Source: Baraboo News Republic

Looking to spur economic activity in low-income areas, the federal government has named much of Baraboo an Opportunity Zone.

Baraboo is one of 120 locations in Wisconsin designated Opportunity Zones by the federal government, and the only one in Sauk County. Uncle Sam is offering tax breaks for individuals or groups acquiring commercial properties in economically distressed areas, including deferment and even forgiveness of capital gains taxes.

The properties themselves don’t have to be distressed — anything purchased within the zone is eligible. Opportunity Zones lie areas with poverty rates of at least 20 percent. Baraboo’s zone covers the western and southern part of the community.

“It really is trying to get investment into those areas,” said Patrick Cannon, director of Baraboo’s Community Development Authority.

Opportunity Zones were created in the 2017 Tax Cuts and Jobs Act, which took effect Jan. 1.

Those buyers could include people or corporations facing federal capital gains taxes. They can make investments up to the amount of their capital gains obligation. In exchange, they can defer paying those taxes, enjoying a 10-15 percent write-off if they keep the property for five to 10 years, or see tax forgiven entirely if they keep it longer than 10 years.

The challenge is identifying areas that need stimulus but aren’t so distressed they scare off investors, said Farshad Maltes, director of strategic business development for the Wisconsin Housing and Economic Development Authority. Tax breaks are offered on investments in real property, stock and equipment.

“You have to have great need and also be able to attract investment,” he said.

The federal government estimated individuals and corporations held $6 trillion in unrealized capital gains in stocks and mutual funds alone in 2017. “The pool of potential investment is quite large,” Maltes said. “It’s a great opportunity.”

Ascertaining how many taxpayers take advantage of that opportunity will take years, as investors are required to keep properties several years before they can enjoy benefits. “It’s still kind of new,” Cannon said.

“We’re trying to figure out the economic impact of it,” said Brett Leifbried, an accountant at MBE CPAs in Baraboo. “Generally a lot of people just aren’t aware of it.”

Taxpayers face capital gains taxes when they sell a property or see its value grow. Average Americans also could benefit from the Opportunity Zone program. “It could be someone buying a duplex,” Leibfried said. “Every little tax credit you can take advantage of, I would think every bit makes a difference.”

There is no application or approval process — investors will simply note their Opportunity Zone acquisitions when they file their tax forms. “I’m sure we will definitely see activity,” Maltes said.

Source: Judy Newman | Wisconsin State Journal

Exact Sciences Corp. says it is working on separate diagnostic tests to detect 15 of the deadliest types of cancer, and its ultimate, eventual goal is to create, with its partners at Mayo Clinic, a single, universal blood test for cancer.

CEO Kevin Conroy said the Madison company, known for its Cologuard stool-based, home test kit for colorectal cancer, told the J.P. Morgan Healthcare Conference in San Francisco earlier this month that Exact Sciences has three top priorities for 2019: To “power” its partnership with drug giant Pfizer; to make significant enhancements to Cologuard; and to advance its liquid biopsy program.

Conroy also disclosed several other significant developments for the Madison company at the conference, the biggest annual meetup for innovative health companies and the investment community:

• The agreement with Pfizer to market Cologuard — just started in October — already has been expanded to include not only Pfizer’s internal medicine sales representatives but also those who call on obstetricians and gynecologists, adding exposure to thousands of physicians.
• When Exact’s second lab is finished, the company will have the capacity to process 7 million Cologuard tests a year, up from previous estimates of 5 million. The first lab on Badger Road, expanded in the past year, can now handle 3 million test samples a year.
• Exact is working on “Cologuard 2.0” — to make the stool test even more sensitive to early cases of colorectal cancer.
• A blood test for colon cancer to find cases as early as stage 1 is in the works.
• One clinical trial of a blood test for detecting liver cancer is underway and a second trial will begin this spring.

Conroy said of the 1.9 million people who have used the Cologuard home test kit since it went on the market four years ago, 8,700 early-stage cases of colorectal cancer have been found and 60,000 pre-cancerous polyps detected.

