To Jessica Silvaggi, Milwaukee’s regular spot near the bottom of national startup activity rankings is puzzling. It doesn’t match what she sees happening around her.
“It just can’t be right; I don’t think they use the right metrics,” said Silvaggi, director of technology commercialization at the University of Wisconsin-Milwaukee Research Foundation. “We have so much going on. There are so many programs and incubators and accelerators. I think we’re all doing a really good job to increase entrepreneurship efforts.”
From UWM’s new Lubar Entrepreneurship Center to Student Startup Challenges to the recent successes of UWM spinouts, she sees the momentum behind innovation across campus.
UWMRF wants to build on that activity, recently announcing a new effort to assist UWM-developed startups that find themselves in the “Valley of Death” – that period between when a fledgling busines receives an initial infusion of capital and begins to generate revenue.
The new Bridge Grant Program fund will target startups that have licensed intellectual property through the foundation that need a “little bit to keep going” in the interim between launching their venture and landing the next government grant or investment.
“We have some (startups) in that zone right now, asking ‘What do we do now? We’re waiting for an SBIR (Small Business Innovation Research) grant and we won’t even know until January, or maybe we’ll get the money in June,’” Silvaggi said. “So, there’s this time when things start to dry up.”
[caption id="attachment_514842" align="alignright" width="300"]
Jessica Silvaggi[/caption]
About 15 UWM-related startups would qualify for the Bridge Grant funds, Silvaggi said. UWMRF plans to launch the program in January with $1.25 million in available funding, which will include a $200,000 matching grant from the Wisconsin Economic Development Corp.
The Bridge grants, which will include $25,000 phase 1 awards and $50,000 phase 2 awards, are designed to serve as a stopgap for startups to reach a milestone that would attract an outside investor. The funds could be focused on translational research, proof of concept, or startup formation and growth.
The program follows in the footsteps of many universities that have created gap funds to compensate for the shortage of capital for university-based innovations.
“Startups coming out of universities have extraordinary potential but are faced with challenges in converting the underlying research into business opportunities,” said Aaron Hagar, vice president of the WEDC’s Division of Entrepreneurship & Innovation. “This new fund helps close that gap and gets these promising technologies to the point where private sector investment can take over.”
The program builds on UWMRF’s existing efforts to help university-based startups scale hurdles in bringing their research and ideas to market.
The foundation has run a Catalyst Grant program since 2007 with support from various funders, including the Bradley Foundation, Herzfeld Foundation, Rockwell Automation and GE Healthcare. Those funds – which are awarded in grants up to $60,000 – are available to students or faculty from any department with an idea or discovery that has commercial potential.
After 14 funding rounds, UWMRF has awarded about $1.4 million in Catalyst grants to concepts that would go on to become functioning startups. Among those startups, they have gone on to attract $14 million in additional funding from SBIR and STTR (Small Business Technology Transfer) programs, venture capital or angel investors.
“In some ways you can say we’ve seen a 10(-time) return for those that have become startups at some point,” Silvaggi said. “I think we’re picking some good ones. The selection process has been going well.”
Several UWM-incubated startups and spinoffs have landed significant recent investments.
TCARE, a caregiving company co-founded by former UWM Helen Bader School of Social Welfare professor Dr. Rhonda Montgomery, in September closed a $3 million financing round that included investments from SixThirty Ventures, Aflac Ventures, BlueCross BlueShield MN, Blu Ventures, Village Capital, Kinetic Ventures and gener8tor.
The company, which provides care management services for family caregivers of older adults, was founded in Milwaukee, later moved to Madison and then to St. Louis in 2019.
SafeLi LLC, a startup founded by UWM professors Carol Hirschmugl and Marija Gajdardziska-Josifovska, last year received a $1 million federal grant to commercialize the graphene-based materials it has developed to disrupt the lithium-ion battery market. The award has funded SafeLi’s expansion of its team and enabled it to begin pursuing angel and venture funding.
Many of the ventures that UWMRF works with are still in their infancy, however. Some haven’t made it past that initial stage.
“Some have already moved on – companies that formed but decided to go back to just having us try to license (their innovation),” Silvaggi said. “Because it’s hard to be a startup.”
Besides funding, researchers-turned-entrepreneurs face additional challenges in getting their businesses off the ground. Silvaggi said there’s the “push and pull” of pursuing innovation while also needing to disclose information as a public institution.
“We have an obligation as a public university to disseminate information,” she said. “...Whereas, if you’re a private entity, you can hold off on publication, and keep it secret to develop it longer to really get it going and strengthen your IP and patent filings. Sometimes we have to rush sooner to protect something with a patent when it’s at a much earlier stage because we never stop someone from publishing.”
Building out the right team is also key to the success of a startup, particularly when it comes to attracting outside investment. But for researchers, the skills that led them to success in their field don’t necessarily translate to business acumen.
“Professors are really good at science,” Silvaggi said. “It’s rare that your founder from the university is an entrepreneur or really wants to be the entrepreneur.”
UWM’s ENGAGE mentorship program has worked to build those skills with a team of about 24 seasoned business leaders who volunteer to help UWM innovators strengthen their startups.
Silvaggi said she wants to see that network grow to include more business veterans who would be willing to eventually step in as CEOs of burgeoning UWM-developed companies. That person might be a retired executive or someone who is in a financial position to lead the business on the front-end without immediately seeing a paycheck.
“We need CEO types who are willing to help out and take a risk to help them eventually get their salary,” Silvaggi said. “It’s hard to find the right match of someone who knows that space and is willing to help.”
