Badger Fund of Funds identifies seventh and final fund manager

State-backed VC program sees 2.6x investment multiplier


Wisconsin’s state-backed venture capital program, the Badger Fund of Funds, has identified its sixth and seventh fund managers and extended them contingent commitments to launch its final funds, according to a new report filed with the State of Wisconsin.

Santa Fe, New Mexico-based Sun Mountain Capital, which is partnering with Stoughton-based Kegonsa Capital Partners LLC to manage the Badger Fund of Funds, planned to have all of its six to eight regional funds established by the end of 2018. This new report details the progress of the BFOF as of the end of 2018.

The State of Wisconsin awarded $25 million to Sun Mountain and Kegonsa in 2013 to establish the Badger Fund of Funds, which raised another $10 million from the private sector and agreed to create the six to eight venture capital firms across the state. The fund managers they have selected have so far publicly established the Idea Fund of La Crosse, Winnebago Seed Fund LP in Neenah, Rock River Capital Partners Fund I in Madison, The Winnow Fund for college entrepreneurs in Madison, and Milwaukee-based Bold Coast Capital Fund I L.P. Each fund manager is either raising or has raised its own venture capital fund to invest exclusively in Wisconsin companies, and BFOF matches 40 percent of that total.

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According to the new DOA report, The BFOF has also made contingent commitments to two additional funds, a seed fund and a growth fund, one of which is planned for Milwaukee. According to the report, “no new fund commitments will be made.”

The Badger Fund of Funds invests only in companies that the state has designated Qualified New Business Ventures, which make investors eligible for tax credits.

So far, the state-backed program has secured a 2.6x investment multiplier, the report says.

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“In aggregate, for every $1 invested by the Badger Fund, an additional $2.60 from other investors has been invested in these Wisconsin‐based companies,” the report states. “The Badger Fund anticipates the pace of company‐level investment to increase as more funds complete fundraising and the existing closed funds continue making investments.”

The two closed seed funds, the $13 million Idea Fund of La Crosse and the $11 million Winnebago Seed Fund, have been actively investing. Idea Fund has invested a total of $1.9 million to date, and Winnebago has invested a total of $2.9 million to date, according to the report.

In the fourth quarter, Idea Fund invested in a new company based on the intellectual property and assets of the defunct Swallow Solutions LLC, which is developing a device to treat swallowing disorder dysphagia. Fund manager Jonathon Horne declined to provide additional detail on the deal at this time.

And Winnebago Seed Fund led a $500,000 investment round in Rebate Bus, a Madison company that helps expedite utility rebates and incentives. It was Winnebago’s sixth startup investment. Rebate Bus plans to use the funding to hire additional employees in Wisconsin, and conduct more product development in the state.

“Between their commitment to Wisconsin-based entrepreneurs and their enthusiasm for technology-driven startups, The Winnebago Seed Fund is an ideal partner for Rebate Bus as we deepen our data analytics toolset and scale our company into more distributors and retailers,” said Joe Pater, co-founder and chief executive officer of Rebate Bus, in a news release. “We are excited to have partners that align with our vision and can help us grow as a powerful resource to our customers and as an employer in Wisconsin.”

“Rebate Bus is a uniquely positioned technology company with significant growth opportunity,” said David Trotter, managing director at the Winnebago Seed Fund, in the release. “The platform that Joe and the team have developed is impressive and we’re excited to be working together to scale the business.”

The two other established BFOF seed funds, Bold Coast Capital and the Winnow Fund, are still actively raising private investment capital.

The one established growth stage fund, Rock River Capital Partners, held a final close at $23.5 million in the fourth quarter, which the report described as “a meaningful milestone for the Badger Fund.” As of June, Rock River had raised $21.2 million.

Rock River in November invested in a $2 million round raised by Madison-based Gravy Live, a gameshow-like live retail marketing app. Rock River has invested a total of $750,000 to date.

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