August 19. 2013 9:00AM

VETransfer expands into Global Entrepreneurship Collective: Adds focus on central city startups

By Dan Shafer

  
The startup business organization that began as VETransfer has been expanded – first, to include veteran-focused startup accelerator Victory Spark, and now this summer, to launch central city-focused startup accelerator Revolution Labs.

The organization is now known as the Global Entrepreneurship Collective.

In addition, Victory Spark and Revolution Labs – the two pillars of the Global Entrepreneurship Collective (GEC) – simulation, interactive media and gaming accelerator Emergent Labs and other "mini-accelerator" programs are also part of the organization's recent flurry of activity.

"We needed to expand our mission to focus beyond just veterans, but to the emerging community of central city-, veteran-, women-, minority-owned businesses," said co-founder Nick Wichert. "(Expanding into the Global Enterpreneurship Collective) gave us the flexibility to do a veteran vertical as well as a central city vertical."
Participants in the Emergent Labs accelerator during a morning work session.

"We needed some sort of larger umbrella to house the accelerators," said co-founder Greg Meier.

Victory Spark, the state's first global accelerator network, has funded and helped launch 24 new startups, collectively raising $1.39 million and creating 89 new jobs. The accelerator was launched in May, 2012, and by the end of July, 2012, it had become part of the Global Accelerator Network and received a $300,000 grant from the Wisconsin Economic Development Corporation (WEDC).

Revolution Labs, Emergent Labs and the "mini-accelerators" are all relatively new, having been launched just this summer. What's common through all of the programs, however, is their emphasis on developing the earliest stage of startup activity.

"We're taking the highest risk group," said co-founder Greg Meier. "Our objective is two-fold. One, we want companies to succeed and create jobs and get returns. But, at the stage that we're focused on, our highest objective is to give people the skills of 21st century entrepreneurship. That's our primary focus. We're taking companies at the very early stage of their existence."

Wichert said the GEC often works with startups that are not yet creating revenue.

"Our goal is to focus on the discovery stage and seeing how we can find a repeatable business model that we can start selling product from," he said. "Our goal, within 12 weeks, is to make sure we can align the companies up with the right value propositions that people are willing to pay for, then the natural progression is a handoff to another accelerator, another program that can help scale that business and execute on a known model."

There are two core principles fueling what the GEC is doing for these very early stage businesses. The first is its methodology.

The GEC is combining the methodology of Boulder, Colo.-based, Techstars – a mentor-driven seed stage investment program now in Boston, Boulder, Colo., San Antonio, Tex., Chicago, New York, Seattle and London – and the customer development methodology and curriculum taught by Stanford and University of California-Berkeley professor and serial entrepreneur, Steve Blank.

"We took Steve Blank's curriculum and married that with the Techstars mentor-driven program," said Wichert. "When startups come to us, it's for 12 weeks. They're given a mentor from our network that we feel can significantly impact their business, whether it's subject matter or expertise."

Meier and Wichert say the way in which you start businesses and release new products has changed dramatically in recent years.

"The big idea that's under all this is that we now know that startups are not small versions of big companies," said Meier. "We historically treated startups like big companies using the same methodologies we would to manage Johnson Controls to start a business. We've created our own distinct methods and processes for starting a business. There's a big global change that's going on right now, that is – at maximum – a couple years old."

Meier said this methodology has become "mainstream" among practitioners and entrepreneurs, giving the startup community "a whole new set of lenses that we're viewing the world with."

"Everything is driven toward customer understanding," he said. "When you start businesses, you only have guesses. Question is how to find out if guesses are direct. Steve Blank's methodology is used to go test those guesses before anything is built, before financing is put in. Before doing a business plan, it goes to customers first."

"You can think of it like when you learn the scientific method," said Wichert. "You put out a series of hypotheses, you run an experiment, you analyze results, and you make iterations based on what you found to improve the experiment next time you run it. That's really what Steve Blank has distilled for startups."

Others in the local startup community, too, see this model as an effective one to incorporate into the local startup community.

"I think the Techstars model is the best way to look at what's really successful," said Tom Schuster, managing director of the Wisconsin Super Angel Fund, who has worked closely with Meier and Wichert. "When you bring a high concentration of entrepreneurs and accelerator activity along with money, people who have built, sold, started up, turned around, and rebuilt companies and successfully sold them, with people that have new, innovative ideas that are disruptive ideas in the current marketplace, good things happen."

Nearly all of the businesses that have been involved with VETransfer, Victory Spark, and the GEC have used this methodology.

The second core principle guiding the GEC is its focus on both the needs and opportunities that exist in the state of Wisconsin and the city of Milwaukee.

"Although it's the Global Entrepreneurship Collective, Nick and I made a conscious decision to focus our time and energy on Wisconsin, Milwaukee in particular," said Meier. "We love the state. It's our home."

