 'good luck,' in Wisconsin they ask what's the matter and question why you would give up that stability.
This type of mentality can also be seen in the way people invest money here. I wrote a post that touched on this a while ago on my blog: http://www.dalebeermann.com/2008/09/lackluster-info.html. That was generally geared towards IT spending. However, investors are much less likely to take risks and will stick to the industries for which the midwest is known, such as biotech and pharma. Seed-fund incubators don't typically work for those industries because the amount of money required is astronomical.
The discussion is an interesting one, I hope that this continues.
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Permalink Reply by Thanh Nguyen on
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Great discussion... Recently I have worked along side with a few entrepreneurs and I came to realize that we need something that could guide these people through the process from idea stage through business model, prototyping, and fund raising. Some sort of organization either incubators and/or education would be good. Universities (especially our own UW-Madison) are well positioned to help its students. What about working professionals with minimal startup experience? Seed-fund incubators could fill that need.
Furthermore, I noticed that investors in the Midwest look to invest in something that they could get their hands on - prototypes. That needs money. Home equity is no longer an option for few people out there so that begs the question - where to get seed money??? Seed fund could provide that as well as coaching entrepreneurs through the process.
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