[Please read the disclaimer once daily -Ed.]
Investments in Wisconsin start-up businesses have gone up according to a report by the Wisconsin Technology Council. The report showed that more than 135 early stage startups received investment capital in 2016. The uptick was a 7 percent increase over the previous year and was double the total number of investments in 2011. The total amount of capital that early-stage companies raised in Wisconsin came to about $276 million in 2016. It is important to note that this was less than the $345 million that was raised in 2014. It was still more than the total investment capital in 2015.
The Wisconsin Technology Council (WTC) compiled the data from surveys, filings, and public reports. They made use of the Tech Council Investor Networks to come up with the annual totals.
The average deal size in 2016 was two million dollars. This was 25% more than that of 2015. Propeller Health made the largest deal when it raised $21.5 million last year. BioAg is also based in Madison. It came in second while Engineered Propulsion that is based in New Richmond came in third. Eatstreet and SHINE Medical Technologies in Janesville rounded up the top five. Most of the companies in the top ten are based in Madison. This speaks to the viability of the location for startups. Most of these startups operate in the healthcare industry.
Tom Still is the president of the council. He released the report at an event in Madison. He was there to kick off the Wisconsin Entrepreneur’s Conference. He also led a panel discussion where the agenda was the venture capital funds that operated within the state. Tom noted that there was a period when they would not have had the discussion because the number of funds in the state was low. He observed that the increase in funds showed that the startup ecosystem was healthy and had a lot of promise.
The panel included several venture capitalists and investors who had funds in Wisconsin. They included David Trotter of Winnebago Seed Fund, Brian Kaas of CMFG Ventures, Greg Baker of Bascom Ventures, and George Arida of 30Ventures. Jonathan Horne of the Idea Fund of La Crosse pointed to the Idea Fund that had raised $12 million. Horne stated that the fund would be announcing its first investments very soon and that they were doing due diligence. Trotter’s fund had closed a $10 million investment. He joked that his phone had not stopped ringing. Many entrepreneurs across the state were expressing their interest.
An investor from Rock River said that it would be investing in the second and third round investing stages of companies. Rock River, Winnebago, and Idea Fund are a part of the Badger Fund of Funds project. They entered into an agreement where they said that they would only make investments in companies in Wisconsin. CMFG was launched by CUNA Mutual Group. It has invested in several early stage companies. The fund that was started 18 months ago has invested $45 million in these companies. CMFG and NM Future Ventures have not invested in any companies in Wisconsin. They are interested and are examples of corporations that want to join the venture capital space. Schedler of NM Future Ventures said that his fund had invested in companies at the coast. He said that he spent most of his time on planes and was looking forward to investing in those that were closer to home.
Later Stage Funding
One of the issues that many of the panelists had with the startup ecosystem was the concept of the “valley of death.” Most startups were able to raise seed funding. They struggled to progress beyond that point. One investor said that there was a lot of activity in the startup space in Madison and Milwaukee. Kaas of CMFG mentioned that they were trying to boost this and promote the companies even further.