The Idea Fund of La Crosse may raise more than $12 million for its seed fund by the time it closes.
The fund, one of those created by the Badger Fund of Funds, had its first close for $8 million in February, and it has since been adding more investors. It now has reached $12 million and has held its second close. And there likely will be a third and final close.
“Our initial range was $8 (million) to $12 million, so we’ve hit the high end of the range,” said Jonathon Horne, managing director of the Idea Fund. “Our committee is evaluating right now whether we can increase the range.”
Once the fund is completed, the Idea Fund will turn its attention to investing the money in promising Wisconsin startup companies. It has four years from the final close to invest in 10 to 12 startups.
“We’re completely agnostic to geography as long as it’s Wisconsin headquartered,” Horne said.
The Idea Fund is in the advanced stages of due diligence for its first potential investment, he said.
“There’s a line out the door. There’s so many opportunities in this state,” Horne said. “We’ve seen a ton of quality (companies). That was the big question that we had going into this is, ‘Are there going to be opportunities?’”
Horne has also found a good appetite from the state’s investors, with 20 of 23 of the fund’s limited partners located in the state. Among them are the Badger Fund of Funds and the Weber family of La Crosse, as well as successful business executives and startup founders. The average investment size (excluding the Badger Fund of Funds) is $320,000, and more than 60 percent are making their first venture capital commitments.
The goal of the Idea Fund is to help companies reach their series A rounds, Horne said.
“We reserve about half of our investment capital for follow-on investments,” he said. “We stand behind the companies and try to help them raise their series A round.”
The state of Wisconsin awarded $25 million in 2013 to establish the Badger Fund of Funds, which raised another $10 million from the private sector. The fund of funds was launched in June 2016 and given two years to create six to eight venture capital funds across the state. So far, it has established the Idea Fund, Winnebago Seed Fund LP in Neenah, and in April formed Rock River Capital Partners Fund I, which is based in Madison. Winnebago last week closed on its own $11 million funding round.
The Badger Fund of Funds, which contributes about 40 percent of each fund and has $15 million left to deploy, also would like to establish a fund in Milwaukee, but has not been able to find a partner to do so, according to Ken Johnson, a partner in the Badger Fund.
