Venture capital funds and angel investors pumped more than $276 million into Wisconsin-based startups in 2016. That was a 6 percent increase over the previous year, when early stage companies in the state raised $209 million; however, the 2016 total was lower than the $346 million that Wisconsin startups raised in 2014.
Those figures and many more can be found in the Wisconsin Portfolio, a yearly report compiled by the Wisconsin Technology Council. The publication, which was released recently, gathers data from public reports, regulatory filings, and surveys. Together, these sources of information produce a more thorough look at angel and VC deals in the Badger State compared to some national studies.
Nationally, 2016 marked a step back in venture activity from the previous year. According to the Venture Monitor report released by the National Venture Capital Association and Seattle-based PitchBook, venture firms invested more than $69.1 billion in U.S. companies in 2016, down from $78.9 billion in 2015.
One encouraging statistic for advocates of entrepreneurship in Wisconsin is that 53 startups here raised $1 million or more in 2016. That’s up from 46 in 2015 and 38 in 2014, according to the report.
“Our report shows continued growth,” Bram Daelemans, who directs the Tech Council’s investor networks, says in the report. “The number of companies receiving funding has steadily increased since 2011. Entrepreneurs and their companies will ultimately be driving Wisconsin’s future success.”
Last year, 137 early stage businesses in the state raised money from investors, and the average deal size was $2 million. Both figures marked improvements over 2015, when 128 startups received funding and the average deal amount was $1.6 million, the Tech Council says. As was the case in 2015, the majority of early stage companies that landed investments last year were not raising their first round of capital.
According to the report, the five biggest investments into Wisconsin-based startups made in 2016 were, in descending order: Propeller Health ($21.5 million), Midwestern BioAg ($21.3 million) Engineered Propulsion Systems ($15.2 million), Shine Medical Technologies ($11.5 million), and Eatstreet ($11 million).
Still, as PitchBook and the NVCA’s numbers show, the amount of money investors are putting into Wisconsin-based companies remains a drop in the national bucket. Moreover, the Ewing Marion Kauffman Foundation recently ranked Wisconsin as the worst state for startup activity for the third consecutive year. In the Wisconsin Portfolio report, the Tech Council recommends some of the same policy changes that the organization proposed at the time Kauffman released this year’s rankings. Among the suggestions are “rethinking” legislation governing corporate noncompete agreements, and increasing the amount an investor is allowed to put into an early stage business and offset with a partial tax credit.
It’s not clear at this point whether the state’s 2017 startup funding total will again surpass the previous year’s total. The report lists some of the current year’s largest deals, including UAS Laboratories ($21.2 million), Promentis Pharmaceuticals ($17.2 million), and Redox ($9 million).