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Ramping up young startups

Globally-recognized, Wisconsin-bred accelerator brings its early-stage business mentorship program to northeast Wisconsin

Story by Rick Berg

February 2018

Equity-based accelerators like gener8tor put startups on the road to venture capital funding, but many early-stage startups are not yet ready for that road. gBeta, a program which debuted in northeast Wisconsin last fall, was created to bridge that gap.

People who know the name Troy Vosseller probably know it because of the Sconnie Nation brand he and a freshman classmate created when they began selling Sconnie T-shirts out of their University of Wisconsin Madison dorm room in 2004. As a company, Sconnie Nation is still going strong, but Vosseller is on to even bigger things with gener8tor, a Madison- and Milwaukee-based startup accelerator he and Joe Kirgues founded in 2012.

Gener8tor is now ranked in the top 15 startup accelerators in the United States, with a portfolio that includes more than $120 million in equity financing. Graduates of the gener8tor program include northeast Wisconsin natives John Bialk, who founded Quietyme in 2013, and Matt Howard, who founded Eat Street in 2010 and was recently named to Forbes magazine’s “30 under 30.”

The ironic note, Vosseller said, is that Sconnie Nation is not the kind of startup that gener8tor would be interested in financing and mentoring.

“My original start as an entrepreneur was as cliché as they come,” Vosseller said. “I often say that my T-shirt company would not have been a good candidate for gener8tor because of the nature of the business – a very confined customer market.

“We would be looking for a venture-backable opportunity – a startup with a high degree of risk but also a very high ceiling. That being said, the relationships I built and the experience I’ve gone through building that company have parlayed into an entrepreneurial career path for me.”

Vosseller’s career path led him from Sconnie Nation to the University of Wisconsin Law School to supervising attorney for the university’s Law and Entrepreneurship Clinic, which provides free legal services for startup businesses. It was through the clinic that he met Kirgues, who worked as an attorney on the investor side.

“Through that experience we realized there were a lot of inefficiencies for entrepreneurs to go from idea to incorporation to growth to raising venture capital, and we felt that whole process could be made much more efficient,” Vosseller said.

Vosseller and Kirgues were attracted to the startup accelerator model pioneered by Boston-based Y Combinator in 2005. That model is defined by a limited-term cohort process in which the chosen startups gain investment by the accelerator in exchange for an equity share in the business.

“You then surround those companies with mentorship and access to potential customers and other investors,” Vosseller said.

Vosseller and Kirgues launched the first gener8tor cohort in the fall of 2012 in Madison

“That first year, we had 90 applications and we selected seven to make an investment in,” Vosseller said. “Some of them have turned out to be very successful – companies like Pinpoint Software, Understory and Eat Street, which now employs over 1,000 people.”

In the first year and a half, all the accelerator participants were Wisconsin companies, but as gener8tor’s national stature and reputation grew, so did the number of applicants from outside the state, with 681 total applications this year.

“At the same time,” Vosseller said, “we were seeing fewer and fewer Wisconsin companies mature to the stage that they were competitive for gener8tor participation. As a for-profit accelerator, we have a fiduciary duty to invest in the best opportunities, but as local entrepreneurs ourselves, we wanted to find a mechanism where we could apply the relationships and the network and the experience we had built over the last five years and apply it exclusively to local companies.”

The birth of gBeta

The solution they created was gBeta, a non-equity-based accelerator designed to work with early-stage startups and ramp them up to the point where they would be valid candidates for equity investment.

“With gBeta, we charge no fees and get no equity in the business,” Vosseller said. “To be able to do that, we rely on sponsors and underwriters to cover the costs of delivering the services.”

The first gBeta cohort of five companies was held in the summer of 2015 in Madison. Since then, gBeta has expanded to Milwaukee, Beloit, Minneapolis, Detroit and – in October 2017 – to northeast Wisconsin.

Underwriters for the northeast Wisconsin gBeta are Microsoft, University of Wisconsin Oshkosh Business Success Center, Venture Center at Fox Valley Technical College, WiSys, UW Green Bay Cofrin School of Business and Greater Oshkosh Economic Development Corp.

The first northeast Wisconsin participants were Career ReSearch Group of Appleton, Fork Farms of Menasha, Appleton-based Little Food Co., OrendX of Marinette and Tracr Analytics in Appleton.

