WisBusiness: State Board Considers Investing More in Tech Sector
8/15/2005

By Brian E. Clark
WisBusiness.com

MADISON -- The Badger State will likely never produce a Silicon Valley, but it could become a major force in the science and technology business world, a trio of experts told trustees of the Wisconsin Investment Board Wednesday morning.

But to do that, emerging companies need financial backing so they can grow, produce jobs and contribute to the state's economy.

Members of the board responded positively to the panel and said they would consider investing more of the $70 billion they oversee in Wisconsin start-ups. The board is the 23rd largesst public or private pension fund in the world.

Mark Bugher, who runs the University Research Park on Madison's west side, said scientists at the Medical College of Wisconsin, Marshfield Clinic, Marquette University, UW-Milwaukee and UW-Madison are creating entrepreneurial "energy" by turning research into products.

In addition to being home to one of the top five research campuses in the country, he said Madison benefits because of the technology transfer efforts of the Wisconsin Alumni Research Foundation.

"WARF is extraordinarily successful," he said, noting that UW-Madison faculty produce 400 patents a year.

"There is a new attitude from the top on down to turn ideas into companies," he said.

While he did not overtly tell them to invest in any emerging firms, he said the research park – which has 107 tennants with 5,000 employees – is "putting its money where its mouth is" by spending $8 million to expand onto 260 acres of raw land.

"We feel strongly about emerging technologies because that is where the action will be," he said.

Not all is entirely rosy, however, he said. And Wisconsin must work to improve its image nationally.

Despite magazine rankings that tout Wisconsin – especially Madison – as a great place to live, he said people who live on the coasts consider the state "rural, flyover country."

"That makes it harder to attract bright, knowledgable employees," he said, noting that some CEOs for high-tech companies commute from other states to Wisconsin.

He also criticized what he called "political interference" from legislators who wish to ban therapeutic cloning in Wisconsin and put other restrictions on science.

Paul Peercy, dean of the UW-Madison Engineering School, said his faculty brings in more than $100 million a year for research efforts.

"There is a lot of commercial potential," said Peercy, who previous job was president of SEMI/SEMATECH, a non-profit R&D consortium of the nation's leading semiconductor industry suppliers.

He predicted many new breakthroughs will come as the boundaries between the sciences disappear. And he said one particularly hot area will be in nanotechnology, in which engineering is done at the molecular level.

Tim Keane, head of the Marquette University Golden Angels Network investment group, told the investment board trustees that Wisconsin produces more than its share of ideas.

"Ideas are not the problem, though," he said. "It's how to find venture capital for companies worthy of investment. And there are many more of them than we've seen in a long time."

Just last week, his group put $535,000 in eMetagen, a drug-development firm in Madison.

In addition to universities creating spinoffs, he said businesses like GE Healthcare can spawn new firms when scientists strike off on their own.

He also said deal flow is improving in the state.

"We are seeing ideas before they go elsewhere," he said, lauding the efforts of the newly created Wisconsin Angel Network.

"The environment is improving for venture capital deals," he said. "And more entrepreneurs will come forward as the economy improves."

Trustee James Senty said the board hopes to invest more in emerging technology companies, but must weigh that against earning the highest possible return for its investors.

Starting five years ago, he said the board began putting money in four venture capital firms. To date, $135 million has been invested, though only $70 million has been used.

After the panel's session ended, Bugher said he was pleased the trio had been invited to speak to the board.

"It's a positive sign that they want our advice," he said. "There are certainly opportunities for the investment board that could benefit their investors and the state."



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