The insurance industry and entrepreneurship don’t normally go hand-in-hand, but American Family Ventures is looking to change that.
“We started out in 2010 by investing in one company, but we’ve really picked up allocations in the past two years,” said Dan Reed, the fund’s managing director. “We are trying to add to American Family’s value by investing in technology or business ideas that can really shape the business’ future and help our policyholders.”
The fund earmarked $50 million to invest over a five-year period, and Reed says they are on pace to do just that. In 2013 and 2014, the fund invested in 16 companies – about half of which are in Wisconsin. American Family Ventures signed on in mid-2014 to provide mentorship and optional seed funding for participants in a Seattle startup accelerator launched by Microsoft that focuses on home automation. Its first class includes Milwaukee-based Scanalytics, which makes sensor technology that monitors physical spaces and human activities.
“Our investments are taken with a very systematic approach,” said Reed. “Every company has to innovate if it wants to be successful. These investments help us to innovate as well.”
Reed said typical investments range from $200,000 to $2 million. Besides the infusion of capital, the fund also provides strategic guidance and tries to connect the entrepreneur with an appropriate person in American Family’s operations if there’s a good fit.
“If these investments help us become a better company and create more jobs at new Wisconsin companies, that’s a huge win,” Reed said.