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Tuesday, December 3, 2013

Tom Still: Ten trends defining tech-based development in Wisconsin


By Tom Still
A recent Wisconsin Taxpayers Alliance study confirmed that Wisconsin lost more jobs than it gained over the past decade, but there's cause for hope in economic sectors that are sources of young, high-growth companies. Here are 10 trends shaping the future of Wisconsin's tech-based economy:

Campus entrepreneurism: A decade ago, it was difficult to find organized entrepreneurial education programs on Wisconsin campuses, the exceptions being the Weinert Center of Entrepreneurship at UW-Madison and the Kohler Center for Entrepreneurship at Marquette University. Today, such programs are relatively widespread and popular. At the UW-Whitewater, for example, the "Launch Pad" is a student business incubator. At the UW-Madison, a dormitory floor has been set aside for self-identified entrepreneurs. This campus fad won't soon fade.

Hacker spaces: These eclectic gathering places attract tinkerers, techies, hobbyists and curious students – but they're also becoming shared working spaces for entrepreneurs. Two prominent examples are Milwaukee Makerspace and Sector67 in Madison, locations that offer opportunities for engineers, artists and people who design prototypes. It's "shop class" on an adult scale for those who want to learn and have fun, as well as a platform for serious startups.

Regional research hubs: Research and development was once the province of a few major academic centers in Wisconsin, such as the UW-Madison and the Medical College of Wisconsin. Judged by sheer R&D dollars raised and spent, that's still true. However, the past dozen years have seen the rise of research clusters on other public and private campuses, including UW-Milwaukee. That showed in a recent competitive grant process that led to $23.5 million in state awards for a dozen UW System projects, most of which were outside Madison.

Talent spinoffs: Epic Systems in Verona is the U.S. "gold standard" when it comes to electronic health records, and it continues to grow sharply in revenues and employees. It also loses talented workers from time to time, and many would prefer to stay in Wisconsin. That's one reason why health information technology is a promising cluster here. Other companies such as GE Healthcare and Promega occasionally shed talent, too, often in the form of managers who start or manage other companies. It's not a rap on those major companies, but a compliment to their hiring systems, training and corporate cultures.

The rise of research parks: When University Research Park in Madison was founded in 1984, it was seen as an off-campus outpost for science faculty pursuing the impure goal of commercializing their ideas. Today, URP is home to about 125 companies and nearly 4,000 highly paid workers. Forbes magazine this month named URP as one of "12 business incubators changing the world." University Research Park will double in size over time, even as other high-quality parks in Madison and beyond, such as UW-Milwaukee's Innovation Park, come on line.

Big company interest in emerging firms: Not so long ago, many corporate CEOs thought "entrepreneur" was French for "unemployed dreamer." Today, some of Wisconsin's iconic companies see young companies as potential R&D sources, suppliers, acquisition targets, investment possibilities and innovation. That trend may continue and companies look for outsourcing opportunities in their own backyards.

Startup accelerators: Tech-based accelerators were born on the West Coast, where groups such as Y Combinators and TechStars decided to invest in a small number of carefully selected companies and put them on a crash course to company growth. It's now a national and even global phenomenon. While there's always a chance the "accelerator bubble" could burst, Wisconsin has some top-notch accelerators on the scene, such as Gener8tor in Madison and Milwaukee and the Global Freshwater Accelerator in Milwaukee.

The information technology boom: The "dot.com" bust of 2000 is ancient history. Nationally, investors are flocking to companies engaged in health IT and other software, gaming, mobile platforms, cybersecurity and more. Investors outside Wisconsin are taking note, and it's no accident that major companies such as Google, Microsoft, Red Hat, IBM, HP and Intel all have a presence here.

New funding sources: Wisconsin's angel investing metrics have grown steadily over 10 years, for reasons that range from state tax credits for investors to a statewide networking and deal-flow structure. The venture capital landscape has been less developed, but that may change with four new funds in various stages of formation. Crowdfunding may help, too, after the rules for equity investments in startups shake out.

Globalization: Wisconsin's exports across the board continue to rise, and tech-based companies are beginning to crack into those markets. Foreign direct investment is also a factor as investors abroad look for companies, ideas and people – all in a stable business environment. "In-sourcing" isn't a stampede yet, but it is coming.

There's an 11th trend, assuming Wisconsin policymakers don't lose sight of the goal line. Job and economic growth is a bipartisan imperative. Manufacturing, agriculture and tourism may always define Wisconsin, but companies in emerging sectors will drive more than their share of growth.

-- Still is president of the Wisconsin Technology Council. He is the former associate editor of the Wisconsin State Journal in Madison.

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