Early-stage investments on the rise in Wisconsin

Early-stage investments are on the rise in Wisconsin, according to a recent report from the Wisconsin Technology Council.

The Wisconsin Portfolio shows that in 2016, 137 companies raised investment capital, up from 128 in 2015. And total investment dollars jumped nearly 32 percent, from around $209 million in 2015 to over $276 million in 2016.

Though this is less than the outlier year of 2014, which had over $346 million invested in 113 deals, the overall number of deals has been on an upward climb since 2011.

“The number of early-stage companies reporting investments has nearly doubled since 2012,” said Tom Still, president of the Tech Council. “It’s evidence that angel and venture investors are finding solid deal flow.”

Some of the biggest investments of 2016 were: Propeller Health with $21.5 million; Midwestern BioAg with $21.3 million; Engineered Propulsion Systems for $15.2 million; SHINE Medical Technologies with $11.5 million; and Eatstreet with close to $11 million.

Bigger deals are also coming more frequently, with 53 deals involving more than $1 million in 2016. That’s up from 46 in 2015 and 38 in 2014.

The average investment size also went up, from $1.6 million in 2015 to $2 million in 2016.

Most investors seemed to put stock in companies working in health care and information technology; nearly 75 percent of total dollars invested in 2016 were in these two clusters. A similar percentage of the number of deals can be attributed to them as well.

The Tech Council gathers data for this yearly report from public and industry sources, as well as its investors’ network surveys.

Data show more than 70 percent of these deals were equity based, while 11 percent were seed and 18 were debt. And about 20 percent of the funded companies are women-led or women-owned — over 5 percent higher than in 2015, and a little higher than the nation’s 17 percent.

The report also touches on a number of new funds and angel networks which popped up in 2016: CMFG Ventures; Northwestern Mutual Future Ventures; 37 Celsius Capital Partners; and Rock River Capital Partners.

Over 58 percent of all deals in the state were made in the Madison region, while nearly 28 percent were in southeast Wisconsin. The rest were split between the Fox Valley and the central, northwest, and northern parts of the state.

Still writes in a special section of the report about the opportunity and need for the state to create a corporate fund of funds, similar to Michigan’s Renaissance Venture Capital Fund.

See a related story on Wisconsin investors calling for a corporate fund of funds: http://wisbusiness.com/index.iml?Article=387063

See the full report: http://wisconsintechnologycouncil.com/wp-content/uploads/2015/09/2017-WI-Portfolio.pdf

–By Alex Moe