Cash flow

Several business and government leaders in southeastern Wisconsin believe the region has several key components in place and in development to establish the area as a hub of freshwater technology research, development and production.

The Milwaukee 7 Water Council is helping to bolster the area’s reputation and attract companies to locate in the region. Higher education institutions such as the University of Wisconsin-Milwaukee, Marquette University and the Milwaukee School of Engineering are developing new products and ideas around water technologies. The city of Milwaukee is also considering providing water for free or reduced rates to select companies that move to the city.

However, a key component to the region’s water technology hub development efforts is missing. It is an element that been critical to the success of the biomedical cluster that has been developed successfully in Madison.

There is no angel or venture capital group in the Milwaukee area dedicated to supporting emerging water technology companies that need funding. However, that may not be the case for much longer.

Tim Nettesheim, a managing shareholder in the Waukesha office of Reinhart Boerner Van Deuren S.C., is now working to create a new venture capital group dedicated to funding water technology companies.

“This all takes me back to Madison in the early 1980s when I was starting my practice,” Nettesheim said. “That was when Madison opened up the first research park, its first incubators for biotech that was being spun out of the university. Twenty years later, look at the great success they’ve had. There are three or four VC groups there. They’re all privately oriented and they’ve had some huge successes there.”

If Milwaukee is going to model Madison’s past success to take ideas from UWM, Marquette and MSOE and generate new companies in the water technology area, it is going to need a similar venture capital structure, he says.

“If entrepreneurs who design ideas know about the availability of a fund, they will be more interested in coming here,” Nettesheim said. “But developing this water technology (cluster) is, I think, a 15 year process. This is year one. But if we can make some progress, then 15 years later, like Madison, I know it can happen.”

Nettesheim’s VC group focusing on water technology is only in the idea phase. In coming months, he plans to meet with members of the Milwaukee 7 Water Council, the Milwaukee Economic Development Corp., the Waukesha County Economic Development Corp., as well as local businesses that deal with water-related technologies, to gather members and potential funding sources.

He will also approach officials in the engineering departments at UWM, Marquette and MSOE, to help develop a list of experts the group can use while performing due diligence on potential investments.

“I want to present the idea to the Water Council and see if I can get some traction behind it,” Nettesheim said. “The key will be, who will be the gatekeeper of it? Can we bolt it onto some already existing infrastructure? Can we find someone who is retired (to be the gatekeeper)? I’ll talk to my Madison colleagues and see what worked there, and use that as a model.”

Eventually, a VC group focused on water technology should have a pool of committed capital that it can use to invest in companies it finds appealing. However, the group will likely operate similarly to Milwaukee’s Successful Entrepreneurial Investors LLC, an angel investor group.

SEI invites entrepreneurs looking for funding to present before its members. After asking questions of the entrepreneur, each individual member decides whether or not to invest on their own.

“(The idea is) to have a clearinghouse where people with ideas can come and present them to a board,” Nettesheim said.

A venture capital group focused only on water technologies could play an important role in helping the Milwaukee area establish itself as a water technology hub, said Richard Meeusen, president, chairman and CEO of Milwaukee-based Badger Meter Inc. Meeusen is also co-chair of the Milwaukee 7 Water Council.

“We have a large number of water technology companies and researchers and we’ve got enough of a focus in the region that we’re starting to see entrepreneurs come up with ideas,” he said. “The question now is how they can come up with funding. We need VC here to push some of those ideas into the reality of new businesses. We need both supply and demand. This is half of the equation and an important part.”

Bernie Beemster, president of ASA Analytics, a manufacturer and distributor of instruments used to measure water and wastewater based in Waukesha, agreed.

“I think that VC and idea flow are a chicken and egg relationship – you’ve got to have it (VC funding) there to allow people to have the confidence to bring ideas forward,” he said. “We’re working with researchers at Marquette and UWM and there is a very active group of programs underway in water issues, all of which will need funding.”

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