WED AM News: Tech Council ups estimate for 2021 early-stage investment to $852M; Entrepreneur points to opportunities for health startups

— The Wisconsin Technology Council has updated its estimate for 2021 early-stage investment in Wisconsin to $852 million. 

That’s up from the $810 million figure announced by the Tech Council earlier this month, capturing more investments that occurred last year. It’s well above the state’s previous annual record of $483.6 million in 2020. 

The update was provided yesterday during a webinar hosted by the Tech Council. 

Joe Kremer, director of Tech Council Investor Networks, says the organization will continue to collect data in the next several months and will publish its Wisconsin Portfolio Report in the spring. He noted the investment total came from 119 companies — five more than last year. 

“This is great, and it’s a great trajectory and we want to keep it up. But we definitely don’t want to take our foot off the pedal because we still have a long way to go … before we start getting equal with our neighbors,” he said. 

He noted the top deals in the state “keep getting larger” over the years and have driven the overall growth in funding. In 2019, the seven largest deals were under $25 million each, while none of the top 10 deals from 2021 were under $20 million. 

“We’ve been raising more dollars for each of these companies as they’re growing, and they’re becoming successful and moving forward,” Kremer said. 

The 10 largest deals from 2021 were: Fetch Rewards, with $210.7 million; SHINE Technologies, $150 million; Redox, $45 million; Veda Data Solutions, $45 million; Leo Cancer Care, $25.3 million; DataChat, $25 million; Rentable, $22.5 million; FlexCompute, $22.5 million; Elephas Biosciences, $21 million; and Sellars Absorbent Materials, $20.5 million. 

See earlier coverage with more details on the Tech Council figures: 

— The head of Veda Data Solution, a Madison-based health software firm, says the workforce shortage and pandemic challenges have created opportunities in health care for startups.  

“The workforce shortage is moving people to be more open to technology than they were before, if what you’re doing is creating an automation or efficiency where they don’t have to struggle to find employees to do things manually,” said Meghan Gaffney, the company’s co-founder and CEO. 

She spoke yesterday during the Tech Council webinar, highlighting fundraising efforts from last year and discussing investment trends in the health care space. Her business had the third-highest investment total in the state last year at $45 million, tied with another Madison company called Redox. 

“I think it’s really opportunities that are opening up in the COVID space now, where it’s just finding what the right pain point is,” Gaffney said. 

Veda Data Solutions, which launched in 2015, has a machine learning platform that aims to save health care payers and providers up to 90 percent in costs through automation. The company recently moved its headquarters from Washington, D.C. to Madison. Gaffney explained that decision was driven in part by the state’s “abundance of health care and technology expertise.” 

She noted the company has been able to recruit well-trained workers from larger companies like Epic, as well as specialists from the academic community in Wisconsin. She also said the lower cost of operation in the state was an attractive proposition. 

Mark Bakken, managing partner for Madison-based HealthX Ventures, said he’s hopeful that as the state continues to build up its investment and startup ecosystem, more companies like Veda Data Solutions will consider moving to Wisconsin. HealthX Ventures contributed to the company’s investment total for last year. 

“It’s really gratifying to be part of something like that, where they’re actually significantly lowering the cost of health care and making it better, and creating jobs, and making money for investors — it’s like all these good things you can do at once,” Bakken said yesterday. 

Bakken is among the most active venture capitalists in the state. He has a wealth of experience with launching and selling startup companies as well. Gaffney said his expertise and guidance has been helpful as the company navigates relationships with very large customers. 

“You get pushed around a lot, in terms of what you can charge for your product, and everybody wants something as close to free as you can get it. I don’t blame them for that, I feel the same way,” she said. “I think having an operator to lean on that’s been on my side of that negotiation was really, really valuable to me.” 

— An economic development expert with the Rural Wisconsin Health Cooperative says the pandemic put a spotlight on the state’s rural health workforce problems. 

“There’s a greater awareness about these workforce challenges and more of an appetite to address them,” said Marie Barry, the group’s director of community economic development. “There’s no magic baby boom coming in Wisconsin’s rural communities, so it’s vital that we quickly and seriously talk about what our plans are to ensure we have adequate workforce.” 

She spoke yesterday during UW-Extension’s 2022 Wisconsin Rural Economic Summit, highlighting persistent and emergent challenges facing rural health care in the state. Along with the workforce shortage, she pointed to aging infrastructure, low patient volumes, rising drug costs, the ongoing opioid epidemic, cyber threats and other issues. 

Despite these challenges, Barry also noted the state has a “really strong” network of rural hospitals. She explained Wisconsin has avoided many of the hospital closures seen across the country over the past 15 years or so, with the majority occurring in the southeastern United States. Since 2005, just one rural hospital in Wisconsin has closed, she said. 

She said Wisconsin has avoided the issue due in part to rural hospitals in the state having a higher median operating margin, “which lends more financial stability” to these care providers. 

