It's time to lead instead of falling further behind
For at least two years now, headlines and editorials have all sounded the same theme: "State lags nation in job growth."
Thought leaders such as Tom Still of the Wisconsin Technology Council; Dan Steininger of BizStarts; Julia Taylor of the Greater Milwaukee Committee; and entrepreneur John Torinus have eloquently and repeatedly cited irrefutable data to lay out the problem and the solution:
We need to get more companies started in Wisconsin, and to do that we need more access to capital invested in early-stage, high-growth companies.
Why isn't this job-creating capital investment happening in Wisconsin?
We have the ideas. Our universities have some of the largest R&D budgets in the country. We have the brainpower. Generous wealthy philanthropists and foundations are donating hundreds of millions of dollars for education through scholarships, naming rights, discovery centers and facilities. We have a proliferation of ideas and an educated workplace to implement them into scalable businesses.
Public-sector capital formation is not my forte, but I have listened intently to the numerous proposals for public investment in job creation. After all the talk of declining state budgets, "fund of funds" vs. CAPCO, and with the political wrangling around the issue, it is apparent that meaningful investment just isn't going to come from Wisconsin's public sector.
Only $25 million of the state budget is earmarked for potential deployment to high-growth companies, and the odds are slim that even that amount will find its way to where it is truly needed. Colorado, on the other hand, just announced the launch of a $150 million venture fund to invest in local start-ups — and that is small compared with some other states' initiatives.
We are quickly falling further behind.
Private-sector, early-stage capital formation usually involves investors who band together as angels in groups. They are willing to attend investor pitches, share due diligence, are not rattled by seeing greater than 50% of their investments fail and will wait five to seven years for a return. This is ground zero for job creation in Wisconsin, and we need many more angel groups to get companies off the ground.
These people can be supported and encouraged by us, but they are not easy to clone in large volume. Solely relying on private sector venture funds or angel investments is not the solution to our problem of creating more job-producing companies.
What then is the solution? Can we change the course of a state we all love? I think we can. Here's how:
Seven of my colleagues and I see only one game-changing way: to do it ourselves in the private sector, without taxpayer dollars. The solution is to call on Badgers throughout the world who care about Wisconsin to come to its aid by changing the discussion from an investment discussion to a charitable discussion.
For this specific purpose, eight of us have created the BrightStar Wisconsin Foundation as a 501(c)(3) entity and have pledged nearly $6 million of our own money to get the ball rolling. These permanent donations will be owned by the foundation and invested directly into early stage businesses. There will not be fees or carried interest.
Through our extensive cumulative investment backgrounds, we will work with local angels and venture firms to identify opportunities and invest with them. Our eventual proceeds will come back to the foundation to be reinvested again and again. Think of the possibilities. As the foundation grows large, we can add additional services.
We are calling for assistance from the same wealthy individuals, corporations and foundations that already are making a difference in education to earmark part of their future donations for creating jobs via BrightStar. You know who you are. We need your help. By allocating a portion of your charitable donations to this job creation solution, we will be able to commercialize more good ideas, create more jobs for our graduates and create a more vibrant state.
This solution is novel, but also simple and obvious. It can put us back in the lead instead of the alternative — falling further behind.