Milwaukee isn’t usually where startup and early stage companies choose to locate, particularly considering the abounding success and resources that seem to be available on the east and west coasts for entrepreneurs. Last year, Milwaukee was ranked dead last nationwide in business startup activity.
But a startup accelerator founded in Milwaukee in 2012 is working to change that—and even earned a national ranking that has put this city’s entrepreneurial community on the map.
Since its founding, gener8tor LLC’s 38 portfolio startups have raised more than $75 million in follow-on capital and have created more than 400 jobs.
And the reputable Seed Accelerator Rankings Project pegged gener8tor last year as No. 14 in its ranking of the top accelerators in the country.
For its commitment to building young companies and fueling the Wisconsin economy, gener8tor LLC has been named the 2016 BizTimes Regional Spirit Award winner. The award, which recognizes a person or organization that promotes and advances southeastern Wisconsin as a place to live, work and play, will be presented to gener8tor on Wednesday, May 18, at the 2016 BizTimes Bravo! Entrepreneur and I.Q. (Innovation Quotient) Awards Luncheon.
Gener8tor, which also operates in Madison, provides first-stage startups with seed capital, applies lean principles to startup development, creates an environment for entrepreneurs to collaborate and establishes access to later-stage capital, according to Joe Kirgues, who co-founded the accelerator with Troy Vosseller, Dan Armbrust, Jon Eckhardt and Joel Abraham.
Getting into its 12-week accelerator program is competitive—gener8tor only accepts five companies in each of its two annual cohorts—but the program also provides individual attention. Each participant receives $140,000 in investment capital from gener8tor and its partners.
The founders of gener8tor focused from the start on the people running these young companies—the entrepreneurs—and how it could attract them and keep them happy, Kirgues said.
“Our thesis was that we wanted to work with the best entrepreneurs. Why would the best entrepreneurs want to work with us?” Kirgues asked. “The entrepreneurs you want are the entrepreneurs with options.”
With a focus on finding the best people rather than the best product or technology, and a commitment to structuring investments to benefit the entrepreneur rather than the investor, gener8tor has set itself apart on the Wisconsin startup scene.
It helps that both Kirgues and Vosseller are attorneys who can help write the language of the investment documents. As University of Wisconsin Law School students, they learned the concept of law in action, or looking at the contracts not just in and of themselves, but in the larger context of how they are applied to society, Kirgues said.
“Entrepreneur-friendly investment documents, for example, is actually a great way to obtain investor-friendly returns,” he said. “By taking harsh investor-friendly terms too early, such as liquidation preferences, we can actually jeopardize our opportunity for success by dissuading later stage venture capitalists from working with the company.”
The company has also established itself as a committed community member that wants to build up local companies to make Wisconsin better, Kirgues said. And it has leveraged that pride of place to garner national investments through the University of Wisconsin alumni network.
“The reason we did it was in part to strengthen this community, not just to make money,” he said. “We could engage the community to create wealth and jobs by investing in the brightest people in our region.”
Kirgues will participate in a panel discussion among young and successful Milwaukee entrepreneurs at the Bravo/I.Q. luncheon. Dominic Anzalone, founder and chief executive officer of RentCollegePads.com; Joe Scanlin, co-founder and CEO of Scanalytics; and Richard Yau, CEO and co-founder of Bright Cellars, will also share their tales of entrepreneurial ambition and tenacity.
Yau knows something about creating jobs in the community. He moved Bright Cellars, a wine subscription service he co-founded in 2014, from Boston to Milwaukee to participate in the gener8tor program last year and then decided to stick around.
“We were both able to finance the company and have access to great talent while we were here,” Yau said. “We said, ‘Hey, we have all the pieces (to grow).’”
Bright Cellars became the first tenant in Ward4, a co-working and private office space for startup companies in the Historic Pritzlaff Building near downtown Milwaukee. The company has grown from three employees to 17 since it moved to town. One lesson he’s learned, Yau said, is to hire employees with an eye to how they will grow with the company and become leaders.
As a San Francisco native who launched Bright Cellars while he was at MIT, Yau could easily have chosen one of the coastal startup communities.
“It’s interesting to see that really there’s an entrepreneurial spirit in Milwaukee that even though it’s earlier on, even though it’s a less developed startup community, the experience, the talent is all here,” he said. “The road most traveled is not necessarily the cheapest, most effective or most efficient way.”
Like Bright Cellars, Scanalytics is based in Ward4. The community atmosphere allows the entrepreneurs to bounce ideas off each other—and off gener8tor and CSA Partners, which have both invested in the two companies and are located in Ward4.
“For us, it was about community and integration with other like-minded companies,” Scanlin said. “Our last spot we were a little bit more…it was a little bit more disparate.”
Scanalytics, which now has 14 employees, has created sensor-laden floor mats that track consumer and human behavior and can be applied in a variety of situations.
Scanlin advised would-be entrepreneurs to take the leap and get started right away, and also to remember to delegate.
“I used to take on probably more than I could handle,” he said. “It’s not about missing the winning shot, it’s knowing that your teammate was wide open.
We certainly didn’t need to grow our headcount, we had the talent, but I was trying to do more things quantitatively and qualitatively at the time than I probably should have.”
The Bravo/I.Q. Awards luncheon will be held May 18 from 11:30 a.m. to 1:30 p.m. at Potawatomi Hotel & Casino in Milwaukee. The awards are part of BizTimes Media’s annual BizExpo. For more information or to register, visit www.biztimes.com/bizexpo.
