Wisconsin venture capital funding up 90% in 2018

But capital invested in Milwaukee area falls

Michael Cromheecke of SteamChain presents his company.

Wisconsin startup investors were very active in 2018, driving a 90 percent increase in venture capital funding from 2017, according to a new report from Pitchbook and the National Venture Capital Association.

Michael Cromheecke of SteamChain, which had one of the top Wisconsin funding deals of 2018.

The fourth quarter venture monitor shows Wisconsin saw a total of $254.3 million in venture capital investment in 2018, up 90.2 percent from $133.7 million in the fourth quarter of 2017. The funding was split among 78 deals, up from 68 deals in 2017.

But the Milwaukee area may not have contributed to the increase. The Milwaukee-Waukesha-West Allis Metropolitan Statistical Area saw 27 venture capital deals totaling $33.2 million in 2018. The deal count increased from 20 in 2017, but the capital invested fell from $51.6 million in 2017, according to additional Pitchbook data obtained by BizTimes. No other Wisconsin metro areas were included in Pitchbook’s funding reports.

When it came to the top VC funding deals in Wisconsin in the fourth quarter of 2018, Madison dominated. New Richmond-based Engineered Propulsion Systems, at $14.5 million, topped the list, followed by Madison-based FluGen with $11.1 million, Madison-based Fetch Rewards with $8 million, Madison-based Understory with $7.5 million, Madison-based Invenra with $7.1 million, Madison-based EatStreet with $6.1 million, Madison-based Semba Biosciences with $3 million, Milwaukee-based SteamChain with $2.7 million, Madison-based Gravy with $2 million, and Madison-based FactoryFix with $1.5 million.

The Great Lakes region, which includes Wisconsin, Michigan, Indiana, Illinois and Minnesota, had a total of 804 deals for 2018. In 2018, the Great Lakes took a greater proportion of VC deals at 9 percent, up from 8.2 percent. But Great Lakes deal value was 3.6 percent of the national total in 2018, down from 4.5 percent in 2017. The West Coast region still dominated, with 39.5 percent of deal count and 61.7 percent of deal value for 2018. And the Mid-Atlantic again performed second-best, with 20.1 percent of deal count and 14.9 percent of deal value.

Tom Still, president of the Wisconsin Technology Council, has advocated for increased venture capital activity in the state for years. He was pleased with the statewide surge in 2018.

“We have been quietly predicting for some time that 2018 will be one of the strongest years on record, if not the strongest year for venture capital,” Still said. “It’s reassuring to see that that has indeed happened, and that investors outside Wisconsin continue to find good deals in our space. I suspect that much of that money is from investors beyond Wisconsin, which is good for so many reasons: It shows that there’s been strong deal syndication, it shows that our companies are valued at the right levels and it confirms that in many ways, we’re no longer a flyover state. We’re on our way to becoming a destination state.”

However, Milwaukee and Wisconsin have a ways to go on reaching their potential for venture capital funding, according to a different report. Omaha, Nebraska-based management consulting firm Chapman and Co. LLC’s 2017 State of the Silicon Prairie Report compares Midwestern states and peer cities to demonstrate not just how much venture capital activity occurred, but also how cities and states should have performed. BizTimes received an early copy of the report earlier this week. According to the 2017 data, both Milwaukee and Wisconsin underperform when it comes to their venture capital funding.

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