Hugh Christie, Wes Grooms, Jeff Poellmann, Richard VanDerWal, and John Vogt

November 18 th, 2013 Ms. Laurel Osman Corporate Venture Forum 247 Freshwater Way, Suite 400 Milwaukee, WI 53204 Dear Ms. Osman, Thank you for the opportunity to examine the state of Milwaukee s entrepreneurial ecosystem and for the chance to offer the Corporate Venture Forum (CVF) ideas for increasing corporate engagement with Milwaukee s entrepreneurs. The ideas we developed for CVF s next step and our analysis of their potential success are detailed in the attached report. After evaluating these ideas, we ve determined that the CVF should pursue a series of meetings that it would jointly sponsor with the Metropolitan Milwaukee Association of Commerce (MMAC), using the MMAC s existing Expert Series meeting schedule and format. The first meeting should have as its topic a case study of a local corporate entity that has found success with partnering with a local entrepreneur. Following meetings would present topics such as successful corporate venture funding of entrepreneurial firms, showing the value proposition of corporate leadership serving as mentors to entrepreneurs, and learning ways to help entrepreneurs understand that corporate employment and/or acquisition can be excellent options for success in their entrepreneurial endeavors. We understand it is possible there might be challenges unknown to us in the relationship between CVF (or its parent organizations) and the MMAC which could complicate the execution of this idea. If that happens to be the case, we recommend that business leaders that actively participate in both the MMAC and CVF be recruited to work with both sponsoring organizations to solve those challenges for the greater good. It may also be possible that the current venue used by the MMAC to hold their Expert Series meetings may be insufficient for handling an audience expanded in size by this initiative. If so, we advise the CVF to either provide, or pay for renting, the space necessary to accommodate any increase in audience experienced. We appreciate the opportunity to help you and your organization in your efforts to develop a stronger entrepreneurial ecosystem in Milwaukee. Sincerely, Hugh Christie, Wes Grooms, Jeff Poellmann, Richard VanDerWal, and John Vogt 1

EXECUTIVE SUMMARY The main objectives of our analysis were to identify a method of increasing corporate engagement in the nurturing of Milwaukee s entrepreneurial ecosystem. We determined the critical problem components to be a very tight timeline for implementation, heretofore lack of strong interest by Milwaukee corporate leadership, and that leaderships concerns about local entrepreneurial understanding of corporate needs and processes. We developed a set of criteria that would assist us in recommending the best alternative to solve CVF s problem. We determined that any effort must be able to be carried out relatively quickly, specifically within a ten week timeframe. Additionally, the preferred alternative must not incur a large financial burden to the organization, must facilitate interactions between the two parties, and increase the involvement of corporate leadership. We explored a number of options that could potentially produce a result of greater corporate involvement. We considered different aspects of why corporate leadership may not be as receptive to the initiatives as we would hope. To this end, we considered developing a symposium around the idea of corporate growth through venture investment as well as bringing entrepreneurs into the offices of major companies. Our evaluation determined that these efforts would not produce the preferred results for the Greater Milwaukee Committee. We also considered that the Milwaukee business leadership was perhaps overwhelmed by the variety of organizations that requested their time. We decided the best way forward was to coordinate efforts between the various organizations so that corporations will have a single entity to work with. We researched a wide variety of organizations. When we considered the effort to bring all of them together on a single initiative, we soon realized that it would become far too time consuming. The two organizations best capable of consolidating resources and talent are the GMC and the MMAC. This joint initiative could also be implemented in a short period of time. With time and resources pooled, more corporations could be contacted and would recognize the stronger, unified organization of the group. The strength of the group would encourage more corporations to attend and participate in the meeting series, fulfilling the CVF s ultimate goal. 2

