Fewer Wisconsin startups raised investment dollars last year than in 2016, according to a recent report from the Wisconsin Technology Council.
The total amount of capital raised also dropped compared to last year, but both numbers represent “a return to normalcy” according to a Tech Council release. That’s because 2016 was a record year for the state in terms of investment activity.
More than $231 million was raised by 127 companies in 2017 — lower than the $276 raised in 2016, but still the second-highest amount on record by the Tech Council’s count. Early stage investments accounted for $128.3 million in 2013, $218.8 million in 2014 and $209.5 million in 2015.
“This may just be a temporary case of investor fatigue. The increased activity these past five years may be catching up to investors,” said Tom Still, president of the Tech Council. “A lot of companies have secured a lot of capital. While many of them may be successful and growing, not many of them have had the successful exits Wisconsin needs to get new and existing investors excited and active.”
Investors put most of their money into health care and information technology. In 2017, 67.7 percent of the deals and 79.7 percent of dollars invested were in those areas.
The Wisconsin Portfolio is created using public reports, filings and surveys of investors in the state. The totals might not capture every deal that took place in the state, as some investors may not have participated in the survey.
The Tech Council’s investor networks are clustered in the Madison and Milwaukee area, but a group of angel and venture funds is growing in the Fox Valley region in the northeast. Others can be found in La Crosse, Chippewa Falls and as far north as Vilas County.
Report authors note “mild concern” with the size of investment rounds. Thirty-seven companies each raised at least $1 million, down from 53 in 2016 and 46 in 2015. That’s compared to 27 over-$1 million deals in 2013 and 38 in 2014.
“This may also be an indication of a larger shift within the industry, with VCs managing larger funds and writing larger checks to fewer companies,” said Bram Daelemans, director of the Tech Council Investor Networks.
The average deal size fell to $1.82 million, from $2 million last year. That’s up slightly from 2015, when the average deal size was $1.6 million.
Women-led or women-owned businesses made up about 16.5 percent of funded companies, down from 19.7 percent in 2016. That’s still above the national average, the report says.
The top deals were: SHINE Medical Technologies, $24.7 million; UAS Laboratories, $21.2 million; Promentis Pharmaceuticals, $17.6 million; Fetch Rewards, $10.4 million; and Redox, $10 million.
Through the first five months of 2018, the report found about $51 million has been raised by 32 companies. That’s a slower start than in 2017, but “still continuing the momentum in angel and venture capital investing that has been building for the better part of a decade,” report authors said.
–By Alex Moe