$250,000 and Series A investments as large as $2 million, Prestigiacomo says. The aim is to spread the money across a portfolio of 12 to 18 companies, in fields ranging from healthcare IT to financial services, advanced manufacturing, education, gaming, and hardware.
The majority of the 4490 portfolio companies must be based in Wisconsin, according to Prestigiacomo, but there will also be some flexibility to invest in companies outside the state. “It would have to be a fantastic investment, or maybe a relationship they are trying to cultivate, so the investment makes sense,” he says.
And he emphasizes that the fund will invest beyond the state’s big university towns. “Some people say it’s a Madison or Milwaukee fund, but it’s not,” he says. “It will focus on the entire state of Wisconsin.”
While there’s a sense that infotech startups have been neglected by the state’s largest investment funds, evening out the balance and growing that part of Wisconsin’s economy is only a side goal for the fund. More importantly, SWIB and WARF want to participate in the potential upside if Wisconsin-born IT companies go big in the future.
“We are not doing this for economic development or job creation,” Prestigiacomo says. “We have a fiduciary responsibility to our beneficiaries to make money. If this fund helps the local ecosystem, that is the icing on the cake.”
Carrie Thome, director of investments at WARF, said in a statement that she’s confident there are infotech entrepreneurs worth backing in Wisconsin. “WARF and the state investment board continue to work closely together as we prepare for the launch of 4490 Ventures in 2014,” Thome said. “We believe the region offers excellent investment opportunities and the fund will certainly help some exciting innovations advance to the marketplace.”
4490 Ventures is not related to a separate $25 million “fund of funds” created by Act 41, which Wisconsin Governor Scott Walker signed into law in July 2013. That venture fund, which will come mostly from the Wisconsin Department of Administration and will look for 2-to-1 matching investments from traditional venture funds, is intended for businesses in agriculture, information technology, engineered products, advanced manufacturing, medical devices, and the medical imaging industry. To qualify for an investment, at least half of a company’s employees must work in Wisconsin. The search is on for a manager for this fund of funds as well; that person will be expected to invest at least $300,000 of his or her own money and raise an additional $5 million from outside sources.
There are enough investment opportunities to go around in Wisconsin that 4490 Ventures and the new fund of funds won’t be competing for deals, Prestigiacomo predicts. “It’s a little hard to tell right now what the underlying funds will look like, but I’m hopeful it will be complementary,” he says.
