Newsletter February, 2011

John Torinus, Jr. President
Dan Steininger, Vice President

A Look Back at 2010

BizStarts is open for start-up business

BizStarts Milwaukee has been championing the creation of an entrepreneurial ecosystem in the seven-county M7 region for more than two years, and the momentum toward reinventing our economy is exciting.
Last year was a big one for BizStarts. It now has about 2,000 people in its network, all concerned and focused on start-up businesses. They bring different skill sets, and they interconnect as necessary on individual deals. Such teams may include lead angel investors, a business lawyer, a CFO, a marketing expert, along with the entrepreneurial team. BizStarts mobilizes their efforts toward one end: to grow good ideas into high-growth businesses that create jobs. The state already has an admirable package of tax credits for early stage investors, and that is a good foundation for further promotion of start-ups.
Since 2008, 27 ventures have launched in the M7 region. We played a direct role in some of those ventures and a cheerleader role in the rest. That is roughly about one high-growth start-upper month. With more support, that rate could be doubled!
Our Venture Track program, which focuses exclusively on assisting high-growth startups, is firmly launched and running. We now have almost 50 advisors and 24 venture track companies in the program. Its monthly Ugly Baby panels, in which entrepreneurs practice their investment pitches, are now full. Our service providers and sponsors continue to sign on to support these efforts. Venture Track is collaborating with the Wisconsin Business Innovation Corporation (WBIC) as part of a three-year $648,000 matching grant from the Economic Development Agency. It is also partnering with a 6-county EDA project in southern Wisconsin and northern Illinois to provide Venture Track support. We added our first full-time staff member, Giuseppe Pappalardo and, lastly, four of our companies received outside funding totaling nearly $1 million.
BizStart’s College Consortium also had a year of firsts. We held our first Collegiate Business Plan Contest for the region and the Collegiate Entrepreneur Conference. We also hosted the first luncheon of presidents and chancellors from the 21 participating colleges in the Milwaukee7 region. The business plan contest and luncheon were great successes, and both will become annual events.
Other advances in entrepreneurship education: Dan Eastman, chair of the Business School at Wisconsin Lutheran College, announced a new major in entrepreneurship this year. Steven Bialek, chairman of the Radar School of Business at Milwaukee School of Engineering, has reported a dramatic increase in number of MSOE students taking courses in entrepreneurship over the last two years. Both Armen Hadjinian, business instructor at Milwaukee Area Technical College, and Richard Pennlesky, chair of the business department at Carroll University, have plans for increased programming on their respective campuses.
The Buzz about us has been terrific. The local media has picked up our story and reported on our efforts. BizTimes wrote a cover story about us last fall, and selected Venture Track Director Chelsea Krause as one of the “Top 10 People Changing Milwaukee.” We have also been covered by The Business Journal of Milwaukee, Fox News, and most recently were featured in the January 2011 issue of Milwaukee Magazine. In addition, you can also find us on Facebook, LinkedIn and Twitter.
In short, we are squarely on the economic map of the region. We are actively looking for our first executive director, because we have big plans for stimulating more new ventures. I think it’s safe to say we are wide open for business – start-up business, that is.

BizStarts College Consortium and Venture Track are funded in part by the Department of Labor Employment and Training WIRED grant.

In this issue of the Catalyst, we share the stories of two ventures that are firmly on the launch pad: Aurora Spectral and Heartfelt Celebrations.

“Our mission is to ultimately re-shape the way the end of life event is viewed.”Tom VanDenBogart, CEO of Heartfelt Celebrations

