Well, this is a big breakthrough for young Madison techies.
A New York venture capital firm is pledging to invest up to $500,000 over the next three years in early-stage UW-Madison startups.
"We're happy to participate and to raise the needle," says John Philosophos, a partner in Great Oaks Venture Capital. Like company founder Andrew Boszhardt Jr., Philosophos is a UW-Madison graduate and native of the Milwaukee suburbs.
"There's a lot happening," Philosophos says of the Madison tech scene. "But it still has a long way to go. At Stanford everybody gets it -- you can start a business coming out of school. At the UW it's not nearly as obvious."
Great Oaks aims to change things. It's partnering with the computer science department's groundbreaking entrepreneurs' class. (See "Backpack Entrepreneurs," 1/11/2013.) Taught by professors Paul Barford and Remzi Arpaci-Dusseau, the class veers from the usual CS focus on programming to tutor students who want to start their own software companies. The class culminates with teams of students pitching their projects to Barford and Arpaci-Dusseau for their final grade.
Now they can pitch for venture funding as well.
"It came together very quickly," Barford says of the Great Oaks partnership. "These guys don't mess around when they commit to something."
The spring class found four tech teams securing Great Oaks investments of up to $20,000 apiece coupled with summer office space on the Capitol Square. Great Oaks also provides a detailed "accelerator" program that includes up to three years of mentoring.
- CrowdDJ is crowd-sourced radio station for public spaces that allows the audience to use their smart phones to vote on the music played. The team includes Jon Morton, Alejandro De la Mora and Ng Ter Chg.
- Captifeye fashions a collective memory of an event like a wedding by creating a shared digital scrapbook to collate photos, videos and comments. The team is made up of Andrew Fink, Ian Powell and Joe Daly.
- Fill in My [Blank], available at the Google Game Store, is a social game app patterned after popular party games. The students behind it are William Pelrine, Phil Morley, Brian Anderson, Connor Mullen and Brennan Payne.
- ReviewSage, founded by Mark Dhillon, provides interactive visualization for quickly parsing online reviews and is usable by both consumers and businesses.
Dhillon, 26, is an interesting figure. He graduated from the top-rated UC-Berkeley computer science department, worked as a programmer for Rearden Commerce, Google and Oracle, and then headed for a master's at UW's own highly regarded computer science program. But for all his programming expertise, Dhillon says he knew little about software business operations and marketing until he got to Madison.
He says that the entrepreneurs' class gave him the opportunity "to pick the brains of smart and innovative" guest lecturers, and that Great Oaks put him in touch with its company startups across the country. The firm also connected Dhillon with marketing veteran Scott Cooper, formerly of the Hiebing Group and Famous Footwear, as his long-term mentor. Dhillon calls Cooper "an absolute guru and sage."
Philosophos subtly downplays Great Oaks' involvement on campus as simply the work of two grateful alumni who want to give back to the school that helped launch their careers. (Boszhardt has also given a big chunk of money to the UW athletic department.) But clearly these guys, whose investment portfolio totals 150 companies, see new opportunity in Madison.
He notes that 80% of Great Oaks' holdings are in Silicon Valley and New York. But Madison, with nine or 10 investments, is emerging at the firm's leading investment site in fly-over country. Those Great Oaks stakes include local startup leaders EatStreet, Murfie, StudyBlue and Nextt.
"Great Oaks has definitely made an impact on the local startup ecosystem," says Murfie's Matt Younkle, noting that Great Oaks was a late joiner to the music service's last investment round. "They bring a lot of venture fund experience, a lot of mentorship to the table. And they've got connections to other capital because they've been co-investors with a lot of other venture funds."
Great Oaks' investment in student startups coincides with an uptick in entrepreneurial ferment on campus. Mark Bugher, who's retiring on Nov. 1 after a long run as director of the University Research Park, noted several new moves in a recent wrap-up interview.
This includes the decision to redesign the Metro Innovation Center, the Research Park's startup site at 1245 E. Washington Ave. Regarded as the park's "stake in the ground" on the east side, the site has never taken off, despite occupying only 6,000 square feet in the old Gisholt factory complex. Just two of 10 suites are occupied. Bugher and his deputy Greg Hyer expect the space to be redesigned along a more open concept with cheaper rents than the current $700 to $800 a month.
The bigger news is the Research Park's purchase (with funding from the Wisconsin Alumni Research Foundation) of the old Luther's Blues building at 1401 University Ave. Hyer put the price at "more than $2 million." Perhaps better known today as "that purple building," the site is strategically placed for tech incubation -- next to the Wisconsin Institutes for Discovery and near the computer science building.
"It has some real interesting entrepreneurial opportunities for the interaction of students, faculty and the private sector," notes Hyer, adding that student coworking space will be installed.
Barford's class may not be interested, however. He says he chose to pair off with the Great Oaks accelerator program because he wasn't sure the university could act quickly on its plan.
Some current tenants will remain, including two restaurants and the nonprofit Games Learning Society, which is deemed a perfect fit because of its focus on computer games and learning. The UW's high-profile D2P initiative -- the "Discovery to Product" program -- will be housed at the site as well.
Aimed at better commercializing the UW's giant $1 billion-a-year research operation, D2P has been embraced by new Chancellor Becky Blank. In recent speeches to the Greater Madison Chamber of Commerce and to the Wisconsin Innovation Network, Blank was forthright in arguing that UW-Madison needs to work harder at turning laboratory findings into products and jobs for the state.
Blank has seemingly come to town at the right moment to push that agenda. So much tech entrepreneurialism is bubbling to the surface. And Bugher, as he prepares to retire, points out how much has already been achieved: the first UW research park off Whitney Way is 94% occupied, hosts 126 companies (65% of them UW-connected) and has a total workforce of 3,600.
Optimism would seem to be the order of the day. But more distant observers aren't impressed. They think the Madison area is actually losing ground. In 10 years, Madison has fallen from #5 to #89 on Forbes magazine's ranking of "Best Places for Business and Careers." The highly regarded Kauffman Foundation issued a similarly dour report in August. Measuring the density of high-tech startups between 1990 and 2010, Kaufman recorded a notable decline here.
All of which underlines the importance of Great Oaks and the UW research park making their moves.
