The Milwaukee-based Gateway Capital fund raised $6.25 million, four months after fund manager Dana Guthrie began raising capital for the venture fund.
Guthrie’s fundraise marks Gateway Capital’s commencement close, which means Guthrie can invest in the Milwaukee-area early stage and pre-revenue startups she plans to target. However, Guthrie will not invest in startups until Gateway Capital reaches its $10 million target, according to a press release.
Gateway Capital’s lead investors include The Greater Milwaukee Foundation, which made a $1 million investment, and West Bend Mutual Insurance Co., which invested an undisclosed amount.
Thirteen investors contributed to the fund with minimum investments of $150,000, according to the U.S. Securities and Exchange Commission.
The Gateway fund is one of five Wisconsin-based venture capital funds with the Badger Fund of Funds, Wisconsin’s 8-year-old state-backed venture capital program designed to invest in Wisconsin-based startups.
The Badger Fund is managed by Santa Fe, New Mexico-based Sun Mountain Capital and Stoughton-based Kegonsa Capital Partners LLC. Similar to other BFOF, the Badger Fund will provide a $40,000 match for every $60,000 raised by the Gateway Capital Fund.
Two of the Badger Fund’s funds, Milwaukee-based Forward Capital and Bold Coast Capital, have since failed, which shows how challenging it is for first-time fund managers to raise capital in general and in Milwaukee in particular.
While Guthrie is a first-time fund manager, she has operated in Wisconsin’s startup ecosystem for years as the founder and managing director of Milwaukee-based angel investment network Alchemy Angel Investors.
The fact that Guthrie raised more than $6 million in four months is fast for any first-time fund manager let alone in Wisconsin. Although the fundraise may appear to have happened overnight, Guthrie has been building relationships for years, she said.
“While this is my first fund, during my time managing Alchemy, it allowed me to build rapport with a number of (limited partners) who have now decided to come on and support me in my Gateway endeavor,” Guthrie said.
One example is The Greater Milwaukee Foundation, which previously invested $100,000 in Alchemy Angel Investors.
Timing also played a significant role in Guthrie’s ability to raise funds. The coronavirus pandemic meant potential investors were more accessible while the investor community at large has become more open to venture capital as an asset class, she said.
Milwaukee is heavily underinvested, Guthrie said, adding that many people in and around the city would like to see that change.
“I do think Wisconsin can obviously do a lot better and I think we’re probably seeing a shift happen here,” Guthrie said. “I’ve always felt that Milwaukee requires building authentic relationships, it’s a relationship-based city. I think that comes into play when you’re trying to raise funds.”
Guthrie’s ability to raise capital is also significant in that a large gender gap in venture capital investment continues to be a challenge for both BIPOC and women startup founders and VC managers.
Guthrie believes diversity in VC means a unique perspective and access to different types of networks, which is positive both in business and venture capital.
For Guthrie, demographics are important in VC, but she believes they are secondary in her ability to attract investments, which had more to do with authentic relationships with limited partners, and a pitch and fund strategy based on data.
“The fact that I happen to be an African American woman is just on top of who I am as a person, that’s just additive to it,” Guthrie said. “I do think that naturally ends up coming into play as a second thought, but the initial thought is, ‘can Dana get the results, and will the fund strategy be one that can meet or exceed the national average of return?”
Read the March 8 issue of BizTimes Milwaukee here: