The Badger Fund of Funds announced the firm held the first close of its Milwaukee-based venture fund — the Gateway Capital Fund — after raising more than $6 million in capital from investors.
The Gateway Capital Fund is focused on investing in Milwaukee-area startup companies that are not yet generating revenue. The initial raise is a signal the fund is on track to reach its overall goal of $10 million within the year.
The fund plans to invest in Milwaukee-area startups across industries with initial investments up to $400,000.
Launched in October 2020, the Gateway Capital Fund is one of five Wisconsin-based venture capital funds with the Badger Fund of Funds serving as lead investor. The Badger Fund is expected to continue providing a $40,000 match for every $60,000 raised by the group, up to $5 million, according to the announcement.
The Greater Milwaukee Foundation and West Bend Mutual Insurance Co. were also named as lead investors.
“The Gateway Capital Fund provides us with a unique opportunity to help overlooked small businesses and entrepreneurs,” said Derek Tyus, vice president and chief investment officer at West Bend. “We like the focus of the fund and recognize the many challenges faced by startups in Milwaukee.”
Ken Johnson, a managing director of Kegonsa Capital Partners LLC, and a Badger Fund of Funds partner, noted that of the roughly $300 million of venture capital invested in Wisconsin in 2018, less than 10% was funneled into Milwaukee-area companies.
“For too long, venture capital has underinvested in Milwaukee County,” said Johnson in the news release. “The Gateway Capital Fund is aiming to reverse this trend by identifying and investing in the vast untapped entrepreneurial community of Milwaukee.”
The Gateway Capital Fund was expecting to take a full year to fundraise but was able to hit its initial goal of $6 million in about four months. The firm has chosen to wait until it reaches its $10 million goal before making its first round of investments.
The fund plans to support 10 to 12 startups in the Milwaukee area following the venture round, said Ellen Gilligan, president and CEO of the Greater Milwaukee Foundation.
“One of the [Greater Milwaukee Foundation’s] approaches to closing wealth equity gaps is to help Milwaukee-based entrepreneurs and businesses develop and thrive,” Gilligan added in the release. “Milwaukee has missed out on far too many opportunities to invest in entrepreneurship, particularly in Black- and Brown-owned businesses.”
The Gateway Capital Fund is managed by Dana Guthrie, founder of Alchemy Angels, an angel investment company. Guthrie was named a Milwaukee Business Journal 40 Under 40 winner in 2020.
The Badger Fund of Funds invests in underserved geographies and in funds that focus on being the first investor in new startups. The fund was first formed in 2015 and was awarded $25 million from the state of Wisconsin.
The fund is managed by a partnership of Sun Mountain Capital and Kegonsa Capital Partners.