It will take up to two years to implement Exact’s agreement to put its records onto the platform of Verona electronic health records provider Epic Systems Corp., Conroy said. But when that happens, physicians will be more likely to prescribe Cologuard because they will be able do it electronically instead of filling out a form and faxing it, he said. In addition, it will let Exact find out what happens down the road to a patient who has used Cologuard.

Exact Sciences now has 500 salespeople of its own — not counting the Pfizer contingent that’s also marketing Cologuard. “This makes us the largest commercial organization in advanced cancer diagnostics, and we intend to extend that capability,” Conroy said.

About the prospects for an Exact Sciences blood test for colon cancer, Conroy said the data so far “is better than anything that we have seen.” But it’s not being released yet because the company is looking for additional biomarkers, he said.

He said a single blood test may screen for a wide range of cancers in the future.

“Ultimately, the goal is to develop a universal cancer screening test so that everybody in this room can get one test every year or every other year to see if they may have cancer,” Conroy said.

Exact’s goal, he said, is “to make early detection possible across the spectrum, because we know that cancer is a disease of the DNA, and that DNA ends up in the blood.”

Exact Sciences, which moved to Madison from the Boston area in 2009, now has nearly 2,000 employees, with about 1,500 of them in the Madison area, and the company is currently seeking to hire about 500 more, spokesman Scott Larrivee said.

Source | Xconomy

The cost of doing business is always on the mind of startup executives. Salaries, rent, and other expenses like software licenses can often make or break a company.

Much of the math comes down to how much money you can raise for your business, and startups often look to San Francisco and Silicon Valley to find the capital they need. Where the business is based would seem to have an impact on how much money it can raise: If you’re a San Francisco startup, you’d presumably get more money to cover the price of those high-salary engineers and that expensive office space.

It’s not a new concept that it’s pricier to do business on the coasts, and startup activity has been flourishing in the middle of the country as a result, from Detroit to San Antonio. But how much cheaper is it—or how much less venture funding does a startup need to raise—to operate a business in middle America versus the Bay Area?

One Philadelphia executive put pen to paper (er, finger to keyboard?) and developed a website that calculates a cost-of-doing-business comparison for various cities around America. Robert Moore, CEO and co-founder of Philadelphia-based software-as-a-service business Crossbeam, calls the website VC Arbitrage, which aims to compare what raising money in San Francisco will mean to your business if your startup is based in another city. It’s easy to think that a business operating in a city with lower costs might get less funding, or be offered a less attractive term sheet, from Bay Area VCs than one that is based in San Francisco.

Moore contends that isn’t true—at least, according to his experience—adding that he believes venture firms do not discount valuations based on the location of a startup’s headquarters. He says Bay Area venture firms will pay the same for a good company regardless of its location—that a deal for a company outside of San Francisco wouldn’t result in greater dilution—which would mean businesses in a lower-cost city will have more relative cash to operate. The reason? Venture firms work in a competitive environment, Moore told Xconomy. “When a (San Francisco) VC wants to invest, you have typically demonstrated that you are a world-class company and you can command a top-of-market valuation regardless of where you are based,” Moore wrote in an e-mail.

Why not then operate your business in a place where a dollar can stretch further, argues Moore, whose business Crossbeam added $3.35 million in a seed funding round this month, largely from Bay Area venture firms. If he can spend $3.35 million in Philadelphia, where salaries and other costs are lower relative to San Francisco, without giving up additional equity (causing dilution to his stock), he’ll take it. Venture firms in San Francisco pay a higher “price per share” than local VCs, too, Moore says, which is a reason why he is only using money raised from Bay Area firms in his calculator.

Xconomy compared the various innovation hubs it covers to the Bay Area using Moore’s website, estimating how much raising $1 million in San Francisco is worth to each other region. Click through the slideshow to see where your city ranks, from highest cost to most affordable.

Moore’s calculations consider the amount startups must pay for engineers, sales people and other staff, rent, and the cost of business products, such as software licenses. The data is heavily weighted toward staff salaries, which account for 75 percent of the formula, while the cost of business products remains consistent throughout each city because things like cloud servers and computer hardware typically don’t change by geography, Moore wrote in a blog post this week. (These comparisons are largely focused on the tech industry; for another industry, like life sciences, the weighting of the categories might change, but the core principles would stay the same, Moore says.)

