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January 16, 2015

Three groups chosen to manage $4 million in venture capital

Excerpted from the Milwaukee Journal Sentinel
By Kathleen Gallagher
Three state-based groups have been chosen by the Wisconsin Housing and Economic Development Authority to invest a total of $4 million in venture capital.
The authority, known as WHEDA, chose the groups from among those who responded to an April 2013 request for proposals, said Kevin Fischer, a spokesman.
The groups are required to raise a minimum of $4 for every $1 WHEDA provides. The agency previously had a requirement that they focus on areas in Milwaukee around the 30th Street Industrial Corridor, Menomonee Valley, Port of Milwaukee and south of General Mitchell International Airport. That requirement was dropped because WHEDA did not receive any applications from people willing to invest in those areas exclusively, Fischer said.
The groups chosen to receive awards are:
Madison Development Corp. received $1.5 million. The group has put $11 million of pooled loans and investments into 35 Madison-area technology and high-growth businesses. Its territory is Dane County, but it is considering expanding that, Fischer said.
NEW Capital Fund II, Appleton, received $1 million. NEW Capital raised $25 million in 2012 to invest in companies in Wisconsin and the Great Lakes region, particularly in the advanced manufacturing, information technology, and life and material sciences areas. The firm focuses on northeastern Wisconsin, a "very capital-starved area of the state," Fischer said.
Kegonsa Capital Partners received $1.5 million. Kegonsa, in a partnership with Santa Fe, N.M.-based Sun Mountain Capital, is planning to launch the Badger Fund of Funds, which hopes to seed small venture capital funds around the state to invest in high-potential Wisconsin companies. The Badger Fund of Funds received its first investment commitment of $25 million in January 2014 from the State of Wisconsin.
Although the fund of funds is "creative and ambitious," it is still developing an organizational infrastructure, Fischer said. "This proposal has the greatest risk, but also the most potential for leveraging additional private capital," he said.