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Wisconsin is building a healthy ecosystem for startups

From a neighborhood coffee shop to a local clothing boutique to a high-tech business working to commercialize research discoveries made in a university lab setting, startups come in many different forms.  Startups of all kinds play a crucial role in Wisconsin’s economic success, and a new report from WEDC and its partners chronicles the state’s initiatives to support entrepreneurship. It also provides an in depth look into the programs’ performance in 2015.

Wisconsin Entrepreneurship & Innovation Report: key findings

Among key metrics, the report shows that WEDC’s direct assistance programs helped more than 300 businesses attract $188 million in new funding and generate $130 million in revenue, for a total of $318 million in capital, during the 12-month period covered in the report. These companies supported 1,740 full-time jobs and 581 part-time jobs in Wisconsin and paid over $94 million in wages. In addition, WEDC’s partners, including the UW-Extension Center for Technology Commercialization, Wisconsin Women’s Business Initiative Corporation, Brightstar Wisconsin Foundation, Wisconsin Technology Council and more, assisted nearly 2,200 companies to create more than 380 new jobs and retain more than 440 more jobs. WEDC relies heavily on these partners, who through their local networks and constituencies, act as the direct link between businesses and the resources that exist to help them succeed.

…WEDC’s direct assistance programs helped more than 300 businesses attract $188 million in new funding and generate $130 million in revenue, for a total of $318 million in capital…

Wisconsin’s universities are also a key asset in helping spur startup growth. “Wisconsin has a uniquely productive relationship between our universities—among the best in the world in terms of research funding attracted and new patents awarded—and the private sector,” says WEDC Secretary and CEO Mark Hogan. “WEDC is committed to providing key services and resources to further enhance this mutually beneficial partnership and support the economic and social impact it generates.”

Filling funding gaps to accelerate growth

Even with very promising business ideas, young companies often face funding gaps when their products are not yet at a phase where investors feel comfortable supporting them. In an effort to assist entrepreneurs in this position, WEDC’s entrepreneurship and innovation programs include a mix of loans, grants, investor tax credits, partnerships and program match funding. Collectively, these initiatives provide technical assistance, fill funding gaps and build an environment where entrepreneurs can succeed.

Based on the results contained in the report, these programs had a leverage ratio exceeding 10:1 for outside investment compared to the investment made by WEDC. This healthy ratio shows that investments of public funds are wisely targeted for maximum impact to help startups succeed, which, in turn, boosts the state’s economy as a whole.

In 2014, SmartUQ, developer of software that uses virtual simulations and advanced analytics for the manufacturing industry, leveraged WEDC’s Qualified New Business Venture (QNBV) Program to help gain additional funding and mentorship. By offering tax credits for investments made in QNBV-certified companies, the program helps startups get access to the capital necessary for growth and supports innovation and the commercialization of next-generation discoveries in areas including biotech, health technology, information technology, manufacturing, energy and beyond.

Many high-tech companies like SmartUQ require significant amounts of capital to develop and launch their products, and traditional routes for funding, including a small business loan or personal investments from founders, are often not enough to fund the company entirely. SmartUQ’s QNBV certification made it more appealing for angel and venture capital investors to invest in the young company, since they received tax credits for their investments into the company.

A healthy startup ecosystem pays dividends

The presence of a thriving startup ecosystem offers benefits the entire state in terms of jobs, wages and taxes collected. A critical mass of innovators enables ideas to multiply as they network and collaborate with one another. These connections among entrepreneurs also attract support from investors and others to accelerate the pace of new discoveries with the power to change the world.

In addition to performance data, the Entrepreneurship and Innovation In Wisconsin® 2015 Report includes company profiles featuring a selection of the state’s most promising startups (including SmartUQ) across a broad range of sectors. Read the full report here.

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Aaron Hagar is vice president of entrepreneurship and innovation for the Wisconsin Economic Development Corporation (WEDC) where he leads a team of dedicated professionals with strong relationships within the state’s entrepreneurial community to quickly advance and develop efforts to support Wisconsin’s startups, innovation-based businesses and entrepreneurs of all kinds.

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