BrightStar Wisconsin Foundation, or “BrightStar”, celebrated their sixth anniversary in July of this year. The organization has come quite far since its founding.
So, what do they do? BrightStar Wisconsin Foundation is an entity looking to fill the early-stage funding void by providing charitable foundations, corporations, and wealthy individuals with a vehicle to help fund job creation. This is done to entice big successful companies and graduates to stay, which helps create more jobs. BrightStar accomplishes this through capital donations. According to their website, nearly 100% of the donations they receive are invested. BrightStar relies on the help of generous Wisconsin natives to help capitalize on Wisconsin’s advantages to ensure the state thrives.
In a thirty-minute presentation given to the Milwaukee Rotary Club, Tom Shannon first discussed early-stage startup investing which he stated is the “core” of the BrightStar foundation.
“Early-stage startup investing is very important. When I talk about BrightStar, I like to introduce a question: ‘what is it that you want for Wisconsin?’ Most people would say something like ‘I want a safe place to work and live.’ To almost all of us, that means high quality, good-paying jobs, and a vibrant economy” said Shannon.
Additionally, CEO Tom Shannon took time to explain that all net new job creation comes from the formation of early-stage companies. After that, he spent some time discussing that the formation of early-stage companies is not occurring at a steady rate in Wisconsin and explained why that is a problem.
“We have the raw materials. We are third in research money flowing into our university. We are 13th in patent creation. But, what don’t we have? Money.”
According to Shannon, the state of Wisconsin simply does not have the money to invest in early-stage companies like other states have. This is because Wisconsin lacks in the private sector by not having a sufficient amount of active angel investors in the state who are willing to invest in early-stage companies. Instead, the state of Wisconsin relies heavily on brick and mortar for cash flow.
“Very few people are willing to put their money into new ideas and startups in Wisconsin. From a private standpoint, it is very hard to clone more angels in the state. Because of the lack of early-stage funding, Wisconsin sees a lot of companies are leaving the state. On the public side, states such as Colorado have delegated $150 million into the budget to fund early-stage companies.” he said.
After spending a lot of time thinking critically about this problem, Mr. Shannon organized a team of experienced early-stage angel investors and started the BrightStar Wisconsin Foundation. Tom explained that he and his team first look to receive deductible donations into the foundation instead of investment dollars. It is with this donated money that his team of experienced angel investors can then invest in early-stage companies.
“BrightStar is a foundation, not a fund, we take donated dollars (not invested for-profit dollars), and we are doing some great things with it.”
According to Tom Shannon, 8 out of 10 companies fail, but the state of Wisconsin has a better ratio than that average. Furthermore, Shannon explained that in 2016, BrightStar had yet to have one company fold, out of 29 in which they have invested.
Tom Shannon, President, and CEO of BrightStar, founded the organization back in 2013 with the goal to keep graduates and companies in Wisconsin and ultimately create jobs. According to Wisconsin Technology Council, Shannon was selected to join the Investor Hall of Fame back in October of 2017. He is also board chairman and lead investor in Shamrock Energy Crop., Neenah; Proxim Diagnostics Corp., Sunnyvale, California; Somma Therapeutics LLC, Milwaukee; and Aver Informatics Inc., Green Bay, Wisconsin. He was most recently CEO of biotech company Prodesse Inc. Shannon graduated from the University of Wisconsin-Madison with a finance degree.
For more information about BrightStar Wisconsin Foundation, please visit: https://www.brightstarwi.org/brightstar-wisconsin-job-creation-through-capital-donation>