Heartfelt Celebrations is close to finalizing a capital raise of $1.25 million in start-up funding and is on its way to launch.
The company, based in Slinger, Wis., offers customized end-of-life products and services for both people and pets on its e-commerce website and in retail stores. Visitors to the company’s website can create end-of-life ceremonies and select personalized services and products. Options include turning ashes into jewelry or creating a personalized cremation urn.
“Our goal is to develop unparalleled customized, end-of-life celebrations and products that capture the person’s life and personalize the event. We feel that the best way to do this is through helping people capture and share the stories of their life,” said Heartfelt Celebrations CEO Tom VanDenBogart.
Heartfelt hopes to capitalize on the upswing in cremation rates, which have doubled over last 10 years. Cremation rates are expected to continue to grow as baby boomers look for alternatives to traditional funeral and burial ceremonies, VanDenBogart said.
“Baby boomers are handling funeral services for their own parents and are looking for something different from traditional options for themselves, and whenever you can customize a solution, it is more attractive,” VanDenBogart said.
Heartfelt will also offer end-of-life products and services for pets. The pet care industry is valued at about $45 billion, VanDenBogart said.
“There’s a lot of opportunity there, as people consider their pets a cherished part of the family.”
Heartfelt’s start-up funding comes from a mix of sources, including: $800,000 from angel investors, $200,000 from the Washington County Economic Development Council and a $250,000 line of credit from First Business Bank. VanDenBogart also bootstrapped his venture with an initial infusion of $95,000 of his own money. The process of securing funding took longer than he anticipated.
“I thought it would be done in a month’s time, but it took about six months and 10 investors to make everything fall into place,” he said.
VanDenBogart, 50, worked for Kimberly-Clark Corp. for 25 years in consumer product research and development. He enjoyed working on products targeted for caregivers and the senior population.
While researching one such product for Kimberly-Clark, he discovered a common theme among baby boomers who didn’t necessarily want a traditional funeral for themselves. He came across the story of Fred Morrison, inventor of the Frisbee, who requested that his ashes be made into Frisbees.
“That got me thinking about this opportunity,” he recalled.
He took an early retirement in 2009 and decided it was time to put his ideas into action.
“I worked on the prototype for the Keepsake box with Hospice and met a woman there who really cherished it . She used it to record a message for her granddaughter. That experience was very powerful and very gratifying for me, personally,” he said.
Heartfelt Celebrations won the 2010 Marquette Business plan competition, and VanDenBogart eventually made his way to BizStarts’ Venture Track program. He met with John Torinus and Pat Thomey, who helped him source funding and form an advisory team.
Thomey is the company’s Chief Financial Officer.
Heartfelt has a staff of 8 and is planning to launch in 2011. For more information, visit www.heartfeltcelebrations.com.

Regional Roundup: In brief

New River Technologies, Grafton, WI, is on its way to launch. CEO Ted Kanavas, former state senator, raised $300,000 and is raising a second round of $550,000 from investors. The e-commerce technology company serves the procurement area for banks and financial institutions and affinity marketing companies.
Scopia Technologies, Bayside, WI, led by founder Ophir Ben-Yitschak, has been bootstrapping itself into launch and recently signed on a new customer, Ezop Travel, reports Tom Still, president of the Wisconsin Technology Council and the Wisconsin Innovation Network and guest columnist in the Milwaukee Journal Sentinel. Scopia is a proprietary travel planning software and web-based platform that offers an Intermodal, door-to-door trip planning incorporating all modes of transportation into one itinerary. The company was a winner in the 2009 Wisconsin Governor’s Business Plan competition. Read the full story here. http://www.jsonline.com/business/113673794.html.
Flex Biomedical, Inc., Madison, WI, biotech company that develops treatments and diagnostics for orthopedic diseases, announced a capital raise of $866,000 of outside funding. Sal Braico, CEO, said that the capital will be used to develop its lead product, Flex Polymer,™ a synthetic polymer that treats osteoarthritis. Funding was led by NEW Capital Fund LP, Appleton, and Wisconsin Investment Partners, Madison. Read the full story http://www.jsonline.com/business/114673244.html

Media Musings

Dan Steininger shares leadership insights in a regular column for BizTimes.
Below is his most recent column, published on Jan. 21, 2011.

Leadership: Innovate or Die
Creativity is crucial for today’s managers
By Dan Steininger for BizTimes

Mark Zuckerberg is Time Magazine’s “Man of the Year.” Why? One simple word explains it. Innovation.
No question. Anyone who can garner 500 million new customers in less than five years is doing something remarkably new.
Zuckerberg represents the face of innovation in America. He has introduced what has been called “disruptive technology.” This means that he has changed the way we do things. This is different from a business that simply replicates existing businesses. If he had founded a new bank that had grown to mega-size proportions to join the top banking firms in the United States,
he would not have been on the cover of Time Magazine. Nothing new about that.
As the U.S. economy tries to emerge from a recession and create new jobs it is hard to see a newscast or read a serious article in the media that does not talk about the need for the U.S. to create jobs through innovation. There is a growing awareness that many of the jobs eliminated during this last recession are never coming back. Even the President of the United States has joined the chorus, and Congress has allocated major tax breaks and incentives for startup companies that will provide the majority of the new jobs that need to be created.
So if you’re running a business you now recognize you must innovate to grow. I’m sure the business leaders who created My Space are still in shock after having been overtaken by Facebook.
Read the entire article at:
http://www.biztimes.com/news/2011/1/21/leadership-innovate-or-die

