High-Tech Wisconsin: Biotech Sizzles, but IT has the Steak

With one of the nation’s biggest and best life sciences research institutions – UW-Madison, of course – it’s not surprising that Wisconsin’s life sciences entrepreneurs have captured the bulk of the attention from inside and outside the state in terms of entrepreneurial opportunities in Wisconsin.  Ironically, though, if you look beyond the hype, IT, and in particular ecommerce, SaaS and gaming, are more likely to drive growth in the next few years than life sciences.  Here are some reasons.

One, life sciences deals, particularly biopharma (say, like stem cell-related treatments for disease) typically take a lot more money and time to pay off than IT deals.  And if you haven’t noticed, Wisconsin has at best one fund that, in terms of size and focus, would even merit serious discussion as a life sciences player if it was based in California.  (And it has not been doing many deals of late.)  Unless and until we have a critical mass of larger ($100 million and up) life sciences venture investors working Wisconsin, don’t expect to see the kind of life sciences explosions that you can see on the coasts, or even in North Carolina.

Two, while the cost of doing life sciences deals is not coming down, and may even be increasing, the cost of doing IT deals – particularly ecommerce deals and with the emergence of the SaaS model – has been plummeting in recent years.  An ecommerce site, for example, that might have cost $5-10 million in 2000 can be done today for $50-100k.  We may not have much risk capital in Wisconsin, but we’ve got that much.

Three, you don’t need either the legions of PhDs or a cadre of grey-haired industry-experienced managers to build the typical IT company.  (While some professorial life sciences entrepreneurs may doubt the need for the later, that, too, will pass.)  IT deals can be – and have been, in Silicon Valley and Wisconsin – successfully launched and built by people who didn’t go to big time universities; indeed, by people who did not graduate from college – or even attend college – at all.

So, three cheers for biotech in Wisconsin.  It’s a great story for the state, well worth telling.  But while time and lack of access to capital take their toll on the nascent biotech industry, look, over the next ten years, for the IT sector to provide robust growth – in jobs and wealth.


About Paul A. Jones

Serial venture capital backed entrepreneur, angel investor and venture capital investor; Co-chair of the VentureBest team at Michael Best & Friedrich, LLP.
This entry was posted in Entrepreneurship, Venture Captal and Angel Investing. Bookmark the permalink.

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