The Pipeline Forecast – 2019

Each day surfers drive through Pillar Point and approach Breakers Beach in hopes of catching the next big California wave, carrying with them accolades for a lifetime. They bring expertise in their craft, professional equipment, and an understanding that no matter how well prepared they are, uncertainty always lies offshore. Today may hold the ride of a lifetime or may simply be another ordinary day.

Investing carries with it the same parallels of opportunity and uncertainty. As I assess the venture capital scene in Milwaukee as 2019 knocks, it is fair to say that the waves of realized returns have not yet reached the shores of Bradford Beach. However, from the base of North Point Tower, there are signs that the winds are changing and opportunities are not far off on the horizon.

Bold Coast Capital was formed on the premise that strategic investments by corporations and academic institutions in combination with Wisconsin’s late arrival to the venture cycle will fuel a great wave in venture capital investing in Milwaukee over the next ten years. So, as I look out to 2019, what am I excited about?

Holes in the Ground Become Homes for Creativity

One of the important pillars of change for the community was the embrace of entrepreneurship in the curriculum and capital investment plans at Milwaukee’s universities. The University of Wisconsin-Milwaukee, Concordia University, and the Milwaukee School of Engineering each have significant building projects in process that will be completed in 2019.

These innovation assets will serve to provide important centers of research and training for the local workforce and incubators for ideas and company formation. Combining those projects with the NML Data Science Institute, and the Connected Systems Institute puts in place secular pillars for growth of Milwaukee’s innovation community.

For Bold Coast Capital, that means deal-flow in which to invest in and talent pools with whom to build companies. Those, my friends, are the lifeblood of strong returns, and we are very optimistic about their impact in the community and the fund.

StartupMKE Learns to Run

One of the local organizations I have had the opportunity to be engaged with over the last few years is StartupMKE. I met Matt Cordio back in 2013 when he was trying to build out 96Square, a coworking office space in the Blatz Building. Matt had great ambitions – big ideas, however his execution, at that point, was a little soft around the edges. But as with all great entrepreneurs, Matt persisted and matured and as 2019 arrives, he leads with great fitness and flair Startup MKE/WI-a central hub for anything and everything startup.

The organization is run by a strong set of volunteers that have grown participation, broadened topics of conversation, and elevated discourse. I look for great things from this group in 2019, maybe even a marquee regional event that puts them on the Midwestern map. It is safe to say StartupMKE has its legs under it and is running strong.

Company Formation in Wisconsin Continues to Swell

One of the key elements of building a geographically focused fund is the prospect for company formation and deal-flow in our own backyard. In Wisconsin, one of the best ways to measure this flow is through the Qualified New Business Venture (QNBV) registration at the Wisconsin Economic Development Council. Startups can petition the state for this certification, and upon approval, benefit future investors via Wisconsin tax credits. One requirement of this certification is that the companies need to be based in Wisconsin, so naturally, it can serve as a solid proxy for company formation in the state.

Since the inception of this program in 2005, QNBV certification has been slowly building. In 2018, this trend continued in a strong fashion. Through early October, QNBV certification had already eclipsed the 2017 total (previous high) with over 40 QNBV companies formally approved. Additional applications were in the pipeline late in the year, so it is safe to say 2018 QNBV totals showcase strong startup formation and potential deal-flow in Wisconsin.

So what else am I thinking about as we enter the New Year…

Two of the more important announcements in 2018 were the NML Data Science Center’s collaboration with UWM and Marquette University and the Connected Systems Institute. These types of corporate/academic partnerships will be essential for the ecosystem to succeed.

As planned, these partnerships and centers for research are open to all, but in the early stages, it is fair to say that Northwestern Mutual and Rockwell Automation have had significant influence at the table of discourse and planning. It is the advantage of being a first mover and willing supporter of these programs and the universities with hard dollars.

However, in an economy where talent attraction – especially technical talent attraction is priority number one for major corporations, it is imperative that we as a community broaden the participation to other large businesses and include them in the planning and governance of these efforts. I would encourage the academic institutions to always remember their responsibility to remain independent. If Milwaukee is to flourish, these pipelines of talent creation need to fuel ALL businesses.

And finally, I want to share how the name Bold Coast Capital came about…

As many of you know first-hand, finding just the right name for a firm from the picked over buckets of commerce and domain addresses is tricky business. And when I started brainstorming what a venture capital firm in Milwaukee, WI should be called, the word Voyage sounded a clarion call. I set forth with great ambition with Voyage Ventures and much to my chagrin, found a legal wall that even our President would like. Over a golf weekend at the Grandfather, I creatively added an “A” to Voyage and thought “Avoyage” was the new silver bullet. But it too found trademark issues too steep to navigate. So, what to do?

With the help of my trusted Investment Committee, we threw a bunch of ideas against the wall and one that emerged was Third Coast Capital. The Great Lakes are commonly known as the Third Coast and it did have a catchy tune. My problem with it was the word “Third.”

Those who know me well, know that a subservient descriptor such as “Third” is not a good fit. More deeply, if Milwaukee is to succeed in building out a strong venture ecosystem, whether it be my fund, a new startup, or an entrepreneurial center, it cannot copy the practices of the more entrenched venture capital states and players on the coast. It needs to be built with principles and culture that are ingrained within our community. We must have the courage to be authentic and define our own destiny.

The word “courage” did not have that catchy ring, but “Bold” – now that word sings a sweet tune and represents those tenants perfectly! And with that, Bold Coast Capital was born.