WED AM News: Investors say last year’s lower VC total was no surprise, follows national trend; 7Rivers raises $2M to support expansion

July 24, 2024

— Last year’s lower total for early-stage investment isn’t a surprise as the state returns to a more typical level of venture capital activity, Wisconsin investors say.

The Wisconsin Technology Council reports early-stage businesses in the state last year raised about $490 million through 107 deals, well below the two previous years.

In 2021 — recognized as a standout year for investment — the state had a total of $869 million raised across 140 deals. By 2022, that had fallen to $640 million and 107 deals. While last year’s number of deals was unchanged over the year, total investment was about $150 million lower.

Speaking yesterday at a Tech Council luncheon in Madison, Venture Investors Health Fund Managing Director David Arnstein said he’s “not surprised” by the group’s findings for 2023, which are captured in this year’s edition of the Wisconsin Portfolio.

“It matches the national trends,” he said, arguing “we have to get used to more normalized cycles, and the data if you go back to [2019 and 2020,] it’s kind of falling in line with what you see from 2023 and 2024.”

Last year’s total was slightly higher than the totals from 2019 and 2020, which saw $454 million and $484 million in early-stage financing, respectively.

Arnstein’s perspective was shared by HealthX Ventures Principal Shabaka Gibson and Golden Angels Investors Associate Director Mary Hannes. But Gibson yesterday pointed to the “promise of a little bit more growth to come,” noting high interest rates have constrained capital markets.

“As that liquidity starts to loosen up, I think there’s going to be more deals,” he said.

Hannes said the two years preceding 2023 were “pretty exciting” and Brookfield-based Golden Angels Investors members were very active during that period.

“We saw the same kind of pattern … and I think the other thing playing into it is — and I know my counterparts here I’m sure are feeling this — is not a lot of activity on the exit side of the equation,” she said, referring to when owners or investors in a startup sell their ownership or stock in the company.

Joe Kremer, director of the Tech Council’s Investor Networks, yesterday noted the top 10 largest deals always play a big role in driving the state’s VC totals. Of last year’s $490 million total, $360 million came from the top 10 deals for the year, with $156 million of that coming from a private equity deal for VBA Software in Germantown, the top deal for 2023.

For 2021 and 2022, the top 10 deals amounted to $588 million and $473 million, respectively.

Kremer touted the role of health care information and IT in general, noting those categories combined made up more than 55% of the total dollars for 2023.

“So really, Wisconsin has a really robust IT, early-stage company startup infrastructure,” he said.

He also noted southeastern Wisconsin, anchored by Milwaukee, secured the most dollars “for the first time in a number of years” with $236 million raised. Madison, which typically leads the state, had the most startup companies last year but raised less with a $180 million total.

— The Milwaukee-based technology firm 7Rivers has raised $2 million as it seeks to expand, bringing its fundraising total to $6 million.

The company, which launched last year, yesterday announced the additional funding. It will be used for potential acquisitions, product development, partnerships, hiring and expanding into various markets such as manufacturing and financial services.

The announcement also emphasizes the importance of generative AI in the company’s future plans, noting its “transformative potential” in the tech industry. 7Rivers offers data strategy, machine learning and “AI-readiness” assessments, along with other services.

CEO and founder Paul Stillmank says the continued support from investors is a “testament to our solid execution” and strategic vision.

“With a substantial portion of our original funds still available to support general business operations and growth, these incremental funds allow us to be more strategic to sustainably accelerate our business,” he said in a statement.

See the release.

— Exact Sciences is providing $1.5 million in funding to 28 organizations working to boost colon cancer screening rates.

The Madison-based diagnostics business recently announced the grant funding through its Funding Opportunities for CRC Screening Uptake Strategies, or FOCUS Program. This program supports community groups, health foundations, public health entities and others, having awarded more than $4.5 million since launching in 2022.

Exact Sciences notes colorectal cancer is among the most preventable and treatable cancers if caught early enough, but about 60 million “average-risk” adults in the country aren’t screened for the disease. At least 50,000 people die from colorectal cancer every year in the United States alone, according to the release.

“Exact Sciences is committed to helping eradicate colorectal cancer, and to do that, we must break down barriers to ensure that the most vulnerable populations have access to effective screening options,” Exact Sciences Chief Medical Officer of Screening Paul Limburg said in a statement. “We are proud to support these dedicated organizations that are addressing screening disparities in their communities.”

Funding recipients include those working to improve screening rates in underserved groups such as Hispanic/Latino and Black communities, others focused on older adults who’ve never been screened, some developing multilingual resources and help for the uninsured, and others.

Multiple groups have set specific goals for improving screening rates, and Exact Sciences notes previous awardees have achieved such increases within their communities.

One prior recipient, Access Community Health Centers, has boosted screening rates from 37% to 55% among racially and ethnically diverse patients with high poverty rates in Wisconsin, the release shows.

See the full list of recipients in the release.

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— Gov. Tony Evers has appointed financial executive Pamela Boivin to the WEDC Board of Directors, filling a position left open after former member Willie Smith resigned.

Boivin is executive director of Woodland Financial Partners Inc., a Native community development financial institution that supports tribal entrepreneurs and small businesses in the state. A member of the Menominee Indian Tribe of Wisconsin, she’s also chair of the Wisconsin Indigenous Economic Development Corporation.

Boivin says she’s “deeply honored and grateful” to be chosen for the Wisconsin Economic Development Corporation’s board.

“Together, we will build a strong Wisconsin business climate that benefits everyone,” she said in a statement.

See the release.

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