Gateway Capital’s fund manager Dana Guthrie raised $12.5 million less than a year after she began raising capital for the Milwaukee-based venture fund.
The Gateway fund is one of Wisconsin’s five Badger Fund of Funds, an 8-year-old venture capital program designed to invest in Wisconsin-based startups.
Guthrie’s Gateway Capital Fund is designed to invest in pre-revenue startups in the Greater Milwaukee area over a 4-year period. The fund plans to make its first investment in a Wisconsin-based startup this month, Guthrie said.
During her eight-month fundraise, Guthrie spoke with hundreds of investors and while most chose not to back her fund, she exceeded her target fundraise by $4.5 million with the investors who did.
It’s difficult for any first-time fund manager to raise capital without prior experience or a dataset that illustrates financial returns generated from investments. For most first-time fund managers, investors base their decision on character and prior successes, which was the case for Guthrie.
Guthrie moved to Milwaukee from St. Louis in 2006 after she was recruited to play basketball for the Milwaukee School of Engineering - the university noticed Guthrie, a point guard for the St. Louis Sparks, at an Amateur Athletic Union tournament in Chicago.
Guthrie earned a computer engineering degree at MSOE and later earned her master’s in science in Energy Engineering from the University of Illinois-Chicago. She has since led a 12-year career in software product development at Johnson Controls before founding her own angel investment network, Milwaukee-based Alchemy Angel Investors.
In addition to being a first-time manager, Guthrie also faced the challenge of raising capital in Milwaukee’s VC ecosystem, which has proven to be a difficult landscape for first-time fund managers to raise capital.
The Badger Fund previously backed two first-time fund managers with Milwaukee-centric funds, however, both were decommissioned after their managers failed to raise enough capital. One fund did not raise any capital while the other was unable to attract a single investment from an academic institution, corporate entity, individual investor, or family office based in Milwaukee.
Guthrie is also operating in an industry where only 4.9% of U.S.-based VC partners are women and 33% of them are women of color, according to Women in VC, an organization that tracks demographics in VC.
Having understood Milwaukee’s history, Guthrie set her target fundraise at $8 million. However, she landed commitments from two institutional investors early on – The Greater Milwaukee Foundation and West Bend Mutual Insurance Co., which helped build momentum, she said.
“Honestly, I think it shows what can be accomplished in business when we broaden our perspective,” Guthrie said of the raise. “When I look at my limited partner base, I’m extremely proud of the makeup and the composition.”
Guthrie has since attracted investments from a diverse group of limited partners, which include institutions, corporations, foundations and individual investors from all different backgrounds. A third of her limited partners are African American and a fourth of them are women, she said.
“From a personal level, I think it's significant because representation does matter,” Guthrie said. “So, I think the raise means a lot mostly because it’s a true reflection of everything great about Milwaukee.”
While the Gateway Fund’s primary objective is to generate returns that exceed the national average, the fund is also tapping into the “returns plus more” trend that VC ecosystems are experiencing across the country.
Guthrie says some investors want more than just financial return, they also want to see the impact as their dollars are put to work in a business, community, or industry that they are passionate about.
In addition to Guthrie's career accomplishments, the financial returns plus more trend is what brought West Bend Mutual Insurance Co. and the Greater Milwaukee Foundation to the table.
“While we clearly anticipate market performance and returns from investing with Dana and Gateway Capital, we also recognize the tremendous social impact. Not only in developing a tech ecosystem and attracting talent to the region, but also, down the road, creation of jobs,” said Derek Tyus, West Bend Mutual vice president and chief investment officer.
As the fund generates financial returns, Guthrie said she believes she’ll achieve social returns in a way that contributes to upward mobility and economic growth in Milwaukee County.
“We have the ability to really make a big impact in this area that I believe is underinvested,” Guthrie said. “Ideally, we’ll have multiple founder success stories, founders of all different backgrounds that are reflective of the market and who will invest back in Milwaukee. That’s the vision.”