Despite having a sizable pool of workers in industries typically associated with innovation, such as scientists and engineers, the Milwaukee area continues to fall behind its peers in attracting the venture capital investments needed to support local startups.
New data released Monday by the Wisconsin Policy Forum shows that the Milwaukee area is still ranked behind several other Midwest metro areas in a handful of categories linked to innovation. The organization’s newly updated Innovation DataTool considers several key areas: regional talent, idea development, capital formation, startups and small business development, and economic trends.
“Metro Milwaukee leads many peer metros in its concentration of worker talent in occupations linked to innovation and economic development, but is trending downward or lags its peers on key metrics like productivity, global exports, and venture capital investment,” according to the Wisconsin Policy Forum report.
Entrepreneurship continues to be a struggle when the Milwaukee area is compared to 10 other peer metro areas. In particular, the region continues to rank near the bottom when looking at the total amount of venture capital investments. This is despite an increase in venture capital investing in the area from 2014 to 2020.
In 2014, the Milwaukee area attracted a total of $12.7 million in venture capital investments. That amount rose to $53 million in 2020.
But that $53 million is nowhere close to the average venture capital investment per year (from 2018 to 2020) made in the Austin, Texas area, which is ranked first. Austin brought in an average of nearly $2.2 billion per year, with the average amount per deal coming in at $7.2 million.
The Milwaukee area is also near the bottom of the pack when looking at the average amount of venture capital investments from 2018 to 2020. Coming in at eleventh, Milwaukee on average attracted $40 million in venture capital investments each year, with about $1.5 million being invested per deal.
In 2020, Austin had a venture capital investment per capita of $1,000. Milwaukee’s per capita investment is $34.
Another weak spot for the Milwaukee area is its gross domestic product per capita.
“Exports are another indicator for which metro Milwaukee is trending in the wrong direction,” according to the Wisconsin Policy Forum report. “Adjusted for inflation, the value of metro Milwaukee’s global exports was 23.2% lower in 2019 than in 2010 and the region ranked toward the bottom of the comparison metro areas and below the national average in global exports per employee.”
One of Milwaukee’s strengths is that it has a high concentration of talent in what the Wisconsin Policy Forum calls “key occupations.”
The number of area students graduating from colleges with STEM-related degrees has increased since 2011. In 2019, area STEM grads accounted for nearly one of every nine local college grads, which was up from roughly one of every 11 in 2011.
“Perhaps most strikingly, in 2020, metro Milwaukee had a higher concentration of scientists and engineers than all but two comparison metros included in our DataTool,” according to the Wisconsin Policy Forum report.
In 2020, the Milwaukee area had an average of 13.8 out of 1,000 working age adults who worked in the fields of engineering or science. This placed Milwaukee at No. 3 out of 11 comparison metros. Portland, Oregon had the highest average of 18 adults per 1,000.
The Milwaukee area also has a high concentration of knowledge workers, which is defined as those employed in jobs that typically require at least a bachelor’s degree. The city’s average for 2020 was 227.1 knowledge workers out of 1,000 working age adults, once again earning the Milwaukee area a fourth-place spot. Minneapolis is ranked first at 263.9 knowledge workers per 1,000 working age adults.
