Several Wisconsin and Milwaukee-area entrepreneurship and venture capital sources have told BizTimes Milwaukee that Foxconn Technology Group is working on forming a large venture capital fund – some have pegged it at $100 million – to invest in Wisconsin startups.
The Taiwanese LCD screen manufacturer, which is building a massive campus in Mount Pleasant, already invests in startups via its HCM Capital private equity arm, which currently has nine portfolio companies in China, California, Massachusetts and New York. Last month, it invested in a $7 million Series A round for Cambridge, Massachusetts-based Cambridge Blockchain.
Foxconn could potentially house portfolio companies from the Wisconsin venture capital fund in its new North American headquarters in downtown Milwaukee, where it has previously said it will provide office space for startups. The headquarters will include the Wisconn Valley Innovation Center, a hub for the 8K+5G “ecosystem” the company is trying to foster in Wisconsin and the U.S.
In response to previous questions about its plans to invest in Wisconsin startups, Foxconn referred to the Innovation Center: “The facility will house incubators, accelerator labs, venture capital activities and startup initiatives, and support Foxconn’s goal of cultivating a new class of vertical solution providers for advanced manufacturing processes and technologies, as well as for industries such as education, medical and health care, entertainment and sports, security, and smart community.”
Indications are Foxconn hasn’t yet decided how it’s going to structure its Wisconsin venture capital fund. One source said Foxconn has been hearing proposals from potential co-investors, but likely plans to raise the fund itself. Another said it may partner with other corporations, like Rockwell Automation Inc. and Northwestern Mutual Life Insurance Co., on the fund.
Asked at a recent Foxconn announcement if he could provide an update on the venture capital fund, Alan Yeung, director of U.S. strategic initiatives for Foxconn, said, “No, we don’t have anything on that yet. The venture capital community here is actually thriving, so I’m sure there’s a lot of chatter and excitement about things. We’re learning. We’re listening.”
Asked at the same event whether he is working with Foxconn on a venture capital fund, Metropolitan Milwaukee Association of Commerce president Tim Sheehy said, “You’ve got to talk to them. I know they’re still interested in it, still excited about it and still working on it, but I don’t have anything new to add to what I said earlier,” referring to a November Milwaukee Journal Sentinel article in which he said Foxconn was considering whether to invest in a Wisconsin venture fund.
And Milwaukee County Executive Chris Abele, who is himself a venture capitalist through his fund CSA Partners, said, “I have had a lot of discussions, actually over dinner at local restaurants here, that was one of the things that we get together downtown with (Foxconn executives) Louis (Woo) and Alan (Yeung) and they’re very interested. With another hat, also I run a venture fund and we focus on venture and startups and one of the first things I thought when the announcement was made is that this, Foxconn, because of the business they’re in, the technology intensiveness of it and their dependence on suppliers, is going to be extremely attractive to startup companies that are going to either want to spin into their supply chain or find different verticals for their technology. And we talked very specifically about exactly that and I know they’ve had a lot of discussions. I don’t want to get ahead of any announcements, but I feel very good about the future when it comes to what will happen with Foxconn relative to the startup community here.”
Portfolio companies being housed in the 611 Building was an idea Foxconn talked about, Abele said.
Yeung also spoke this month at the Wisconsin Entrepreneurs’ Conference, where he emphasized Foxconn’s commitment to entrepreneurship and hinted at additional investments in Wisconsin startups.
“We hope in the weeks and months to come, we can come back to you and actually announce more of the work that we want to do to contribute to your success,” Yeung said to the gathered entrepreneurs.
Asked what kinds of technology Foxconn is interested in, he pointed to health care and medical sciences, and autonomous vehicles.
“We also would like to be not just a doer and practitioner. We’re also looking towards becoming investor, accelerator and hopefully enabler in the community, as well,” Yeung said.
Two Foxconn executives attended the two-day Entrepreneurs’ Conference, which Yeung said was not to evaluate potential investments, but to “listen” and get a feel for the Wisconsin entrepreneurship community.
In an exclusive interview with BizTimes Milwaukee this week, asked whether Foxconn was raising a $100 million venture capital fund, Louis Woo, special assistant to Foxconn chairman and CEO Terry Gou, said:
“Only 100 million?
“We’re looking at ourselves as an enabler, an enabler of talents, so that’s part of the job creation commitment that we made to the State of Wisconsin. We’re looking at ourselves as an enabler of technology. We’re constantly looking at what is the latest technology, especially that enables the development of 8K+5G ecosystems, and also we are looking at, now the latest is, how can we help the small and medium-sized manufacturers to be on the bandwagon of Industry 4.0, to become an industrial internet-related company, so there are a lot of technologies that we are looking at, there are a lot of technologies that we’ve been developing all over the world, so there again we are looking at ourselves as an enabler of technology.
“At the same time, we certainly understand that to do this together, we cannot do it alone, you have to create a platform, an ecosystem, to enable startups or even mid-sized companies to join us so that we can work this together, so that everybody can have their own domain knowledge and develop vertical solutions in the area that they are good at, but from time to time they would need help in terms of investment, so we would also look at ourselves as an investment enabler, so I would not be surprised that you’re going to hear, maybe a few weeks from now or a month from now, that we are putting together a fund that would help in doing that, but whether its $100 million or $200 million, I don’t know, but you might have heard more than I do, but certainly that should be an area a company like us with the kind of vision that we have to try to do the right thing for Wisconsin.
“At the same time, we are also looking at ourselves as an enabler of the economic transformation. We are certainly going to transform the economic structure of Wisconsin, at the same time, and it’s a topic that I don’t want to talk about because it’s becoming very sensitive, which would be helping the trade deficit between the two greatest economies in the world, so we are really looking at ourselves as enablers of all these things from talent to technology to investment to the economic structure.”
BizTimes Milwaukee reporter Arthur Thomas contributed to this report.