The challenges for entrepreneurship in the city and the state are abundant, said Meier. A big part of the problem, he says, is the problematically low number of new companies that are being started in the state.

"We're usually starting businesses about half the rate of the national average (in Wisconsin)," he said. "The bulk of all companies in the U.S. fall between startup and about five years old. That's why most jobs are created within this universe; mathematically, there's just a lot more of them. If we're starting businesses at half the national rate, that means we have half as many young companies. Our problem is that for the next decades, (the state) is going to be short, including short $100 million companies. That's why Nick's and my work is so dedicated to the (early stage) piece. If you start low, you fail all the way up the ladder. There's a lot of things that we need to do to be more sophisticated to try and dig ourselves out of the hole, but our hole is this."

According to a Kaufman Foundation report, Wisconsin had the fourth lowest percentage of residents engaged in entrepreneurial activity last year and the second biggest decline in entrepreneurship from a decade ago.

"This is the complexity of our problem in Wisconsin," said Meier. "We were so low in our start rate even before the recession. For more than a decade, we've been in the bottom. We have very few one-to-five year old companies because we started very few companies. And that means we'll have very few 6-10 year old companies, 10-20 year old companies, and so on. If we don't change (the number of startups and young companies), for each generation, we're going to pass on a dimmer and dimmer view for our state. It's pretty dramatic. The world changed, and we've missed out here."

While this is a problem that exists across the state of Wisconsin, no population group is hit harder than Milwaukee's central city, said Meier. He said the central city is creating roughly 10 percent the amount of businesses of what it should.

"We're upwards of 1,000 businesses short per year in the urban core of Milwaukee that we're generating," said Meier. "Our central city is so far off the mark of what it should be, it's pulling us down across the spectrum. That's got to be our largest adult population base in our entire state: 250,000 adults in a fairly refined geographic area. They're such an outlier on the distribution curve that they're not even on the curve. That's a problem. If we don't change that, we don't change the central city, we never change Wisconsin, then we don't change anything. If we don't change the innovative capacity of the central city, we don't change the prosperity equation and we don't change the educational outcomes. They all derive from that origin."

What this problem creates, however – at least according to GEC leadership – is "unlimited opportunity in Milwaukee," which is why the GEC has focused its Revolution Labs program on growing businesses with entrepreneurs in Milwaukee's central city.

"The birth of Revolution Labs started because Greg and I started seeing patterns within the veterans that there were a lot of black male technologists who were also vets going through our program," said Wichert. "We realized that we have a lot of central city entrepreneurs that are mixed in the veteran population. So we thought, well, we've distilled it to veterans, let's see if we can't distil it into Milwaukee's central city, because we know that there are issues that exist with job creation and economic prosperity there."

With this in mind, the GEC approached the WEDC and the Wisconsin Housing and Economic Development Authority (WHEDA), saying Revolution Labs could be a good program to apply to the state's Transform Milwaukee initiative. Ultimately, WEDC and WHEDA each provided $50,000 for the launch of the program, and Revolution Labs got underway in July with five central city startups – ImCoveredWI, Destiny Electronics, That Salsa Lady, U The Center, and Nappturalistic Beauty. Each startup that successfully completes the program will receive a $10,000 grant.

The 12-week program incorporates the methodology that is woven through every aspect of what the GEC does, teaching best practices in launching a business and emphasizing performance milestones throughout the program. The businesses will have opportunities to present their startup idea to potential investors, including a "Demo Day" event near the conclusion of the program.

Emergent Labs also launched this summer after receiving a $50,000 grant from the WEDC. It is a 12-week accelerator program and also includes five new businesses – Fond du Lac-based Draiochta Labs, Madison-based Galactavision, and three Milwaukee-based companies, Digital Iris, MetaMorphic Games and Wayman Apps. Emergent Labs is being managed by Emil Harmsen, an instructor in the Interactive Media Department at Milwaukee Area Technical College (MATC), who also took his own company – Forever Interactive – through the Victory Spark accelerator.

"What he saw is an opportunity to take a lot of these gaming and visualization startups that don't have a place to go," said Wichert. "Gaming is not a big market in Milwaukee yet, but there's so much talent that's been created out of MATC."

"A robust gaming community is often indicative of how strong your software development community is," said Meier. "It's the same universe that does simulation, modeling, virtual reality and different control systems. It's a close existence to everything else that goes on in R&D."

In addition, the GEC also recently held its first "mini-accelerator," and more are planned for this fall.

"What Greg and I have done is take the curriculum and distil it down into weekend boot camps," said Wichert. "We're also looking at a potential six-week startup school in partnership with Startup Milwaukee, and then, (separately), a 16-week curriculum that's taught at universities that we're teaching next spring at UWM. We're trying to address the different pools of brain power to where people are at."

"The common thread is Steve Blank's customer development methodology," said Meier. "We're trying to make it accessible to as many audiences as possible."

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