FRI AM News: WisBusiness: the Podcast with Jon Horne, Idea Fund of La Crosse

May 23, 2024

Subscriber note: There will be no Monday AM News due to Memorial Day. Regular delivery will resume Tuesday.

— This week’s episode of “WisBusiness: the Podcast” is with Jon Horne, managing director of the Idea Fund of La Crosse.

The venture capital firm recently announced it had raised $31.5 million for a second fund, building on the success of its initial VC fund. It will focus on early-stage companies in Wisconsin, Minnesota and Iowa across agriculture, manufacturing, health care and logistics.

Horne, who previously appeared on the podcast in late 2022, provides an update on the firm’s recent activities and shares insights on the direction for the new fund.

“We saw fantastic performance across the portfolio,” he said. “One of the biggest issues we saw coming into Fund I is what people refer to as the ‘valley of death’ … Wisconsin companies would raise $500,000, do some good things with it, and then just couldn’t get that $1 or $2 million round done.”

He noted many first-round investors targeting companies in the state weren’t participating in those critical later rounds, and the Idea Fund of La Crosse sought to bridge that gap. The latest fund aims to make initial investments of between $500,000 and $1 million across about 20 startups.

“These companies need to be able to raise follow-on capital to scale, and we’ve seen it,” he said. “We’ve had capital coming in from California, Boston, tons of Illinois, tons of Minneapolis. I mean, we’ve really changed the flow of capital where we’re actually attracting out-of-state capital to Wisconsin now, rather than the other way around.”

Still, Horne also underlined the importance of the first couple investments in startups coming from local sources. That informs the fund’s strategy of finding pre-revenue or very early stage companies and “de-risking” them so they’re better prepared for future funding rounds, he said.

“We move quick,” he said. “We understand the risk profile. It’s something you’ve got to do your homework on, but at the end of the day you’re making the investment in the person more than anything else.”

Listen to the podcast and see the full list of WisBusiness.com podcasts.

— U.S. Sen. Tammy Baldwin has introduced a bill to prevent layoffs and price hikes following mergers after Energizer closed two Rayovac battery manufacturing plants in Wisconsin in 2023.

Baldwin’s release notes the facilities in Portage and Fennimore employed more than 600 Wisconsinites who were represented by the International Brotherhood of Teamsters. But after purchasing Rayovac in 2018, Energizer shut down the plants and moved the work either outside of the United States or to a non-union facility in North Carolina.

The release also notes the Federal Trade Commission under former President Donald Trump approved the merger despite the fact that it was expected to give Energizer control over 40% of the U.S. battery market.

“Too often when big companies consolidate, hardworking Americans pay the price. The Federal Trade Commission is supposed to protect Americans from mergers that reduce competition and lay off workers, but as we’ve seen in Wisconsin, that is not always the case,” Baldwin said, adding her bill would “crack down on companies buying up their competition, sending jobs overseas, and jacking up prices.”

The “Stopping Threats to Our Prices from (STOP) Bad Mergers Act” would require the FTC to determine if past mergers have “reduced competition, increased prices, cut wages, eliminated jobs, closed facilities, or outsourced to foreign countries.” It would also allow workers and labor groups to weigh in on proposed mergers, among other measures.

Larry Wedan, secretary-treasurer and principal officer of Teamsters Local 695, praised the proposal.

“For decades, Wisconsin communities have been devastated by harmful mega-mergers, as multinational corporations have gobbled up so many of the homegrown companies that once provided good-paying union jobs across our state, without much scrutiny from enforcers or regulators,”

He argued the bill would help empower people to challenge reckless actions and “stop bad deals in their tracks.”

— The MKE Tech Hub Coalition announced it will launch a series of artificial intelligence workshops in July “to empower small and medium-sized manufacturers and students in the region to harness the power of AI.”

The workshops will be funded with a $50,000 donation from 7Rivers, a tech company focused on data modernization and artificial intelligence. Each workshop will be limited to between five and 10 companies.

MKE Tech Hub Coalition CEO Kathy Henrich said the group is “grateful” for 7Rivers’s donation, which she said will help manufacturers expedite their AI journey responsibly.

“It is only through our donors’ support that we are able to partner with leading AI experts to help our regional talent and businesses bolster their AI tech and data capabilities,” she added.

The coalition’s release notes the workshops will build on other investments in AI, including Microsoft’s $3.3 billion investment in a new artificial intelligence datacenter in Racine County.

7Rivers founder and CEO Paul Stillmank said Milwaukee “is preparing to become a powerhouse in the AI revolution.”

“Our partnership with MKE Tech Hub Coalition is a pivotal move to supercharge the region’s AI and data capabilities. We’re not just investing; we’re igniting the limitless potential of AI in this vibrant market, setting a path for dynamic growth and innovation,” Stillmank said.

Businesses interested in applying for a workshop can do so here.

Amid debate about child labor rules, Wisconsin teens take summer jobs

Wisconsin’s budget surplus shrinks slightly under latest estimate

TOPICS

AGRIBUSINESS

– Wisconsin reinstates agrichemical cleanup program fee

EDUCATION

– MPS Head Start funding suspended after allegations of abuse, improper supervision of kids

– UW bucks trend in keeping ACT and SAT optional for admission

ENVIRONMENT

– Wisconsin city measures its own air quality as it is named country’s most polluted

– Cedarburg man fined $25K for illegally dumping into Eau Claire creek