Jonathon Horne, managing partner of the Idea Fund of La Crosse
Jonathon Horne, managing partner of the Idea Fund of La Crosse
A Wisconsin-based venture capital fund aims to jumpstart startup activity in the Upper Midwest with a new pot of cash.
Last week, the Idea Fund of La Crosse announced it has closed on a new $31.5 million fund. The firm plans to invest those dollars exclusively in early-stage software startups based in Minnesota, Wisconsin, and Iowa. It’s targeting companies with annual revenue under $500,000. Some candidates might even be pre-revenue.
Jonathon Horne, the Idea Fund’s managing partner, sees the effort filling a gap in the market.
“There’s a ton of venture capital in the market, even though the market’s at a multi-year low right now,” Horne said in a Monday interview. “But the early rounds are just very, very hard for even very qualified founders. This is particularly true in our part of the country.”
Citing Pitchbook data, Horne said the latest raise marks one of the three largest venture capital funds ever raised dedicated to investing in Minnesota, Wisconsin, and Iowa.
Horne said that the fund’s own bankrollers are about half institutional investors and half family offices and high-network individuals.
Founded in La Crosse in 2016, the Idea Fund has funded 15 portfolio companies to date. Horne said that with the new funds in hand, the company aims to bump up that number to 20. The firm has already made investments in four new companies, one of which – Lumberjack Technologies Inc. – is based in Minneapolis.
Though the new fund was formally announced last week, the Idea Fund of La Crosse had already privately started making investments beforehand. The Lumberjack investment, for instance, took place in February 2023, Horne said.
The Idea Fund is focusing investments on companies “disrupting” industries with a strong foothold in the Upper Midwest, including agriculture, manufacturing, and health care.
“Our opportunity in this part of the country is directly related to the employment base here,” Horne said.
The Idea Fund’s new effort comes at a time when venture capital dollars have been drying up across the board. Last month, Pitchbook reported that global VC investments fell to a near five-year low in 2024’s first quarter. Horne said that VC firms have objectively fewer dollars than they did only a year or two ago. “The result is there’s just less capital for companies to try to raise from,” he said. “The reality is there’s the same amount of competition for fewer dollars.”
Horne said that raising the new fund was yearslong grind. He lined up an anchor investor back in November 2020, then took a slight pause during the pandemic. The firm pulled in most of the capital between 2022 and 2023, with the last limited partners signing on this year.
“In a tough market, the new funding allows us to lean in, scaling our offerings and helping our portfolio companies move even faster and farther,” Horne said in a statement last week. “With venture markets contracting, supporting our region’s most promising entrepreneurs is now more important than ever.”