Total Administrative Services Corp. (TASC), a Madison, WI-based business that administers employee benefit plans for businesses across the country, has formed a venture capital arm that will invest in startups developing technologies for use in industries such as human resources, insurance, and financial services.
TASC Ventures plans to make about eight to 12 investments by 2022, says managing director Jed White. He says TASC Ventures will target seed-stage companies. White declined to say how much money TASC is allocating to its investing arm or what he expects the typical size of its investments will be.
“TASC has been growing rapidly within our employee benefits niche,” White says. “As we’ve grown, we’ve seen the opportunity to have a bigger and more positive impact. While we invest for financial return, first and foremost, we have an opportunity to support entrepreneurs and ideas that we think will lead to consequential innovation.”
Don Rashke founded the business that would become TASC in 1975 in Stevens Point, WI. The company, which has been headquartered in Madison since 1995, today has nearly 1,200 employees and is led by Rashke’s son, Daniel. TASC’s revenues eclipsed $100 million last year, according to company materials.
TASC is perhaps best known for administering flexible spending and healthcare savings accounts. These accounts allow workers to use TASC-issued debit cards to pay for things like prescriptions and doctor visits, which they’re reimbursed for out of money set aside pre-tax.
White says that TASC may become a customer of some startups TASC Ventures invests in and serve as a test bed for products they’re developing. According to TASC’s website, it’s “always seeking the latest tools” in areas like data security and payments processing.
TASC Ventures will likely invest alongside other funds that support early-stage companies, White says. It’s possible that TASC Ventures will be the lead investor in some deals, he says.
White says he’ll make investment decisions with a “support team” independent of TASC. The reason for this structure is so that TASC Ventures is “not beholden to the legacy company’s interests,” he says. (TASC Ventures might consult leaders at TASC when evaluating deals, White says, but there’s no requirement that they do so.)
TASC Ventures will likely size up software startups as possible investment recipients, but will also consider services companies, White says.
“Technology will underlie most, if not all, of our investments,” he says. “However, we believe effective delivery of services on top of technology is a true differentiator in many fields.“
White declined to go into detail when asked about past investments TASC has made in startups.
White’s prior career stops include Nerites, a Madison-based biomaterials company that Kensey Nash acquired in 2011 for $20 million. White also has experience in corporate business development and investing, he says.
Most venture capital funds raise money from limited partners and invest it over a fixed period, often five years. But when corporations form venture arms, they typically draw from their own coffers when making investments.
With the entry of TASC Ventures, the corporate venture landscape in Wisconsin continues to grow.
American Family Insurance and CUNA Mutual Group are among the large corporations headquartered in the Badger state that have recently created internal venture groups. Those two companies, like TASC Ventures, look at startups from all over the U.S. for potential investments.
Other organizations with large footprints in Wisconsin have committed to investing in their own backyard. Northwestern Mutual and Advocate Aurora Health said last year they each plan to invest $5 million in startups based in the Milwaukee area over the next five years.
Still, it remains to be seen whether the companies these new funds choose to invest in will grow into profitable businesses that create high-paying jobs—or become attractive acquisition targets for larger companies, an outcome that is also generally favorable for startup founders and the investors who back them.
White says that on one hand, TASC Ventures “would love to invest in Wisconsin.”
“It’s a fertile area where TASC was born and has prospered,” he says.
But at the same time, TASC Ventures is focused on returns. White points out that TASC has customers in all 50 states. The company’s venture arm plans to “take advantage of that geographic breadth,” he says.
