Editor’s note: This column was co-authored by Kathleen Gallagher, executive director of the Milwaukee Institute, and Chandra Miller Fienen, director of operations and programs at StartingBlock Madison.
Wisconsin startups are good at getting their first customers locally.
Too often, however, they struggle to snag those next four customers in Chicago or Minneapolis or Los Angeles – a critical ingredient for growth and job creation. Call it a connectivity gap: Our startups aren’t connecting outside the region to get those critical sales.
That insight is backed by data analyzed by Tom Chapman, one of the nation’s best data gurus for innovation ecosystems.
Our organizations – Milwaukee Institute and StartingBlock Madison – invited Chapman to present his Madison and Milwaukee report card on startup growth at the first Madwaukee Talks event on Jan. 30 and 31. More than 120 people showed up.
In terms of the overall numbers, both cities perform fairly well in startup creation, number of deals, SBA loans and investment, said Chapman, who chairs the data committee for Startup Champions Network and runs Chapman & Co. LLC, an Omaha-based boutique management consulting firm.
As for the connectivity gap, Chapman had some recommendations: Add directors from outside the region, and when they come in to town for meetings, introduce them to startups that could use their advice or connections. He also recommended better connecting Madison and Milwaukee networks so they don’t operate like two separate systems.
We agree: More connections outside of our region and more connective tissue between our networks leads to more prosperity.
Chapman didn’t neglect Wisconsin’s elephant in the room. For three years running, our state has ranked dead last for startup activity, according to the Ewing Marion Kauffman Foundation’s analysis.
The rankings depend upon what you measure, Chapman told us. In his analysis, Wisconsin isn’t really last and in terms of our two biggest cities, Madison sparkles and Milwaukee is average, Chapman said.
Telling our story better would help both cities. The Inc. 5000 list, which depends on self-reporting, misses companies. Chapman recommends we get better organized and help eligible companies get on the list. “Hold an Inc. 5000 party,” and the data will better reflect reality, he said.
Other recommendations: Venture funds should self-report to the NVCA/Pitchbook survey. Track angels better. Maybe even gain a clearer idea of what people are saying outside Wisconsin by measuring how many times “Wisconsin,” “Madison,” “Milwaukee” and “innovation” or “disruption” are mentioned in the same sentence in the national press.
More important than message, Chapman says that the greatest component in entrepreneurial ecosystems is the entrepreneur.
Chapman’s advice: Know your true entrepreneurs. There may be 20 entrepreneurs in “Madwaukee” capable of building a $100 million company. We need to know them and support them every way we can.
Here are some other takeaways:
From 2010 to 2017, Wisconsin exceeded the amount of SBA loans state businesses would have been expected to attract by nearly $1.4 billion, putting us in the top six states.
There are pockets of worry, however. While Verona exceeds its expected SBA total by $23 million, Milwaukee’s 53205 zip code misses by $12 million.
Madison has a very high number of federal Small Business Innovation Research grants, and Milwaukee holds its own, but we need to convert more SBIR projects into companies.
We are perhaps too dependent upon accelerators for deal flow. We suspect gener8tor’s success is a big reason for this.
Sixteen percent of Madison jobs are “cool” (read: STEM) jobs. This puts Madison in an elite tier, below top-ranked Boulder with 20 percent and above Austin with 14 percent. Milwaukee’s 12 percent is close to average.
Madison added 12,000 “cool jobs” and Milwaukee added 4,580 “cool jobs” between 2012 and 2016.
Chapman’s bottom line: Madison sparkles; Milwaukee is average. But if we could all get Milwaukee to sparkle, the entire state would benefit.
We’re looking forward to tackling that and other issues at future Madwaukee Talks events. We started Madwaukee Talks to foster collaborative ideas and dialogue between the Madison and Milwaukee entrepreneur communities. So far, so good.