Wisconsin Startup Investments Shrink, But Deal Flow Up in 2013

Wisconsin startups collected $128.3 million from investors last year, down 21 percent from the previous year’s haul. But the number of deals rose 16 percent, as 86 companies received funding.

That’s according to this year’s Wisconsin Portfolio, a newly released report from the Wisconsin Technology Council and its Wisconsin Angel Network. The annual publication gathers data from public reports, filings, and surveys, usually producing a more comprehensive look at angel and VC deals in Wisconsin than some national studies. The Wisconsin Portfolio’s numbers don’t jibe with the MoneyTree report, for example, which uses Thomson Reuters data compiled from a survey of VC firms nationwide. MoneyTree’s January report found that Wisconsin saw only $35.9 million invested in 19 VC deals last year. That report’s overall sentiment matches the latest Wisconsin Portfolio, however, as both studies found that deal flow was up in 2013, while the investment total dropped.

Last year’s $128.3 million invested was the lowest amount tracked by the Wisconsin Portfolio since $46 million in 2009, although the report noted that Wisconsin’s venture capital activity is usually low compared with other states, and “often one or two large deals can skew the totals.”

Deal sizes last year ranged from $25,000 for Cloud Learning Network to $38.3 million for Nordic Consulting, the report found. Rounding out 2013’s top five deals were StudyBlue ($9.3 million), Wisconsin Brewing Co. ($8 million), Propeller Health ($7 million), and Montage Talent ($4 million).

At least 27 Wisconsin companies raised more than $1 million last year, the report found. In addition to getting money from active local investors like Madison-based Wisconsin Investment Partners, companies here also drew interest from out-of-state investors, including some from Chicago, Boston, California, and Brazil, the report noted.

Overall, deal sizes were down last year, which the report attributed to investors’ shift toward more software startups, which often require less capital to get off the ground than some other industries.

“Although we saw fewer ‘big-dollar deals’ in 2013 than in some of the past years, there are new pieces of the puzzle coming together in building a more robust venture capital ecosystem in Wisconsin,” said Tom Still, Wisconsin Technology Council president, in a press release. “We are moving in the right direction as exciting new companies and funding options continue to appear statewide.”

Those new Wisconsin-based funding options include 4490 Ventures, a $30 million micro-VC fund backed by the Wisconsin Alumni Research Foundation and the State of Wisconsin Investment Board; the nonprofit BrightStar Wisconsin Foundation; and the state government-backed “fund of funds” program.

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