In a novel attempt to retain educated professionals and support local entrepreneurship, the University of Wisconsin-Eau Claire Foundation is launching an angel fund that will invest in companies that are founded by recent graduates and located in the Chippewa Valley.
The Blugold Angel Fund already has commitments of $90,000 - $10,000 each from nine contributors - and hopes to make its first investment next summer, said Ray Hughes, director of the UW-Eau Claire business college's entrepreneur program and an organizer of the new fund.
"Wisconsin needs early-stage capital and it needs strong connections between universities and business, and the UW-Eau Claire effort combines both," said Tom Hefty, a health care and government relations attorney at Reinhart Boerner Van Deuren and co-chairman of the Governor's Economic Growth Council.
The Blugold fund encourages alumni and donors to make tax-deductible contributions to the foundation, which then invests in university-related companies and recycles the returns. It's a unique model, said Charles Hoslet, managing director of corporate relations at the University of Wisconsin-Madison.
The UW-Eau Claire Foundation is seeking as many as 16 more contributors to give $10,000 each to the Blugold fund, so it will have $250,000 to deploy at a rate of $50,000 a year, foundation president Carole Halberg said.
Contributors will be on an advisory board that reviews proposals and chooses investments from among Chippewa Valley companies started by entrepreneurs who graduated from UW-Eau Claire in the last five years, Hughes said. The contributors will hold their first meeting next week to discuss issues such as whether they'll take seats on their companies' boards and other logistics, he said.
The Blugold fund will target growth businesses likely to create jobs in areas such as manufacturing and technology, rather than service businesses such as restaurants and bars, Hughes said.
It will likely invest at least $25,000 in each business, with the hope the company can leverage the initial investment into more funding opportunities, he said.
The fund's organizers and others said they aren't aware of any similar university-affiliated angel funds in the state.
UW-Madison's patenting and licensing arm, the Wisconsin Alumni Research Foundation, makes investments in start-ups, but the school does not have an angel investment fund, Hoslet said.
"The idea of the university, or an organization closely affiliated with the university, serving as a means for UW-Madison alumni and donors to invest in university-related start-up or spin off companies is something that's being looked at, but no definite plans are being made at this time," Hoslet said.
Marquette University has an angel network - one of the biggest in the state in terms of members - but it isn't organized as a fund, said Tim Keane, Marquette's entrepreneur in residence and director of the Marquette Golden Angels network.
The Blugold fund is a "creative form of philanthropy with a natural constituency," said Michael Knetter, the dean of UW-Madison's business school who earned his undergraduate degree at UW-Eau Claire.
The fund is also a challenge to other endowment funds in the state, as far as Hefty is concerned.
"Hopefully, this will spur other colleges and foundations in Wisconsin to look at similar models," he said.
- Used with permission of Milwaukee Journal Sentinel, from "University to start Eau Claire angel fund", Kathleen Gallagher, November 5, 2005; permission conveyed through Copyright Clearance Center, Inc.