Robinson holds the key to a new pot of money to help young Wisconsin companies [The Wisconsin State Journal :: ]
(Wisconsin State Journal (Madison, WI) Via Acquire Media NewsEdge) May 11--Greg Robinson left a cushy post with a venture capital firm in the mecca of IT magic, Silicon Valley, to steer a new fund aimed at giving a jump-start to promising young software companies in Wisconsin.
Robinson is general partner of 4490 Ventures, a $30 million venture capital fund established -- and financed -- by the State of Wisconsin Investment Board (SWIB) and the Wisconsin Alumni Research Foundation (WARF).
Until recently, he was a partner at Peninsula Ventures, an early-stage venture capital firm in Redwood City, California, and before that, Robinson co-founded a software company, Cogent Technologies, which was purchased by BrightStar Information Technology Group in 1998.
For now, 4490 has a staff of one -- Robinson -- temporarily working at the Wisconsin Institutes for Discovery building. At least two more people will come on board to handle back office and deal-processing activities, he said. And while the main office will be in Madison, Robinson said the fund will have a future presence in Milwaukee and in northern Wisconsin.
"We want to cover the whole state," he said.
A native of the Phoenix area, Robinson, 45, is married and has two daughters and a son, ranging from eighth grade to college age. He has a bachelor's degree from Arizona State University and a master's degree from Dartmouth University's Tuck School of Business.
When he's not working, Robinson likes to spend time outdoors -- golfing, playing basketball, skiing, or just hanging out with his family.
Q: You've lived on the East Coast and the West Coast and spent most of your life in warm, sunny climates. What brought you to Wisconsin to start a new job with a new investment fund -- in February, still in the thick of winter?
A: The job I'm doing at 4490 is very similar to what I was doing at Peninsula Ventures. But I wanted a different challenge. In Silicon Valley, given its size, it's really hard for an individual to make a meaningful contribution to a community.
I'm here because I want to take Wisconsin to the next level, in terms of start-ups. I want to feel like I'm contributing in a meaningful way.
Q: When you spoke to a meeting of the Wisconsin Innovation Network in Madison recently, you said you plan to "selectively apply the best of Silicon Valley." What did you mean by that?
A: Silicon Valley has done a lot of things right. It is a center for innovation. I think they have a recipe for success, and it is somewhat unique to Silicon Valley in terms of the amount of resources it requires and maybe the critical mass required to do some of the things there.
Trying to take concepts like thinking big, solving really hard problems, trying to change the world -- those are very much things that I think can be imported to places like Madison.
There are very smart people here, willing to try to solve hard problems and to work very hard to do that.
But Wisconsin doesn't have the amount of capital to build a company that Silicon Valley has. In Wisconsin, we're going to have to build companies far more efficiently, in a Midwestern, no-nonsense way.
Q: Thirty million dollars -- how far can it go to help Wisconsin start-ups?
A: This is the first 4490 Fund. We think it will allow us to invest in somewhere between 12 and 20 companies, and it will take us about three years to deploy that capital. As far as individual investments, it depends on the stage of the company. Earlier-stage companies will probably need a couple hundred-thousand dollars in seed money; more mature companies may need $1 million to $2 million.
Q: What's the meaning of the name, the 4490 Fund?
A: It's the notion of the location being, roughly, the center of the state of Wisconsin, measured in latitude and longitude. It's meant to indicate our home and our focus will be Wisconsin.
Q: How soon do you expect to start making investments in companies?
A: We can make investments in companies now; I'm talking to entrepreneurs. The real bottleneck is just getting myself up to speed on the investment and entrepreneurial community in Wisconsin.
We're looking at opportunities, but it will take a little while before we actually make an investment. Hopefully, we will make three or four investments in 2014, starting sometime this summer.
Q: What are you looking for when you consider which companies should get an investment from the fund?
A: They have to be IT focused, which really means business-to-business software. And they have to be, for the most part, earlier-stage companies.
Ideally, they are companies trying to solve a hard problem, that would be difficult for others to duplicate.
They should be operating in a market that allows them to build a large and sizable company that will ultimately be interesting to acquirers.
And we want to invest in people who are passionate, who have the capability and the desire to build something significant.
Q: It seems as though a lot of tech companies are springing up around Madison and elsewhere in Wisconsin right now. What types of companies do you hope to zero in on?
A: I've been pleasantly surprised and pleased to see the amount of activity. Certainly, there's a lot of positive energy and enthusiasm.
Health care IT has some good opportunities to invest in.
I would hope that one-third of our fund, or maybe even more, will be invested in health-tech companies. I think Wisconsin is uniquely positioned, relative to the rest of the country, in health IT.
As for the other two-thirds, we'll let the opportunities define, to some degree, where we go.
Q: Why are you looking for business-to-business companies when there are so many more consumers than there are businesses?
A: It's a very different skill set required to invest in consumer businesses rather than business-to-business.
Historically, there have been a couple of very, very large consumer winners in each sector and they get the vast majority of the spoils. If you're a winner, like a Facebook, you get the spoils. If you're third in line, there are not a lot of spoils left.
On the business side, businesses tend to be a bit more practical and predictable. And there are vast amounts of opportunity to improve, to disrupt the existing market leaders and build something that's really, really interesting.
On the consumer side, it's really hard to pick -- especially, early on -- who's going to be a winner, and it's often winner-take-all.Q: What is your earnings goal?
A: It's probably too early to say. This is a long-term proposition that we're engaged in.
Venture capital returns are commonly two to three times the size of the fund; in this case, you would want returns of $60 million to $90 million to the investors. Funds generally have a 10-year life cycle -- that means it takes 10 years to deliver their full potential.
When about 70 percent of the first fund is invested -- around three years from now -- you're generally able to start raising money for the next fund. Ideally, that will be a bigger fund and will include additional investors beyond just SWIB and WARF. By the time we get to a third fund, it could be even bigger and include even more investors, with some from out-of-state. The goal, eventually, is to continue to support Wisconsin companies but to become more of a regional investment source, five to 10 years from now.
(c)2014 The Wisconsin State Journal (Madison, Wis.)
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