Oct 20, 201408:51 AMInside Wisconsin
with Tom Still
Venture capital is a roller coaster, and Wisconsin is along for the ride
(page 1 of 2)
The good news: Venture capital investments in Wisconsin through the first three-quarters of 2014 are already double all venture investments last year, and the number of deals is approaching an all-time annual high for the state.
The sobering news: Wisconsin still lags 23 other states in deals reported during the third quarter of 2014 and falls behind 25 states in total dollars invested during those three months.
That scenario summarizes the status of early-stage investments in Wisconsin, which appear to be gaining momentum across important industry sectors — but which still trail many states, including some states similar in size and workforce makeup.
The latest statistics come from the MoneyTree Report by PriceWaterhouseCoopers and the National Venture Capital Association, which have tracked venture industry deals by state, sector, stage, and other metrics since 1995. Through September, 22 reported Wisconsin deals (more on the word “reported” later) had generated about $67.1 million for state companies, compared to $33.9 million during all 12 months of 2013.
Venture capital investments are investments in the “equity” of a company — its anticipated return over time — versus “debt” investments that are generally based on a company’s current assets and collateral. Along with angel capital, venture capital is how many emerging, high-growth companies finance their research, product development, marketing, and sales until revenues flow from customers.
In Wisconsin, the total of 22 deals thus far already ties deal totals for 2007 and 2010, and is approaching the record of 27 deals set in 2000, the banner year nationally and in Wisconsin for venture capital investments. The dollar totals are on track to more or less match 2012 and 2007 but will likely fall short of 2010, when two $40-million-plus deals drove Wisconsin’s totals.
The reason for that optimism gets back to the word “reported.” Not all venture deals immediately find their way on to the MoneyTree Report radar screen. At least $20 million in Wisconsin deals fall into that category, based on news reports and other tracking sources.
One of the most encouraging trends in Wisconsin’s venture capital numbers is diversity. The state is increasingly not dependent on a single sector when it comes to emerging companies.