Looking for angels in Waukesha County

By any account, Waukesha County is one of the wealthiest counties in Wisconsin. According to the latest figures from the U.S. Census, the per capita annual income in Waukesha County grew from $24,718 in 1991 to $41,337 in 2001, trailing only Ozaukee County ($47,122).
The number of households with incomes of at least $200,000 in Waukesha County grew to 5,251 in 2000, according to the Census.
So, just how much of that money might be available for angel investments in small start-up or second-stage growth companies in the county?
"No one knows," says Bill Mitchell, executive director of the Waukesha County Economic Development Corp. (WCEDC)
"We have no idea. I haven’t found one person that can give me an idea on that yet," said Thomas Hefty, president of the WCEDC.
Waukesha County’s untapped potential for angel investment was the focus of a recent Conversaction session initiated by the WCEDC. The session evolved out of the Waukesha County 2020 event and publication presented by the WCEDC and Small Business Times in October 2002.
The discussion has now led to a WCEDC seminar that will be held Wednesday, Oct. 13, at the Chenequa Country Club in Hartland. The seminar, which will take place from 8 a.m. to 5:30 p.m., is titled, "Seed Investing as a Team Sport."
The WCEDC is inviting potential angel investors to attend and learn how they can collaborate to invest in rising small businesses in Waukesha County, Mitchell said.
"This is a measurable and exciting outcome out of the Conversactions, by way of Waukesha County 2020," Mitchell said. "We have every intention of creating an angel investor network in Waukesha County," Mitchell said.
The WCEDC’s effort was nudged along by Tim Nettesheim, managing shareholder of Reinhart, Boerner, Van Deuren S.C.’s Waukesha office. Nettesheim participated in the Conversaction and helped propel the creation of the seminar.
"I believe, for a lot of reasons, we need this in Waukesha County. Wisconsin lags in VC (venture capital) sources," Nettesheim said. "You’ve got that reality that it’s a rich county. We need to harness those resources to invest in businesses that exist in Waukesha County."
The traditional angel investment equation involves a young technology firm. That need not be Waukesha County’s model, Nettesheim said.
"Yeah, ‘tech’ is cool. Well, guess what? Our strength, our bread and butter, is manufacturing and distribution," Nettesheim said.
Nettesheim said it is no "dirty little secret" that Wisconsin venture capitalists have been notoriously cheap, doing relatively few deals and providing little in actual capitalization. That’s got to change, he said.
The WCEDC is not going alone in its venture to identify and recruit angel investors in Waukesha County. The Oct. 13 seminar will be co-sponsored by the Wisconsin Department of Financial Institutions and the Reinhart, Boerner, Van Deuren law firm.
The Waukesha County angel investment seminar is being administered by the National Association of Seed and Venture Funds (NASVF), which has conducted similar programs in 85 markets across the nation.
In addition to Waukesha County, the Madison-based organization has been asked to help develop angel investment networks this year in Salt Lake City, Utah; College Park, Md.; Rochester, N.Y.; Arlington, Texas; and Des Moines, Iowa.
Dan Loague, executive director of the NASVF, notes that angel investors helped Bill Gates grow Microsoft grow from a small business.
"I knew one guy who could have been one of Gates’ original investors, and the guy said, ‘No way. He (Gates) is a wild-looking man, and I wouldn’t put any money into him.’ And he didn’t," Loague said.
"The good news in the downturn of the ‘dot.bomb’ era is that you’ve got some very good people who are growing their companies, creating exciting things," Loague said. "My hats off to Bill (Mitchell) and what he’s doing over there. Our job is to help them reach out into their community and tap their resources. Typically, these are individuals with wealth who are tired of just playing golf."
"The seminar is designed to help build local angel investment networks, increase deal flow and add new organizational resources," Mitchell stated in a letter to potential investors. "Angel investors are very pleased with the team learning experience, working with their peers and discussing how to accomplish successfully the complex process of seed investing. The seminar helps them quickly move up the learning curve."
The itinerary for the seminar includes discussion on several aspects of angel investment, including: the impact of networks; the process of seed investing; methods of due diligence; assessment of investment appetite; techniques for valuation and pricing; structuring the terms of an agreement; strategies for negotiation; and "closing, mentoring and cashing out."
The WCEDC has a working model to learn from right in its neighborhood. The Marquette University Golden Angel Network was formed late in 2002 and has grown to about 125 investors who have plunked down $2 million in venture stakes in three companies so far, according to Tim Keane, director of the program.
The Golden Angel Network was formed by the Kohler Center for Entrepreneurship in Marquette’s College of Business Administration.
The network taps affluent Marquette alumni to invest in companies in southeastern Wisconsin, between Chicago and the Fox River Valley.
To succeed, an investment network needs a point-person to coordinate the process and be a matchmaker between investors and seed companies, Keane said.
"What makes the difference in angel networks is full-time administration. You need to find a way to manage the thing. That’s what makes the difference," Keane said. "We’ve looked at 25 deals just this summer."
The effort to create an angel investor network in Waukesha County was applauded by Charles Hoslet, managing director of the University of Wisconsin Office of Corporate Relations.
"This county is one of the stars in economic development in Wisconsin," Hoslet told the WCEDC directors at a recent meeting.
Hoslet noted that the Wisconsin Alumni Research Foundation (WARF), which provides intellectual property management systems for technology transfer and licensing opportunities, has more than 900 technologies available for licensing by private companies.
"One of the areas that WARF has specifically targeted is southeastern Wisconsin," Hoslet said.
Presuming the WCEDC’s seminar attracts enough interest, Mitchell intends to conduct a follow-up event to identify and recruit Waukesha companies that are interested in receiving angel investments.
"It’s a matchmaking network," Mitchell said.
"The bridge between a potential investor and the idea is broken (in Waukesha County)" Hefty said.
Seminar: "Seed Investing as a Team Sport"
Objective: To attract angel investors to interested in investing in growing Waukesha County companies.
When: Wednesday, Oct. 13, from 8 a.m. to 5:30 p.m.
Where: Chenequa Country Club, Hartland
Registration fee: $195 if received by Oct. 10; $395 at the door.
Reservations: Contact Peter Fogec at (262) 695-7903 or pfogec@wctc.edu. Further information is available at the Waukesha County Economic Development Corp.’s web site, www.understandingbusiness.org, or by calling the WCEDC at 262-695-7900.
October 1, 2004, Small Business Times, Milwaukee, WI