'Quiet' Midwest Teems With Water Venture Capital

Some of the biggest players in water are General Electric(GE), Danaher(DHR) and Ametek(AME). There's an exchange traded fund that focuses on water: PowerShares Water Resources(PHO). The ETF has increased 20% this year, almost double the 12% gain of PowerShares' S&P 500 ETF.

There are 120 water-related companies in Wisconsin alone, including water-meter maker Badger Meter(BMI) and water-heater maker A.O. Smith(AOS).

Silicon Pastures was an early investor in Milwaukee water-sensor startup Aqua Sensors, which was bought by Thermo Fisher Scientific(TMO) last year.

To that end, the University of Wisconsin in Milwaukee this year established the School of Freshwater Sciences, the only graduate school in the nation dedicated solely to the study of fresh water. The school has partnered with the Milwaukee 7 Water Council, which aims to make Greater Milwaukee the global hub of fresh-water research and development.

"There are many more entrepreneurs in the Midwest than the coast gives us credit for," says Steve Einhorn, general partner at Capital Midwest Fund, a VC firm in Milwaukee that focuses largely on medical startups.

Most venture-capital investors work on either coast. In the second quarter, the Midwest saw only 5.5% of the nation's venture deals, compared with Silicon Valley's 32% and New England's 13%, according to Thomson Reuters(TRI).

Heartlanders tend to be more humble, in contrast to the aggro culture of VC. "Aw shucks" isn't likely to fly in a pitch meeting.

"There's a definite cultural bias toward being low-key and maintaining a low profile," Esser says.

To wit: Milwaukee's biggest employer, Northwestern Mutual, is known as "The Quiet Company" because of its lack of advertising and publicity.