New data shows that Wisconsin tech companies raised a record amount of venture capital funding in 2019, even though total deal volume in the state remained flat.
The Madison-based Wisconsin Technology Council and its Tech Council Investor Networks released a report this week that shows Wisconsin tech companies raised more than $454 million across 123 deals, the most amount of capital raised by the state’s companies ever.
Last year’s funding was up 51% from 2018, when startups raised $300 million across 121 deals. Though companies raised the most amount of capital in 2019, it didn’t see the most deals. In 2016, there were 138 deals, but the amount raised across them was much smaller at about $276 million.
“Our ecosystem is maturing as a whole,” said Bram Daelemans, the director of the Tech Council Investor Networks. “We had more companies raising larger rounds. It’s great to see.”
Over the five-year period beginning in 2015, the report shows that Wisconsin’s early-stage companies have raised $1.47 billion. Additionally, the average round size is at an all-time high of $3.8 million, while the median round size eclipsed $700,000 for the first time.
Like in years past, Wisconsin’s biotech and healthcare industries attracted the most funding in 2019. The largest deals reported in 2019 included SHINE Medical Technologies ($132 million), NorthStar Medical Radioisotopes ($75 million) and Redox ($36.1 million).
“If you look at Madison’s history, biotech has always been huge,” Daelemans said. “It’s more expensive to bring medical technology to market than it is to do something in IT. No surprise there.”
Other large non-healthcare deals in 2019 included Fetch Rewards ($25 million) and Fasetto ($20 million), which left Wisconsin for Arizona earlier this year.
The report also showed that more funding was funneled to women-led companies in 2019. Twenty-two percent of companies that raised funding last year were woman-owned or woman-led, up from 14% in 2018.
The Madison area was home to most of the state’s funding deals. Last year, of the 123 deals across the state, Madison saw 60 of them, which accounts for 48.8%. The Milwaukee area only saw 42 deals, or 34.1%.
The data reported in the Wisconsin Technology Council’s report was significantly different than that reported by PitchBook at the beginning of 2020. PitchBook reported that Wisconsin startups raised just $204.8 million across 66 deals in 2019. Daelemans said the Tech Council uses public reports, filings and surveys to compile its data.
The steady increase in Wisconsin startup funding can be attributed in part to the number of new Wisconsin-based startup funds, including Titletown Tech in Green Bay and Northwestern Mutual’s Cream City Venture Capital in Milwaukee.
“At the end of the day, it’s all about capital availability,” Daelemans said. “More money is always better.”
Not only are Wisconsin startup raising money from in-state investors, but they are also attracting more out-of-state investments. Investors from Chicago, Boston, New York and California showed up in about 39% of deals in which the investors are known, according to the report.
“There’s certainly room for growth,” Daelemans said. “It’s something that we are aware of and it’s something that we are trying to work on—to get more out of state investors to participate in deals. We’re making headway but we can definitely do a much better job than we are currently.”
