Eighty-four Wisconsin startups received $281.7 million in funding in 2016, up 60 percent from $177 million in 2015, according to the latest INvest Quarterly report from the Wisconsin Economic Development Corp.
The report tracks only companies the state has designated as Qualified New Business Ventures, which is open to high-tech, early-stage Wisconsin companies developing innovative products, processes or services. Investors in QNBV firms receive a 25 percent tax credit on their investment.
The $281 million invested in QNBV companies in 2016 includes qualifying investments, other private investments and grant funding. Of the total investments, the qualifying investments totaled $71.7 million, down from $73.1 million in 2015. Those qualified QNBV investors received a total of $17.9 million in tax credits from the state in 2016.
Among the largest QNBV investments in 2016 were Milwaukee-based Scanalytics Inc., which received $407,340 in angel funding and $845,000 in fund investment, Milwaukee-based Rent College Pads LLC, which received $54,003 in angel investment and $399,998 in fund investment, and Milwaukee-based Access Healthnet Holdings Inc., which received a $655,000 angel investment and a $200,000 fund investment.
Of the qualifying investments, $36.1 million was from angel investors, while $35.6 million came from early-stage investments by seed and venture capital funds. The nearly even ratio is a promising sign, since the state has seen an imbalance between angel and venture capital investments over the past several years that has resulted in a “valley of death” for new companies. In 2015, for example, there were $49.4 million in angel investments and $23.7 million in early-stage investments. The trend was detailed in a BizTimes Milwaukee cover story last year.
The QNBV program was established in 2005 and there are now 211 QNBV firms employing 1,818 people. There were 47 new companies certified for QNBV in 2016. Over the past five years, the total annual QNBV investments have increased 86 percent.
“What we saw (in 2016) is that there were a number of companies that were raising later stage rounds, so really just more companies raising more money,” said Aaron Hagar, vice president of entrepreneurship and innovation at WEDC. “In contrast to some other years with high totals where there were one or two companies that were raising very large rounds … 2016 saw more companies raising $10 (million) to $20 million, and that really added up.”
The WEDC report also detailed the average full-time salary at QNBV companies, which was $72,475 in 2016, down from $73,373 in 2015 but still well above the average statewide wage.