Q: What is the Capital Catalyst program all about?
A: The Capital Catalyst program provides access to capital for high-growth startups and early-stage companies at a critical point in their development. The program offers matching grants to local or regional nonprofit organizations that establish and manage a seed fund for this purpose. These organizations evaluate applications and select funding opportunities, which may be offered as grants, loans or investments. While the primary emphasis is on technology-based companies, each organization sets its own criteria based on its particular mission focus.
Q: How was the Capital Catalyst program started?
A: Capital Catalyst was designed to address an identified gap in the funding cycle for technology-based companies. A startup can bootstrap or acquire pre-seed funding from sources like friends and family in its very early days, but there’s often a scarcity of capital in the period before businesses generate revenue or secure an equity investment or bank loan. Capital Catalyst-supported funds typically tend to help companies bridge that period of their development.
The first participating community was Whitewater, whose leadership made the growth of its entrepreneurial ecosystem a specific strategy for economic development in the area. Since that time, other communities have deployed similar initiatives. The program soon broadened its reach to support funds that assist research-to-commercialization activities, such as the Wisconsin Innovation Initiative, a nonprofit aligned with UW-Madison, focused on the translation of medical research into commercial ventures.
Q: Who is eligible for the program?
A: Organizations can include regional or municipal communities, or other entities such as universities and nonprofits. Examples of the latter categories include the UW-Extension, which designed the Ideadvance program for certain UW System students and faculty utilizing funds provided by UW System and the Capital Catalyst program. More recently, the Doyenne Group, a Madison-based nonprofit supporting women-led ventures, received an award through the program to add financial assistance to its service offerings.
Qualified applicants must be able to demonstrate organizational and administrative capacity to manage a fund, as well as provide mentorship and entrepreneurial support. The program also requires organizations to provide a 1:1 match to the amount of funding provided by WEDC.
Q: Why is the Program important to the state of Wisconsin?
A: Capital Catalyst helps address the critical need to increase the number of successful business startups in Wisconsin and stimulate long-term job growth. With increasing awareness nationwide that net job creation is highest among new and young companies with high growth potential, it is imperative that the state encourages the development of new businesses to secure its economic future. Technology companies in particular tend to create higher-wage jobs as they develop innovative solutions to global problems. The role of Capital Catalyst in this broad strategy is to support entrepreneurs at the earliest stages of company formation where private investment is most scarce.
Q: How has it helped companies thus far?
A: Over 80 startup and growth stage companies have received some level of financing from funds created with assistance from the program. Additionally, these companies have gone on to attract nearly $8 million in additional capital from other sources. In many cases there are additional benefits provided to these companies. The Ideadvance Seed Fund, for example, also provides specialized training in guiding entrepreneurs through activities such as business model refinement and customer discovery, significantly accelerating their development through the process.
Q: What should a company interested in the Capital Catalyst program do to get more information?
A: While Capital Catalyst does not provide direct funding to companies, organizations that have established funds may be found at /entrepreneurs/assistance/capital-catalyst/. It’s important to keep in mind the focus of each fund, as each may target a specific community, industry or demographic. In addition to the Capital Catalyst program, there are other financial assistance resources that may be available through WEDC or local organizations. These can be found on WEDC’s ConnectED page.
Q: Anything else important you’d like to add?
A: Capital Catalyst is just one component of a broad suite of resources that exist to stimulate the entrepreneurial environment in Wisconsin. Even in areas where the program is currently unavailable, entrepreneurs are encouraged to keep in touch to learn about other state and local resources that may help to support their business needs. And local economic development organizations are invited to discuss how the program can support their efforts to impact business formation and growth in their area.