PROBLEM SUMMARY At the first meeting of the Corporate Venture Forum (CVF), its members identified several next steps they could take to create a stronger, more mutually beneficial relationship between local corporations and Milwaukee s entrepreneurs. The primary challenge described by small business owners and entrepreneurs is a lack of opportunity to do business with local corporations. In a 2011 research report, the Center for an Urban Future found that small businesses that supply to corporate clients have higher revenues and growth than their noncorporate dealing counterparts. Sixty-three percent of the small businesses who are corporate suppliers earn more than $500,000 annually while seventy-seven percent of non-suppliers earn $500,000 annually or less. 1 Suppliers to large corporations reported revenue growth of 266.4 percent, on average, between one year before and two years after becoming a corporate supplier and expanded their employment base by an average of 164 percent. 1 CVF is striving to provide these kinds of successes to Milwaukee s entrepreneurs and small business owners through innovative partnerships with large corporations. Even if the CVF achieves better interaction for business deals between these groups, corporations will not invest capital if entrepreneurs cannot produce pertinent information about their businesses in a language that speaks to corporate concerns. Corporate leaders have indicated that many entrepreneurs lack appropriate patents, an understanding of costs and time savings estimates for their innovations and services, certainty about the end goals of their business plan, a proper marketing strategy, or established markets for their work and ideas. The demands of local corporate leaders are not without merit. These topics repeatedly surfaced in recent business journalists reasons for why small businesses and start-ups fail, representing at least half, if not all of the reasons given in each of the articles. 2 If local corporations are expected to contribute time and capital to the entrepreneurial ecosystem, they need reassurance that their investments are going to responsible, competent, and capable entities. Bringing the entrepreneurs up to par with the expectations of corporate leaders remains a challenge for the CVF to overcome. There are, however, entrepreneurs and small business owners in Milwaukee who meet the standards of corporate leaders and still struggle to obtain corporate investment and engagement. The issue in this circumstance involves the difficulty of corporations to effectively establish successful ventures with entrepreneurs. The quick thinking, risk taking, and flexible operations of small businesses can make estimating projected profits and partnerships, from a corporation s standpoint, difficult. However, this inability to appropriately establish worth does not fall completely on the entrepreneur. As pointed out by 3M s CEO George Buckley on his award 1 http://nycfuture.org/images_pdfs/pdfs/givingsmallfirmsthebusiness.pdf 2 http://www.forbes.com/sites/ericwagner/2013/09/12/five-reasons-8-out-of-10-businesses-fail/ 2 http://boss.blogs.nytimes.com/2011/01/05/top-10-reasons-small-businesses-fail/?_r=0 2 http://www.inc.com/geoffrey-james/seth-godin-why-small-businesses-fail.html 3

winning 3M s New Ventures team, The birthplace of 3M's corporate ventures was not originated to see how much money we could make in venture investments. It was about searching for a new future; finding new units that would ultimately comprise the elements of a new 3M. 3 Providing local corporations with proper practices, tactics, and examples of successful venturing will help the CVF establish a stronger entrepreneurial ecosystem in the city. PROBLEM STATEMENT The Corporate Venture Forum (CVF) needs to decide upon and initiate a next step to continue its initiative to better engage local corporate leadership in CVF s efforts to nurture the entrepreneurial ecosystem in Milwaukee. CRITERIA Administrative Ease The preferred alternative must be coordinated or implemented within the next 10 weeks. Rationale: The next gathering of the CVF membership has been scheduled to occur within 10-12 weeks of the group s first gathering held on October 23, 2013. To maintain this initiative s momentum, the preferred alternative must be coordinated or implemented by the next CVF gathering. Effectiveness The preferred alternative must increase corporate involvement by 20 attendees at the next Corporate Venture Forum. Rationale: The Greater Milwaukee Committee (GMC) leadership has expressed an interest in increasing corporate leadership participation in the CVF from the 30% of attendees (60 of 200) at the first CVF meeting to 50% (100 of 200). We think it is a reasonable goal to achieve 40% corporate attendance at the next CFV. Cost The preferred alternative must not result in per event expenses of more than $3,000. Rationale: The GMC has indicated they are able to sustain an expense of $3,000 or less per event for regularly occurring, ongoing events. Projecting to an annual expense, GMC could alternatively sponsor one large annual event costing approximately $36,000, instead of the regularly occurring events. Equity The preferred alternative must promote interactions between corporate leadership and entrepreneurs. Rationale: Because the intention of the CVF initiative is the development of greater partnership between Milwaukee corporations and entrepreneurs focused on improving the 3 http://www.businesswire.com/news/home/20110609006736/en/3m-wins-innovator-award-corporate-venturing 4

entrepreneurial ecosystem, both groups should have the opportunity to participate in any CVF functions. ALTERNATIVES We ve considered the challenge before the members of the CVF and obtained input from corporate leadership, intrepreneurs, entrepreneurs, corporate innovation leaders, and small business leaders. In addition, we ve conducted independent research to supplement the information provided to us by these stakeholders. We ve developed the following four alternatives, which are designed to increase corporate/entrepreneur partnering and engagement in Milwaukee, from that research. Alternative 1: Entrepreneur Pub Crawl Previous efforts to bring entrepreneurs and corporate leadership together have fallen short of their intended goals because of the difficulty bringing corporate leadership to the table. We have found that young entrepreneurs seek exposure to some of the great Milwaukee companies, however, scheduling meetings with key decision-makers has been a challenge. This alternative addresses this issue by bringing the entrepreneurs directly to the corporate offices. This alternative requires the Greater Milwaukee Committee to coordinate with key corporate leaders to identify a date when they could open up their offices to Milwaukee entrepreneurs. Corporate leaders would identify areas in their operations which could benefit from innovative techniques and new technologies that small startups could offer. The companies would then have a chance to share these insights when the entrepreneurs stop in during their pub crawl. On the day of the event, entrepreneurs selected to participate will gather for a meeting in the GMC conference room. After a brief introductory pep talk, the participants will hop on a trolley in route to one of the corporate offices of each participating company. The tours of each company will last an hour and there will be a total of six visits throughout the day. A mid-day lunch break will be held in the Milwaukee Public Market. At the end of the day the entrepreneurs will have had a chance to understand the inner workings of corporate life and will be mentored on how to present themselves when approaching corporate leadership. The corporations will have had a chance to witness the innovative spirit of Milwaukee entrepreneurs and will be eager to participate in future programs and activities. The interaction between the entrepreneurs and corporate leaders will be beneficial to both. The visits will provide important mentorship for the entrepreneurs and show corporate leaders the quality and quantity of local entrepreneurs. Alternative 2: CVF/MMAC Joint Meeting Series This alternative requires that the CVF partner with the MMAC to sponsor one, or a series, of meetings as part of their Expert Meetings Series 4. Each MMAC Expert Series meeting 4 http://www.mmac.org/events/eventdetail.aspx?eventid=785 5

has a different, focused topic of interest. The program of the first CVF-sponsored Expert Series meeting would be a Case-Study presentation. A local Milwaukee corporation would share their success story and expertise in partnering/innovating with a local entrepreneurial firm. This would provide local corporations and entrepreneurs with tactics for approaching each other to develop beneficial partnerships. Additional Expert Series meetings can be held with programs about: 1) successful corporate venture funding of entrepreneurial firms, 2) showing the value proposition of corporate leadership serving as mentors to entrepreneurs, or 3) learning ways to help entrepreneurs understand that corporate employment and/or acquisition can be excellent options for success in their entrepreneurial endeavors. The benefit of partnering with MMAC on sponsoring these meetings is four-fold. First, this meeting series already exists. Milwaukee corporate leaders have expressed interest in seeing fewer, rather than more, events and initiatives focused on growing the innovation and entrepreneurial ecosystem in Milwaukee. MMAC members, of which CVF members are a subset, already know of and attend this meeting series. Second, the 1,800 members 5 of MMAC provides an excellent opportunity to significantly expand the size of the corporate leadership audience available to the CVF for promoting the growth of the innovation and entrepreneurial ecosystem in Milwaukee, and recruiting corporate leadership for the CVF initiative. Third, corporate leadership has indicated a preference for collaboration between existing organizations rather than the creation of new organizations or initiatives to conduct this important work. This alternative provides the opportunity for MMAC and the CVF to streamline the promotion of the innovation and entrepreneurial ecosystem in Milwaukee and reduce redundancies of effort. Fourth, the Expert Series meetings are already open to both MMAC members and the general public for reasonable prices ($25/members, $40/non-members). This allows entrepreneurs to attend these meetings along with corporate leadership representatives without incurring the expense to sponsor or conduct separate events. Alternative 3: Corporate Venturing Symposium This alternative requires that the CVF conduct a Corporate Venturing Symposium that will aim to educate corporations and entrepreneurs on strategies to successfully conduct partnerships and demonstrate the potential successes of doing so. Like the Intersect Symposium, the Corporate Venturing Symposium would develop its theme around fostering collaboration and partnerships between small businesses and large companies. This alternative will seek to solve the problem of a lack of collaboration between large companies and entrepreneurs that can stifle innovation in those companies and stunt the growth of the business sector overall. Collaboration and partnerships are vital to establishing new markets, new opportunities and growing our local economy. 5 http://www.mmac.org/about_mmac/mmac_history.aspx 6

For instance, the Harvard Business Review recently noted that corporate venturing can provide faster responses to both technological advances and competition. This includes the ability to disengage with state-ups quickly as well. Additionally, they found that corporations that either privately or jointly funded venture capital directly to start-ups earned higher returns and rates of success than independent venture capital firms. 6 The symposium will use real-life examples of successful corporate venturing to demonstrate the potential returns and successes to be gained by Milwaukee corporations from similar efforts. The Corporate Venture Symposium would include a full day event consisting of specialized speakers that have a background in corporate venturing. These speakers would be highlighted by a keynote speaker that would be a nationally acclaimed executive or expert in corporate venturing, such as Virgin Group founder Richard Branson. Virgin Group currently consists of over 400 companies and has recently created Virgin StartUp that is aimed at helping new entrepreneurs. The other speakers would be local executives and CEO s that have experience in corporate venturing to speak about their experiences. The symposium would be designed as a type of educational forum to instruct local corporations and entrepreneurs in how to successfully create and manage partnerships. Alternative 4: Joint Corporate Venturing Initiative This alternative will bridge connections and partnerships between the Greater Milwaukee Committee and other non-profits, councils, and committees that are also running corporate venture programs. The GMC will seek to bring these partners in as part of the Corporate Venture Forum group and hold a collaborative CVF to bring the resources from all parties together. The improved CVF group will increase the connections the GMC has with corporate entities moving forward. A main goal with of the GMC is to get increased commitment and attendance at their events by corporations. Building bonds with these corporations through existing relationships with other groups will help the GMC achieve their goal and do so more quickly. Examples of these groups include WEDC, BizStarts Milwaukee, MEDC, and MMAC. All of these groups have different levels of access to various entrepreneur groups and corporate leaders. The GMC would seek to bolster the CVF group of Scale Up Milwaukee and MiKE with these other groups to obtain greater access to corporations and entrepreneurs. The resulting collaboration makes Corporate venturing in Milwaukee a joint effort, strengthening the overall influence of these groups on the local entrepreneurial market. The alternative requires that the involved entities schedule regular meeting the plan the next CVF and discuss way is to increase and improve corporate venturing in Milwaukee to create this collaborative environment. These initiatives give The GMC a better chance of including large corporate groups when they are requested at a large, joint event, as opposed to asking them to partake in many events from different entities every year. They will be able to use the new connections they have established in consolidating their networks to build stronger relationships with more corporations, increasing the turnout of those corporations in GMC sponsored events. It 6 Harvard Business Review, Oct. 2013. See Appendix for figures. 7

In Milwaukee, these groups are running and promoting separate corporate venture initiatives but there is not a lot of collaboration or joint efforts within these groups. All of these groups have different interactions with various corporations and entrepreneur groups that could benefit from being brought together. The CVF group would unify these efforts to create a much stronger drive to promote corporate venturing and make it much more successful in Milwaukee, and further in Wisconsin. When corporate venturing is run by one collective group, all initiatives are mutually planned and promoted to entrepreneurs, corporations and outside entities. ALTERNATIVE EVALUATIONS Alternative 1: Entrepreneur Pub Crawl Administrative Ease: This criterion requires the alternatives to be able to be coordinated or implemented by the next CVF gathering. We envision this event occurring monthly, with three corporations participating each month. We expect that GMC staff will have sufficient time to coordinate arrangements with these corporations and the selection and transportation of the entrepreneurs. The alternative would take a 4 weeks for coordination and additional 4 weeks for registration, totally 8 weeks for completion. This alternative fully meets this criterion. Effectiveness: This criterion requires the alternatives to increase the number of corporate leadership attendees by 20 (a total of 80 corporate attendees) over the first CVF gathering. This alternative provides for only brief interactions between entrepreneurs and a few corporate leaders per month. This alternative does not meet this criterion. Cost: This criterion requires that the alternatives cost no more than $3,000 per event (or a presumed $36,000 per year). The only anticipated expense for CVF is the cost of renting trolley(s) to transport entrepreneurs to the corporate locations each month. These trolleys 7 carry 38 people and rent for $2,280 per nine hours, for a calculated monthly cost of $2,280. This alternative fully meets this criterion. Equity: This criterion requires that the alternatives provide the opportunity for both corporate leaders and entrepreneurs to attend. Alternative 2: GMC/MMAC Joint Meeting Series Administrative Ease: This criterion requires the alternatives to be able to be coordinated or implemented by the next CVF gathering. Because this alternative uses an existing meeting series as its foundation, the primary use of time will be identifying and securing the desired speaker(s). The MMAC meeting series meets monthly, so the alternative could be completed within 4 weeks. The alternative fully meets this criterion. Effectiveness: This criterion requires the alternatives to increase corporate attendance by 20 (from 30% to 40% based on attendance rates at the first CVF). The first CVF gathering was attended by 60 corporate leaders. This alternative leverages the usual corporate attendees of this existing meeting series to obtain the desired additional corporate attendees. We anticipate that at least 20 MMAC corporate members already attend this meeting series and that that attendance 7 http://www.secondcitytrolley.com/corporate.html 8

level would not constrict for the CVF-sponsored topic(s). This alternative fully meets this criterion. Cost: This criterion requires that the alternatives cost no more than $3,000 per event (or a presumed $36,000 per year). Based on estimated CVF corporate attendance levels of 80 representatives, and 10 entrepreneurs (all presumed to not be members of MMAC), the estimated cost is: ($25 x 80 + $40 x 10 = $2,000 + $400 = $2,400). This alternative fully meets this criterion. Equity: This criterion requires that the alternatives provide the opportunity for both corporate leaders and entrepreneurs to attend. This existing meeting series already allows MMAC non-members to attend (at a slightly higher fee than is paid by members). As this will not change for the CVF-sponsored topic(s), entrepreneurs will be readily able to attend alongside corporate attendees. This alternative fully meets this criterion. Alternative 3: Corporate Venturing Symposium Administrative Ease: This criterion requires the alternatives to be able to be coordinated or implemented by the next CVF gathering. The event can be planned within the required timeframe, but held in the future, and annually thereafter. The alternative mostly meets this criterion. Effectiveness: This criterion requires the alternatives to increase corporate attendance by 20 (from 30% to 40% based on attendance rates at the first CVF). Because of corporate resistance, we think the caliber of the speaker is crucial to achieving our target corporate attendance rates. Without knowing who the speaker is, this alternative cannot be evaluated against this criterion. Cost: This criterion requires that the alternatives cost no more than $3,000 per event (or a presumed $36,000 per year). Based on the expected cost to secure a high-caliber speaker, event space and catering, this alternative does not meet this criterion unless sponsorship funds can be obtained by GMC. Equity: This criterion requires that the alternatives must promote interactions between corporate leadership and entrepreneurs. As the topic of the symposium is the promotion of corporate venturing, and both corporate leadership and entrepreneurs will be in attendance, this alternative fully meets this criterion. Alternative 4: Joint Corporate Venturing Initiative Administrative Ease: This criterion requires the alternatives to be able to be coordinated or implemented by the next CVF gathering. In order to assemble all of the different entities involved to plan and implement a joint strategy going forward would exceed the 10 week requirement. Although you could begin to hold meetings with involved parties, it would take longer than 10 weeks to bring those involved together, plan a joint venture and hold an event. This alternative does not meet this criterion. 9

Effectiveness: This criterion requires the alternatives to increase corporate attendance by 20 (from 30% to 40% based on attendance rates at the first CVF). When the next CVF was held they would be able to attract 20 more corporate leaders. Establishing a unified group would allow the largest connection to corporate leaders and be able to increase attendance. This alternative fully meets the criterion. Cost: This criterion requires that the alternatives cost no more than $3,000 per event (or a presumed $36,000 per year). Holding the meetings and creating a joint venture would not create a cost on the GMC. The next CVF would be handled similarly to the current CVF and most likely require the use of a sponsorship to afford the cost. This alternative mostly meets this criterion. Equity: This criterion requires that the alternative involve both entrepreneurs and corporate leaders. This alternative would seek to include a greater number of corporate leaders and entrepreneurs and increase collaboration at the CVF. This alternative fully meets this criterion. GOELLER SCORECARD: Criteria Goeller Scorecard Alternatives "Pub Crawl" CVF/MMAC Joint Speaker Meetings Venturing Symposium Joint Venturing Initiative Planned within 8 weeks 4 weeks The next CVF timeframe, held later Administrative Ease Meets Criterion Meets Meets Mostly Meets Does not Meet Dependent on Would not gain 20 Greater than 20 speaker Effectiveness Greater than 20 Meets Criterion Does not Meet Meets N/A Meets Cost $2,280 $2,400 Greater than $36,000, would require sponsorship Meets if same conditions met as first CVF Meets Criterion Meets Meets Does not Meet Mostly Meets Inlcudes both Inlcudes both Inlcudes both Inlcudes both Equity Meets Criterion Meets Meets Meets Meets Most Preferred Preferred Least Preferred RECOMMENDATION After applying the criteria, we arrived at the recommendation that demonstrates it will best solve the problem at hand. We ve determined that conducting one or more Expert Series meetings, jointly sponsored by CVF and MMAC, is the best alternative for increasing the engaged involvement of corporate leadership in nurturing Milwaukee s entrepreneurial ecosystem. The jointly-sponsored meeting(s) provide access to an already organized corporate audience of significant size and scope. This audience presents a tremendous opportunity to reach many new members of Milwaukee s business community that aren t CVF corporate members. 10

In addition, this series of meetings can be implemented very quickly by leveraging the existing structure and scheduling of MMAC s Expert Series meetings. The MMAC membership already knows about the timing and content of these meetings. This is beneficial because they are known quantities to corporate leadership in Milwaukee - in other words, it isn t yet another initiative CEO s must learn of and to which they must commit. Further, these meetings won t break the bank. This will prevent the need for CVF to solicit funds from their members or sponsors to keep this important initiative moving forward. Corporate leaders and entrepreneurs alike will appreciate and benefit from the affordability of this solution. Lastly, these meetings are already open to the public, and will continue to be so in their new jointly-sponsored form. Importantly, corporate leadership is used to the open access of these meetings so the entrepreneurs participation in them should be more welcome. Over time, these regular interactions between corporate leadership and entrepreneurs are expected to result in stronger relationships between these groups. This in turn is expected to result in increased innovation and partnering between these groups as well. 11

APPENDIX Harvard Business Review, October 2013, Comparison of Corporate vs. Independent Venture Capital firms. Start-ups backed by Independent VC firms Start-ups backed by Corporate VC firms Risk-Adjusted Monthly Excess-of-Market Return Average Annual Revenue Growth 0.58% 1.71% 162.8% 189.9% Increase in Return on Assets 5.6% 17.3% 12