April Hansen, the founder of OrendX, is no stranger to startup mentoring. In 2015, when she launched OrendX – an employee-engagement application for use in the health care industry – she worked with the Small Business Initiative at Northeast Wisconsin Technical College to gain some needed mentoring and advice. For her, gBeta was just the next logical step to gain “exposure, connections, and guidance.”

“The gBeta network is deep and broad, so entrepreneurs can be connected with subject matter experts and mentors for just about any type of need,” Hansen said. “Also, the educational content offers insight into topics like venture capital funding, market analysis, and legal aspects that entrepreneurs typically want to learn, but don’t have a dedicated educational source.”

Ryan Eardley, the founder and CEO of Tracr Analytics, a software solution for use in forensic accounting, said one of the most valuable results from his participation in gBeta, was “learning how investors think.”

“It’s such a unique program from that standpoint, because for someone like me, it’s a way to learn what the investor landscape looks like, how to speak their language and learn the granular details of what a pitch looks like,” he said.

Eardley and his co-founders, Mattias Soderqvist and Felix Henriksson – all 2017 graduates of Lawrence University in Appleton – participated in the Innovation & Entrepreneurship program at Lawrence and won the inaugural “The Pitch” event in May 2017 where entrepreneurial students from colleges and universities across northeast Wisconsin competed for a $10,000 prize.

Eardley said the company is not yet ready to enter a seed funding round, but hopes to do so once their beta testing program is completed later this year. Four accounting firms with 250 offices nationwide are part of the beta testing.

Another gBeta participant, Amanda Santoro of Appleton, is a registered nurse and mother of four children who created Little Food Co. because she saw a lack of organic, natural baby food on the market. She began selling her homemade baby food at Appleton’s Farmer’s Market.

“My experience with gBeta was really transformative,” Santoro said. “As a nurse for 20 years I’m new to business, so it was a great way to introduce me to business concepts and resources to help as I look to grow my business.”

Hansen said the backing of sponsors like Microsoft has added value for gBeta participants.

“The partnerships with both local and national groups help give us brand recognition in the market too,” Hansen said. “It’s cool when we can say, ‘We just finished the gBeta program in partnership with Microsoft.’ Even if people don’t understand what gBeta is, they recognize Microsoft and that helps build credibility for our businesses.”

A platform for growth

Adrienne Palm, recently hired as the director for northeast Wisconsin gBeta, said she and others at gBeta understand their work is primarily as facilitators.

“The entrepreneurs are the ones doing the heavy lifting,” Palm said. “Our role is to help them identify priorities and focus, and help them understand startup speak. You’re not going to talk to a potential investor, for example, the same way you would to a customer. Entrepreneurs get into this because they love something and know a lot about it, but they may not have the resources and support they need.

“Our job is to connect them with the right people and resources, and then it’s up to them to do the work. And on a tactical level, it’s getting companies ready to get in front of investors, to know what their value proposition is going to be. That’s where I think we can be especially impactful – helping them put together an executive summary and give them the opportunity to get in front of multiple investors and start building those relationships.”

Vosseller said he and Kirgues have been gratified so far by the way gBeta has been able to help early-stage startups.

“The goal of gBeta is to have at least one third of our participants get seed funding through angel investors, venture capitalists or an equity-based accelerator like gener8tor, though we also introduce them to our peers in the accelerator ecosystem,” Vosseller said. “That’s the benchmark. We’re currently at 50 percent, so we feel very good about that outcome.”

The fact that it’s happening on a local level is even more encouraging to Vosseller, the one-time teenage entrepreneur selling T-shirts out of his dorm room.

“We think there are a lot of great startups in Wisconsin and that with some additional coaching and structure and access to our network, we can deliver superior outcomes,” Vosseller said. “We’re trying to build a platform for investing in the region’s best and brightest. We want to put our money where our mouth is – to touch regional ecosystems that have historically been underserved and to identify that region’s best and brightest, whether it’s Madison or northeast Wisconsin. We know that not every startup is going to be successful, but we believe that by increasing the structure and support around these startups, we can increase the rate of success.”

Rick Berg is a freelance writer and editor based in Green Bay.