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 below, sponsored by UW-Madison:
