Helping startups ‘scale up’ is a vital strategy for Wisconsin

Helping startups ‘scale up’ is a vital strategy for Wisconsin

Is Wisconsin producing enough startup companies? No, especially when all startups are counted… whether those young companies are bakeries, burger joints, beauty salons or biotechnology firms.

What often matters more than the sheer number of startups is the survivability and “scale up” stages for young companies, a time when emerging firms produce increasing numbers of jobs that pay solid salaries.

Wisconsin has some prominent examples. Companies such as Epic, Promega, Astronautics, Direct Supply, Logistics Health, Renaissance Learning, Trek and many more were all Wisconsin startups not so long ago. As they grew, they collectively produced thousands of jobs created through innovation born close to home.

Another instructive example is Madison-based Exact Sciences, which developed the first noninvasive screening test for colorectal cancer. The company recently announced its work on a lung cancer detection test, as well as plans to locate its headquarters in downtown Madison.

The company has a grand total of two employees when Kevin Conroy and Maneesh Arora, former executives with Madison’s Third Wave Technologies, moved a near-death molecular diagnostics company from Boston to Madison. Why Wisconsin? Conroy and Arora were convinced the talent pool, work ethic, research base and industry ties in the Madison area were under-valued.

Today, Exact Sciences owns a federally approved product that will save lives while creating economic value for the company, its employees and the region. Already, more than 8,000 physicians in 50 states have ordered Exact’s “Cologuard” test. There are now more than 500 employees at Exact Sciences in two main locations and the firm plans to grow to 900 workers within a year or less.

Not only are those employees well-paid versus the Wisconsin average – recently reported at about $44,000 per year for 2014 – they are happily staying put. Exact’s employee “engagement rate” rate has been 92 percent or better for five years, which compares to a national rate of 33 percent.

The company’s growth was aided first by a state loan and most recently by tax credits through the Wisconsin Economic Development Corp., which required that Exact invest $26.4 million on its own over time while creating 758 jobs by late 2020. The direct and indirect payback on the loan and credits is already tangible, as Exact has paid about $6 million in state payroll taxes alone since 2009.

That’s why helping startups “scale up” is vital to Wisconsin. The potential payback leads to increased vibrancy, not only for the company itself, but the larger business landscape and the sense of opportunity it creates for young, talented workers.

One perception about Wisconsin among young people is that the state lacks engaging and well-paying places to work. Exact Sciences is countering that perception and the “brain drain” by hiring half of its employees from the UW-Madison and many more from other state colleges and universities.

The combination of the company’s 30,000-square-foot production facility on Madison’s South Side and the prospect of a downtown location means Exact’s workplaces themselves will become a draw – not only for its workers, but others who may want to locate nearby.

The company is also using its status as a rising biotech star to attract money to Madison. About 50 investors and analysts from outside Wisconsin will attend a company “Investor Day” June 25; part of the exercise will include examining other opportunities and resources in the area.

Emerging companies that quickly grow from startup status often tap into global marketplaces. An example of Exact’s international reach will take place Tuesday when the Swiss ambassador to the United States, Martin Dahinden, shares a stage with Conroy during a Wisconsin Innovation Network luncheon in Madison.

A minority of startup companies survive and many that do are often more n the “mom-and-pop” category than a fleet-footed gazelle such as Exact. The more Wisconsin can plant startup seeds in fertile ground, however, the more likely it is that young companies will take root and flower in our own backyard.
Recent articles by Tom Still

Still is president of the Wisconsin Technology Council. Still is the former associate editor of the Wisconsin State Journal.The opinions expressed herein or statements made in the above column are solely those of the author, and do not necessarily reflect the views of WTN Media LLC. WTN accepts no legal liability or responsibility for any claims made or opinions expressed herein.