Despite strong finish, state venture capital ends 2016 down

Fourth quarter was best in two years

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The second best quarter in the last four years for venture capital deals in Wisconsin was not enough to overcome a slow start to the year as investments fell by 8 percent in 2016, according to data from PricewaterhouseCoopers and CB Insights.

Wisconsin companies completed six deals for almost $69.2 million during the fourth quarter of 2016. The total trailed only the $174.1 million secured in the fourth quarter of 2014 over the last four years.


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For the full year, Wisconsin companies completed 21 deals for $112.8 million, down 8 percent from the $122.8 million secured in 2015 for 33 deals.

The per deal average for venture capital investments in the state rose from $3.7 million in 2015 to $5.4 million in 2016.

The PwC Money Tree report includes only verifiable funding from venture capital backed firms into private companies. It doesn’t include business development or research and development arrangements, loans or government funding.

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Investments across the entire country were down 20 percent for the year to $58.6 billion and the number of deals fell by 889 to 4,520.

The report said investor caution prevailed at the end of the year, with a 17 percent drop in funding during the fourth quarter and the total number of deals dropping below 1,000 for the first time since the end of 2011.

Silicon Valley and New England, both major tech hubs, saw funding drops from the third quarter, according to the report. The Midwest saw funding up 1 percent over the previous quarter and the Washington D.C. area jumped 132 percent with a $1.2 billion mega-round for satellite broadband provider OneWeb. The number of deals in the Northwest was up 15 percent, while funding was down slightly.

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The report called out artificial intelligence as an area that outperformed the broader slowdown in deals at the end of the year. U.S. companies secured $705 million in financing through 71 deals during the quarter, up 16 percent and 22 percent over the third quarter.

“Artificial Intelligence is becoming a major disruptor across a number of sectors,” said Anand Rao, a partner at PricewaterhouseCoopers. “This is evidenced by the record level of investments in AI in 2016. This is likely to continue in 2017, as AI moves from the technology sector to other traditional enterprise sectors like automotive, financial services and healthcare.”

Within the 12-state Midwest region, Wisconsin’s 2016 performance ranked in the middle of the pack. Illinois led the way with 128 deals for roughly $1 billion, but was down 6 percent over the previous year. Minnesota was second with 23 deals for $339.4 million, down 13 percent from 2015.

Iowa saw the biggest jump, with $39.4 million in four deals, up 15.8 percent. Missouri added 3 percent, coming in at $236.8 million. Michigan also outperformed Wisconsin, with $245.3 million from 39 deals, a 1 percent drop.

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