Did Milwaukee-Based Startups Really Raise $111 Million in 2016?

According to data compiled by PitchBook and the National Venture Capital Association, two groups that monitor investment trends, startups based in the Milwaukee area collectively raised about $44.6 million in 2016. That was up from 2015, when PitchBook and NVCA data show the region’s funding total was about $28.1 million.

Many members of the Milwaukee area’s early-stage business community would likely be heartened upon learning of this 59 percent year-over-year increase. However, the estimate of the region’s 2016 funding total from PitchBook and NVCA is a fraction of the $111 million-plus figure that first appeared on the website Startland, and has since been bandied about by national and local news publications.

Brian Matthews, who authored the article that ran on Startland, wrote that he used data from the website Crunchbase to calculate the funding totals listed in a table that accompanies the text. (Crunchbase lists funding rounds raised by startups, and is designed so that any user with a login and password can request changes if data appear to be inaccurate or out of date.)

Matthews is co-founder and general partner at Cultivation Capital, a St. Louis-based VC group. One of his colleagues, Yvette Rodriguez, provided Xconomy with a spreadsheet listing 25 funding rounds apparently raised by Milwaukee-area startups in 2016. Taken together, these rounds make up the $111 million funding total.

Some of the deals were widely covered in the press. Here are three examples: $8.7 million to Promentis Pharmaceuticals, in October; $7 million to Smart Choice MRI, in May; and $1 million to Rent College Pads, in September.

But the list also included a $20 million funding round raised by College Ave Student Loans, which is erroneously listed on Crunchbase as being headquartered in Milwaukee. According to a press release put out in January 2016 announcing the deal, College Ave Student Loans is based in Wilmington, DE. A spokesperson for the startup said via e-mail that its corporate address is in Delaware.

Another financing round listed in the spreadsheet was a $28 million investment in Auro Technologies. According to Crunchbase, the company is headquartered in Belgium, WI. However, Auro Technologies says on its website that its “main office” is located in Mol, Belgium (the European country). There is in fact a town named Belgium in the Milwaukee area, but that does not appear to be where Auro Technologies is based. A company spokesman confirmed that Auro Technologies’ headquarters is in Belgium, not Wisconsin.

Joe Kirgues, a co-founder of the Wisconsin-based startup accelerator Gener8tor who is based in the Milwaukee area, said that when he saw reports showing the $111 million figure, it was not a number he was expecting. Still, he said that as far as he can tell, early-stage companies in the region hauled in more venture capital last year than they did in 2015.

“It’s not entirely bad news,” even if the $111 million figure is too high, Kirgues said.

“Hopefully, that builds a narrative people can rally around,” he added. “Prematurely [declaring] success only to find out that the road ahead is long and windy could be seen as a step back. In truth, what happened last year was a step ahead of the year before. We should be proud of [how far] we’ve come. Certainly, we want to acknowledge where the reality lies, even if it’s not quite the news we were hoping for.”

Jeff Buchanan is the editor of Xconomy Wisconsin. Email: jbuchanan@xconomy.com Follow @_jeffbuchanan

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