29 Jun WisBusiness: Tech Council’s annual ‘Wisconsin Portfolio’ breaks down investment deals across Wisconsin
The latest Wisconsin Portfolio report from the Wisconsin Technology Council shows more than $483 million was raised by early-stage companies in the state in 2020, marking a record year for the amount raised.
But the Tech Council notes in its report that Wisconsin’s numbers still lag behind other Midwest states, and the total number of deals decreased from 123 in 2019 to 114 last year.
By comparison, Illinois, Ohio and Minnesota all saw more than $1 billion in investment last year, while Michigan had $3.1 billion in 2020, making it the fastest-growing venture capital state in the country.
Still, the report highlights a continuing trend of increasing deal size in Wisconsin. In 2020, 51 percent of companies tracked in the report raised $1 million or more. That’s been steadily increasing from 29 percent in 2017, to 38 percent in 2018 and 43 percent in 2019.
Meanwhile, the state’s median and average round size both increased over the year, according to the report. The average round size reached $4.2 million for the first time in 2020, increasing from $3.8 million in 2019. The median round size reached $1 million last year, compared to $700,000 in the prior year.
“On balance, our ecosystem continued to mature in 2020, despite the effects of the COVID-19 pandemic,” Still said. “It’s great to see major deals because it signals more companies are moving beyond the startup stage. Much work remains to be done, however, to take full advantage of Wisconsin’s assets in research, technology and talent.”
About 60 percent of the 2020 deals were for “first-time” companies securing initial investments, the report shows. The Tech Council says that signifies the state’s “deal-flow pipeline is being refreshed with new startups” and bodes well for the startup ecosystem overall.
At the same time, the report highlights a “disappointing” finding related to the diversity of that ecosystem. Just 12 percent of the 2020 deals in the report were led by women, which has decreased from 22 percent in 2019. The national number is between 20 and 25 percent, the report shows.
The Tech Council notes that the number of women-led funds in the state is increasing, including the Madison-based Winnow Fund and Gateway Capital Partners of Milwaukee, suggesting this metric could improve in the coming years.
The Wisconsin Portfolio report also shows that health care-related companies accounted for nearly half of all early-stage capital raised in Wisconsin last year.
Just over 48 percent of all capital investment tracked in the report was attributed to health care businesses. That’s largely due to just two companies: SHINE Medical of Janesville and NorthStar Medical Radioisotopes of Beloit.
The industry that saw the largest number of deals last year was information technology, with 36.8 percent of all 2020 deals. But health care was a close runner-up for the number of deals, making up 28.1 percent of all investment deals made in the state last year.
Madison and Milwaukee continue to dominate the state’s capital investment scene, the Tech Council report shows.
The Greater Madison area makes up half of all deals tracked in the report for last year with 57 deals, while southeast Wisconsin had about a third of the deals with 38.
Meanwhile, the south central region had nine deals, and the Fox Valley region had six deals. Northwestern Wisconsin had just two deals, and central Wisconsin had one.