The Badger Fund of Funds said Tuesday it has raised more than $10 million of capital from private investors, double what was required by the state legislation that launched it.
The private funding brings to more than $35 million the amount the Badger Fund has to invest.
The Badger Fund was formed after the state in 2013 committed $25 million to investing in start-up companies. As a condition of receiving the $25 million, the fund was required to raise at least $5 million more from the private sector.
The Badger Fund’s private investors include individuals and institutions from across the state, said Ken Johnson, a partner in the Badger Fund and founder of Kegonsa Capital Partners, Madison.
“Wisconsin ranks in the bottom quartile, and in some rankings dead last, for start-up activity in the U.S.,” Johnson said. “Yet all of these investors share the vision that Wisconsin venture capital investment returns can compete nationally.”
The Badger Fund is pursuing what it calls a “money for minnows” strategy. Rather than bring in a national venture capital firm that won’t stay in the state permanently to manage the money, the Badger Fund is forming seed- and early-stage venture capital funds headed by local managers in different areas around the state.
The Badger Fund has announced the launch of two of those funds so far: The Idea Fund of LaCrosse and The Winnebago Seed Fund, which is based in Neenah. The Winnebago Seed Fund will target entrepreneurs in Brown, Outagamie and Winnebago counties. The Badger Fund this week said it has committed $4 million to the Winnebago fund.
Like many other areas of Wisconsin, the Fox Valley, where the Winnebago fund is based, is an underserved market in terms of venture capital, said Paul Schulz, a Neenah investor in the Badger and Winnebago funds. Schulz, who is on the Winnebago fund investment committee, in 2012 sold his Webex Inc., a maker of plastic film production equipment, to California-based Bertram Capital.
“You’ve got a rich educational system, meaningful corporations and people with good ideas that are not being fully realized and capitalized by the investment community here,” Schulz said. “There needs to be some type of service for that in the Fox Valley.”
Schulz said he is optimistic about the Badger Fund’s prospects, given that it is headed by a seasoned venture capitalist such as Johnson, who developed a good track record and proven process at Kegonsa Capital Partners.
“The clear need in the Wisconsin venture capital eco-system is with company formation, seed- and early-stage funding,” said Brian Birk, a Badger Fund partner and a managing partner at Sun Mountain Capital in Santa Fe, N.M. “Building from within, we intend to grow the Wisconsin venture capital profession.”