John Schmid takes a look at a proposed Venture Capital Fund for inner city Milwaukee.

Venture capitalists, a clique of financiers obsessed with risk and exponential growth, incubated the Internet, seeded the bioengineering boom and propelled the likes of Google, eBay, Microsoft, FedEx and Starbucks out of their infancy. Now, for the first time, they intend to apply the same approach to Milwaukee’s inner city.

VC in Wisconsin is very much a chicken and egg problem. My view is that Wisconsin lacks a risk taking, entrepreneurial environment, which is ironic because it used to exist here, in the days when manufacturing was the rage. We see evidence of this everywhere, from The Madison School District’s annual “same service” approach to budgeting in an era of constant change to our very slow adoption of the critical assets for the next generation of entrepreneurs: broadband (wifi and fiber networks to the home). Wisconsin is not a player politically in these initiatives, unlike other areas.

The truth, in my view, is that there’s plenty of money in Wisconsin. We’re simply lacking the will, and perhaps people – though I wonder about this, to apply it to new businesses.

Finally, any VC discussion must include internet entrepreneur Paul Graham’s essay: A Unified Theory of VC Suckage. (I know some venture capitalists and believe they can play an important role. The idea and execution, however are critical).

Finally, why not look at results? Madison’s fast growing (now – started in 1978) Epic Systems never took venture capital, while Berbee did (started in 1994). Judy Faulkner has run Epic from the beginning while Berbee founder Jim Berbee hasn’t run the company for years, and recently left. Foodusa, hypercosm, guild.com (apparently 40+M, including over 2m of local funds) and sonic foundry all took venture capital. A number of local biotech firms are also vc financed.