“That was really important going into COVID, because COVID threw hospitals for a financial loop, so having that higher median operating margin and lower negative operating margin in comparison to other portions of the country was a huge asset for our rural hospitals,” she said. 

Still, Barry pointed to research showing Wisconsin is projected to have a shortage of over 16,000 registered nurses by 2035, which poses a serious threat to rural care. Other professions are also projected to see shortages, but she said the lack of nurses will have the largest impact on rural communities. 

She said rural care providers are trying to offset that projected shortfall by “looking at how we can take the workforce we do have, and better train it, better cross-train it, make it more flexible, more adaptable and better suited to care for our rural population.” 

— Wisconsin has seen the largest drop in union membership in the country since 2000, according to a new Wisconsin Policy Forum report. 

The percentage of employed state residents in unions fell from 17.8 percent in 2000 to 7.9 percent in 2021, dropping below the national average of 10.3 percent. WPF found Wisconsin’s 9.9 percent decrease was the largest in the country, and more than three times the national decline of 3.1 percent. 

That decline brought Wisconsin from 10th among U.S. states for union membership to 28th over about two decades, the report shows. 

While Wisconsin saw the most significant decline over the past 20 years or so, this trend has been occurring since at least the early 1980s. In 1983, 465,600 Wisconsin workers were union members, making up 23.8 percent of the state’s workforce. By 2020, that number had fallen by more than half to about 227,000. That made up 8.7 percent of Wisconsin’s workforce. 

The overall decline has occurred among both private and public employees in the state, though a significant drop was seen in public union membership following 2011 Wisconsin Act 10 being signed into law. 

Report authors say the future of unions in the state will likely depend on broader labor market trends. 

“A tight market like the one currently capturing the headlines tends to strengthen the hand of workers, either individually or collectively,” they wrote. “Still, at least for now, unions in Wisconsin and nationally seem likely to play a more modest role than they did in previous decades.” 

See the full report: 

— Nearly half of the respondents to Wisconsin Manufacturers and Commerce’s latest business survey say inflation has caused their costs to rise more than 10 percent. 

The survey tapped 265 businesses in the state with questions on supply chain challenges, inflation and related issues. While 93 percent of respondents said costs for supplies have increased due to supply chain woes, 48 percent said they turned down orders because of these problems. Another 21 percent said they’ve moved from global suppliers to those based in Wisconsin or the United States. 

Meanwhile, 10 percent of respondents said their costs have increased more than 30 percent due to inflation. 

“When companies are facing 10, 20 and 30 percent cost increases, it means consumers will be next in line for double-digit hikes,” said WMC President and CEO Kurt Bauer. “Unfortunately, we see no signs of inflation easing in the coming months.”

When asked where they lay the blame for U.S. supply chain problems, 40 percent of respondents pointed to the Biden administration’s policies, 27 percent blamed the workforce shortage and 25 percent said they’re caused by the COVID-19 pandemic. 

And 61 percent said the Biden administration is at fault for inflation, compared to 21 percent blaming COVID-19 and 13 percent blaming the workforce shortage. 

Bauer argues in the report that federal lawmakers are “just making the problem worse.” 

“The federal government has flooded the economy with trillions of dollars we don’t have, and President Biden is just accelerating inflation with policies that make it more expensive to fill up our cars and heat our homes,” he said. 

See the survey results: 

See recent coverage of earlier survey results: 

— UW-Madison researchers are using models of leukemia in mice to better understand what factors lead to its development. 

While scientists have previously identified genetic markers for the disease, a release from the university shows it can be difficult for clinicians to determine when “serious stages” of leukemia will begin. Both the patient’s environment and genetics can play a role. 

UW-Madison cancer researcher Alexandra Soukup says disease progression can be “extremely variable” even within a single family, with a grandparent potentially not showing symptoms until the cancer emerges late in life. 

“By contrast, one of their grandchildren with the same genetic alteration may have serious symptoms starting at age seven — like lymphedema, which is severe swelling in the arms and legs, or low blood cell levels called cytopenia, which can cause life-threatening infections,” she said in the release. 

Emery Bresnick, director of the Wisconsin Blood Cancer Research Institute, partnered with Soukup and other scientists to test various factors on mice with genetic mutations linked to leukemia. These factors, or “triggers,” affect bone marrow failure, which is associated with the development of leukemia. The results of their work were published in the journal Science Advances. 

The three triggers tested on the mice were a common chemotherapy drug, a component of bacterial cell walls that causes inflammation, and a drug that prompts stem cell division before transplants in humans. For all the mice, the typical “healthy” stem cell response in their bone marrow did not occur. 

“Our mouse model provides a unique system to discover what may trigger severe disease presentations in humans, and we can use this system to develop strategies to counteract or nullify the triggering,” Soukup said. “We would want to apply such strategies to patients.” 

Find the full study here: 


# ‘More history to be made’: The decade-long effort to restore Milwaukee’s Bronzeville to its glory gains momentum

# Wisconsin union membership dipped sharply over two decades

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