The Milwaukee-focused venture firm Gateway Capital Partners has raised $13.5 million after its final close at the end of July. It's now preparing to begin investing in pre-revenue startups, according to the fund's managing director Dana Guthrie.
The state-sponsored Badger Fund of Funds led the round, contributing $5 million, Guthrie said. Other institutional investors were the Greater Milwaukee Foundation at $1 million, as well as Bader Philanthropies Inc., BMO Harris Bank, Johnson Financial Group, Northwestern Mutual and West Bend Mutual Insurance Co.
Accredited individual investors also contributed to the fund. About a third of the investors are African American and around a quarter are female, Guthrie said.
"It's just a really strong investor pool and I think it shows the excitement and the alignment with the mission at Gateway," Guthrie said.
With a motto of "investing in underestimated Milwaukee," Gateway is primarily targeting early-stage startups in Milwaukee County that have at least one full-time employee. It's emphasizing startups that positively impact low- to moderate-income communities or have founders from those communities, Guthrie said.
The fund will make its first investment "within the next month," Guthrie said. It plans to put around $400,000 into 12 to 15 companies within the next four years and is also reserving some capital to make follow-on investments in those companies, she said.
Gateway Capital is the last fund to close among five venture capital firms that have received backing from the Badger Fund of Funds, a public-private initiative backed by $25 million from the state of Wisconsin and managed by Sun Mountain Kegonsa LLC, a partnership between Wisconsin-based Kegonsa Capital Partners LLC and Santa Fe, New Mexico-based Sun Mountain Capital.
Kegonsa Capital Partners managing director Ken Johnson is on Gateway Capital's investment committee, along with Generation Growth Capital managing director Cory Nettles, Midwest Label Supply owner Dan Voell, Baird Capital operating partner Don Layden Jr., and health care and business executive Jill Schwieters.
The process of fundraising for Gateway helped Guthrie, a first-time fund manager, build empathy for the founders who are now pitching their startups to the firm, she said.
"When I speak to founders, I like to say 'we're building together,'" Guthrie said. "Gateway is very much similar to a startup; I'm building our fund and our firm."