If a startup does raise money from a San Francisco venture firm, there are indeed benefits to being close to them, and hiring talent there—which can outweigh a lower cost of business. In his blog post, Moore argues that cities outside the traditional tech hubs are quickly maturing, with extra resources to develop tech talent, experienced mentors who can compensate for not being near a VC, and new business models that allow for remote workers.

Images courtesy of VC Arbitrage and Robert Moore.

David Holley is Xconomy’s national correspondent based in Austin, TX. You can reach him at dholley@xconomy.com

Every year Montrose Development Advisors, a team of economic development planning professionals based in Columbus, Ohio, releases a list of site location trends. Naturally, we at MadREP wait to see if they align with what we are seeing in our market and hearing from other site selection consultant experts.  Now, without further ado, here are the top ten corporate site location trends for 2019 from Montrose:

1. Amazon HQ2 will portend greater scrutiny on incentives for corporate site selection projects.
2. Historic preservation project will bring Millennials back to the urban core
3. Tech, skills and quality will dominate the important workforce discussion.
4. New local Living Wage laws will drive corporate site location to neighboring communities.
5. Technology-based industry disruptors will impact retail, banking and insurance.
6. Opportunity Zones will begin to blossom
7. AVs and IoT will drive Smart Community and digital revolution.
8. Western and Southern states and mid-sized urban market to remain hot.
9. Logistics will drive economic growth.
10. Dysfunction in Washington is unlikely to slow corporate site location projects.

These trends should not be confused with the many site selector criteria lists that are produced each year. We expect that this year, just as in years past, the top four trends/criteria will still be workforce, assets (spec buildings, certified sites, gold shovel, etc.), infrastructure and incentives, even though the latter is not one that most site selectors will admit to. Indeed, incentives continue to play a growing role in site selection. Amazon and FoxConn changed the game in the last two years and now major corporations, and particularly their boards, will expect that massive incentives are front and center on every site selection project. What will be critical is whether states and cities react and move more cautiously on these megadeals, or continue to go all-in.

As all industries continue to add more technology to their operations, the quality and quantity of talent with coding, engineering, or science experience/education will be drivers in attracting and winning projects. Regions with engineering colleges and universities will be at an advantage if employers can create solid internships and FTE employment opportunities that keep graduates in the region following graduation. Here in the Madison Region, we rank #4 in the United States with respect to the percentage of our workforce having mathematical and computer science occupations and were recently featured on Livability’s list of best places for recent college grads.

The Madison Region’s robust assets and infrastructure are very attractive to site selectors. We are strategically located in the center of the United States between the three major metros of Chicago, Milwaukee and Minneapolis/St Paul. Our Region is bisected by three interstate highways, several four-lane federal highway systems, and transnational railroads. In addition, we are a manufacturing and agriculture state that makes products the rest of the world consumes. Certified and Gold Shovel Sites, speculative warehouses for the products that we make and purchase, and logistics partnerships that get products to market efficiently are key opportunities throughout the region. Our airport continues to add direct flights to destinations around the nation, which allows us to be considered for more satellite or regional location opportunities.

Luckily, quality of life also shows up on most lists and that is a criterion which often includes education. The Madison Region does not take a back seat to anyone on this issue and, hopefully, the new administration here will be able to sustain and even enhance that superiority while improving our infrastructure.

Source: In Business Madison

Deciding to go their separate ways on South Park Street, Welton Enterprises of Madison and SSM Health now propose two separate projects that will amount to about $100 million in development at or near the former Truman-Olson U.S. Army Reserve Center property.

According to a Wisconsin State Journal report, Welton hopes to pursue a $24.8 million project named Truman Commons that would include a 40,355-square-foot grocery store, parking lot, and a separate five-story building with 69 housing units and mostly underground parking on a vacant lot at 1402 S. Park St. The developer is asking the city for between $4.5 million and $4.7 million in financial assistance.

SSM, meanwhile, is looking to purchase adjacent property Welton owns at 1312 S. Park St. — currently a 26,000-square-foot Pick’n Save — to build a new medical building that would replace its aging clinic at 1313 Fish Hatchery Road. A city committee is analyzing the proposals.