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Report: Investment in state start-up companies up 43% last year

Jeff Richgels  —  6/24/2008 8:04 am

Private dollars invested in Wisconsin start-up companies operating in high-growth sectors -- such as biotechnology -- grew 43 percent in 2007 to a record high, according to a report released Wednesday.

That exceeds the 1.8 percent national growth estimate provided earlier this year by the Center for Venture Research, the Wisconsin Technology Network reported.

The survey conducted by NorthStar Economics and the Wisconsin Angel Network found $146.9 million in early-stage investments in 2007, up from $102.9 million in 2006. The funding comes from individual angel investors, angel networks, early-stage funds and others interested in Wisconsin start-up deals.

Venture capital investments -- later-stage investments made after early-stage companies begin to grow -- in Wisconsin increased to $90 million last year from $73 million in 2006, the survey showed.

In addition to the early-stage and venture capital investments, Wisconsin also showed year-over-year gains in Initial Public Offerings (led by Madison-based TomoTherapy, four offerings raised $343 million) and federal Small Business Innovation Research grants ($33.7 million).

Gov. Jim Doyle announced the survey results during the 2008 BIO international convention in San Diego, which is being attended by a Wisconsin delegation that includes representatives of many early-stage companies. Doyle spoke during the Wisconsin reception hosted by Quarles & Brady LLP.

"This is great news for Wisconsin. In order to grow Wisconsin, it's important we attract investment and support new high tech start-up companies," Doyle said. "These businesses will create the bedrock for a knowledge-driven economy and produce the high-paying jobs of tomorrow. By accelerating the growth of new businesses we can build on our success and lure new investment to our state."

Doyle and the Wisconsin Legislature have worked together on initiatives to spur creation of so-called "risk capital" in Wisconsin, including investor tax credits and the formation of the Wisconsin Angel Network to help facilitate deal flow, investor exchanges and network creation.

Angel investors are high net-worth individuals who invest in start-up ventures, sometimes alone and sometimes as members of a group. More than 250 angels in 20 groups are affiliated with WAN, which is a public-private program of the Wisconsin Technology Council.

Surveyed for the report were Wisconsin angel groups and funds, as well as eight major law firms that handle deals for individual angels and others. Other sources of data included state tax credit data, national venture capital reports and Tech Council data on SBIR grants.

"Wisconsin's early-stage capital market is growing at a rate that exceeds the U.S. average, which speaks to the tremendous strides being made by Wisconsin start-ups and those who help those companies grow," Mark Bugher, chairman of the Tech Council and director of University Research Park in Madison, said in a statement.

To download the 17-page report, go to www.wisconsintechnologycouncil.com/uploads/2008WRCR.pdf.

jrichgels@madison.com

Jeff Richgels  —  6/24/2008 8:04 am