Early-stage Wisconsin companies raised more than $450 million in investment capital in 2019, according to the 2020 Wisconsin Portfolio from the Wisconsin Technology Council and its partner investor networks. This marks the first year investment has surpassed the $400 million mark.
The Tech Council and its investor networks released their annual compilation and analysis of Wisconsin’s entrepreneurial and investment activity last month. Although focused on 2019 numbers, the report also acknowledges the impact COVID-19 is likely to have on this year’s investments.
“Many investors are adapting to the times instead of going into hiding and waiting for the pandemic to blow over,” writes Tech Council President Tom Still. “Deals are still getting done in 2020, although not as many as transpired in 2019 and perhaps not always on terms entrepreneurs once envisioned.”
By the numbers
As for 2019, the Tech Council reports that many of the numbers were at an all-time high. Average funding round size hit a new high of $3.8 million, with median round size passing $700,000 for the first time. Of the 123 companies included in the report, 43% of companies raised at least $1 million.
Equity funding accounted for almost 58% of deals, followed far behind by debt funding or a combination of debt and equity funding. About 39% of deals included investors from Chicago, Boston, New York or California.
Two-thirds of early-stage investment deals in 2019 involved companies in life sciences or information technology, but a range of other sectors, including advanced manufacturing, consumer products and medical devices, were also represented.
Women-led or women-owned business comprised 22% of the companies that raised funds in in 2019, placing Wisconsin within the national average range of 20% to 25%.
The full report lists the reported deals and amount raised, as well as annual trends and a breakdown by industry.
The report also includes an update on Tech Council activity at the legislative level, including efforts to expand Act 255, which governs WEDC’s Qualified New Business Venture (QNBV) Program. From 2005 to 2019, $155.7 million in tax credits were granted, generating $622.7 million in private investment in almost 500 QNBV-certified Wisconsin companies.
Based on the successes and shortcomings of the Badger Fund of Funds, the Tech Council is also pushing for the creation of a larger public-private investment fund similar to those in surrounding states.
Although COVID-19 has impacted plans in ways that are still not fully known, and for which the end date is not certain, the Tech Council is urging the governor and the Legislature to consider the creation of such a fund during the 2021-2023 session, noting that “When the recovery gets underway… a five-year goal should be to increase the total amount of venture capital dollars invested in Wisconsin with return on investments that are at or above the national average for the various stages of investing.”
About the Tech Council
The Wisconsin Technology Council is an independent, non-profit and non-partisan advisory board comprised of tech companies, venture capital firms, higher education, research institutions, government and legal experts. In addition to its advisory role to the governor and the Legislature, it promotes innovation and entrepreneurship through its individual membership arm, the Innovation Network, and acts as an economic catalyst through initiatives like the Governor’s Business Plan Contest and the Wisconsin Tech Summit.