Meet the Advisors

John W. Splude

Building an entrepreneurial culture is an essential part of business growth in Wisconsin andultimately the state’s future, John W. Splude believes.
That’s why he’s volunteered as a Venture Track advisor with BizStarts Milwaukee for the last two years and has been involved in other efforts to help new businesses.
Splude, 65, is the founder of HK Systems an automated material handling and software solutions provider in New Berlin. He was the company’s chief executive officer from 1987 until 2010 when the company was sold to Dematic Corp. of Luxembourg and Triton, a German private equity firm. Splude continues to serve as senior advisor to Dematic and on its board of directors.
In addition to being a Venture Track advisor, Splude also is involved in the Marquette University Golden Angels Network.
HK Systems was a division of Harnischfeger Industries when Splude led the management buyout of the company in 1993. The company grew to $250 million in annual revenue.
Building the confidence that allowed him to take that risk is one of the challenges Splude faced in his own entrepreneurial journey.
“When you’re an entrepreneur, you’re asking a lot of people to take a risk based on your abilities. That’s not an easy thing to do,” he said. Entrepreneurs also have to motivate the employees who join them on their journey, he said.
New business owners must be aware of the commitment required in making a business successful and make sure they risk adequate money to get through the first year, Splude said. Many start-ups under fund themselves, and it’s difficult to go back and ask for more money, he said.
Often people who have business ideas or a product idea lack the ability to write a business plan and how to sell it to investors, and Splude believes Wisconsin needs a support system to help. The state lacks the entrepreneurial culture that exists in California or Texas, where entrepreneurs have been through the process multiple times, he said.
That’s why Splude is involved.
“The key here is to develop a culture … where people who have ideas about a new business or have a product or an invention or a concept can readily go out, and there’s a structure in place where they can talk to people about what they’re trying to do,” he said.
“If we don’t grow new businesses in Wisconsin or the greater Milwaukee area, we’re going to continue to see poverty and the deterioration of our infrastructure,” he said. “The answer is not just necessarily to go out and try to recruit very large companies to move to Wisconsin, but to establish an entrepreneurial culture along with all the support networks for that.”

Ugly Baby Panel














Thomas and Heidi Schmid of Lukyduk Holdings practice their pitch at Venture Track’s Ugly Baby panel.

The following start-ups made their pitch to a full house of advisors at Venture Track’s January Ugly Baby panel. Long Tail Media Group Winnetka, IL CEO: Robert Cornog, Jr. Long Tail Media Group is a branded entertainment media company that serves both its audience and the corporate marketers trying to reach them. Its first site, fridaynitebYtes.com, is the home of the first interactive comedy show developed with, by and for its audience. Since its Q3 launch, fridaynitebYtes has garnered almost 500,000 views and 5,000 subscribers. The next episode will appear in late February. As the company continues to build on its early momentum, it is interested in speaking with all types of interested parties - sponsors, advertisers, investors and professionals. For more information, email info@LongTailMediaGroup.com Lukyduk Holdings, LLC Whitefish Bay, WI Co-Founders: Thomas and Heidi Schmid Lukyduk produces the original patent-pending, three-minute hair styling solution that conveniently and naturally invigorates curls and waves. An addressable 8 million curly-haired US women can consider this affordable hand-held mist-emanating appliance to enjoy a “goodhair day” in cold/dry air environments. Celebrate and embrace – don’t fret and fight – your natural curl. Venture Track has several ventures looking to develop teams. For more information about becoming a member of Venture Track Advisors or to apply to become a Venture Track Company, please contact venturetrack@bizstartsmilwaukee.com.

Photo by Susan Carlson

Despite cold weather, 80 people turned out for a day of networking and learning. Breakout sessions developed on an array of lively topics, including: Start-up failure and lessons learned; practicing your pitch;
and Racinnovation, an economic development strategy presented by Perceptral’s JohnathanPearl.
Some of the event stats: Over 50 percent of the attendees were business owners; and over 50 percent of the attendees were 26-50 years old. There was a tremendous amount of positive feedback and connections made!  This event is co-produced by BizStarts Milwaukee,Bucketworks and CATI/Gateway Technical College. The next one will be held in Rockford, IL. Visit startupaccelerator.org for more information.

Mark Your Calendar

The national Small Business Innovation Research (SBIR) Conference will be held April 11-13, 2011 at Monona Terrace in Madison, WI. For more information, visit http://conferencing.uwex.edu/conferences/sbir2011/.

For up-to-date information on BizStarts Milwaukee, be sure to visit the website:
www.bizstartsmilwaukee.com

BizStarts Milwaukee	BizStarts Milwaukee	Venture Track	BizStarts Milwaukee

Classes and events relating to business can be found on the BizStarts calendar at: 
http://www.bizstartsmilwaukee.com/Calendar.htm