While investment activity in Wisconsin so far this year is faltering, one expert says there’s still time for “a nice uptick” in the coming months.
The Tech Council has identified about $191 million in investment deals in 2023 — well below the year-end totals of $870 million in 2021 and $640 million in 2022. And the group has only identified 40 investments for 2023, compared to 140 in 2021 and 107 last year.
But Joe Kremer, director of the Wisconsin Technology Council’s Investor Networks, noted investment activity tends to escalate in the fourth quarter.
“I remember this time last year feeling kind of trepidatious as to what the numbers might be,” Kremer said in an interview Friday. “We had Fetch in the bag at that point — that was a really big, large deal — but the numbers weren’t huge. And they really picked up, which surprised me, between October and December.”
Fetch Rewards, a Madison-based company with a rewards program and marketing platform, raised $240 million in 2022, accounting for a third of all investment capital raised in Wisconsin that year.
This year has lacked a major deal like that, Kremer said, though he pointed to a number of “decent-sized mid-range deals that show potential for popping,” adding “it looks kind of promising.”
As examples, he pointed to Madison-based fusion technology company Type One Energy raising $29 million, Milwaukee-based sports product manufacturer Hoop raising $11 million and green hydrogen company Advanced Ionics in Milwaukee raising $12.5 million.
“If things go well for them, they’re probably going to be successful at raising a very large amount,” Kremer said. “Because they already have BP Ventures in, Mitsubishi is in, and those folks can do large dollars. Something like Advanced Ionics is going to need a pretty significant investment, same with Type One Energy.”
Regardless of whether those success stories from this year turn into bigger numbers in the near future, Kremer noted the totals from the past two years were exceptionally high.
“If things are slowing down, to what level? Are they going to go back to the 2020 level, which isn’t horrible?” he said. “As we’re comparing things, we have to remember the historical picture, at least especially for Wisconsin.”
The drop in Wisconsin is in line with a national trend that saw $347.5 billion in venture capital investing in 2021, a dip to $246.5 billion in 2022 and now $85.6 billion so far in 2023. Kremer points to economic and political instability and higher interest rates as factors driving this shift.
See the Tech Council’s latest Wisconsin Portfolio covering 2022: https://wisconsintechnologycouncil.com/wp-content/uploads/2023/07/WI-Portfolio-2023-FINAL-web1.pdf
See a recent related story: https://www.wisbusiness.com/2023/early-figures-suggest-state-seeing-lower-levels-of-investment-in-2023/
–By Alex Moe
