emerging healthtech cluster in Madison, WI—he mentioned Redox, which raised a $9 million Series B financing round in January—but that the fund is still “looking for the right opportunity in the Midwest.”
“I keep joking that I want to do a deal where I don’t get on an airplane,” Schedler said.
He added that over the last couple years, entrepreneurs have begun to view corporate venture funds differently. In the past, he said, these groups were seen as taking a somewhat heavy-handed approach to startups. They also had a reputation for trying to work “draconian provisions,” such as rights of first refusal, into deals, Schedler said.
“It’s not quite so much like that today,” he said. “There’s more willingness to partner and work with your peers and others to ultimately ensure a successful investment.”
And from a startup’s perspective, it’s not always an “either-or” proposition in terms of working with standalone venture firms versus corporate (or “strategic”) ones.
CMFG Ventures, for one, “likes to co-invest with traditional VCs and other strategic VCs,” Kaas said.
Another well-known Wisconsin business with a corporate venture arm is American Family Insurance. One company in American Family Ventures’ portfolio that illustrates the potential upside of working with this type of fund is Santa Monica, CA-based Ring, whose flagship product is an Internet-connected doorbell with a built-in camera.
In late 2015, American Family—the larger insurance company, not its investing arm—announced a partnership with Ring intended to encourage policyholders to install smart doorbells outside their homes. Under the program, eligible AmFam customers can get a 15 percent discount off the price of a Ring video doorbell, which lists for $199.
This two-pronged approach, where a large company invests in a startup, and also leverages its reach and resources to get the startup’s products into more customers’ hands, could be seen as an advantage corporate VCs have when competing for deals.
Dan Reed, managing director of American Family Ventures, said in an e-mail that offering more than capital is one of the ways corporate investors seek to differentiate themselves.
“We very much appreciate the partnership we get from many areas of our company,” Reed said. “The benefit we get as an enterprise is an early look and small equity position in some very promising companies.”
