A second look at startup data

In November 2024 the Wisconsin Policy Forum released a report highlighting Metro Milwaukee’s struggles in attracting venture capital and fostering new business growth, despite strengths in workforce education and income gains.

The report, made possible through a partnership between the Metropolitan Milwaukee Chamber of Commerce and Chris Abele to strengthen the startup ecosystem in the Milwaukee 7 region, received little attention.

The data came from the 2024 Metro Milwaukee Innovation DataTool, an interactive resource developed by the Wisconsin Policy Forum. The tool compares the region’s economic performance to Austin, Buffalo, Cincinnati, Cleveland, Indianapolis, Kansas City, Minneapolis-St. Paul, Oklahoma City, Pittsburgh, and Portland.

The findings show that Milwaukee ranked last among its peers in venture capital investment per capita in 2023, dropping from 10th place the previous year. Business creation remains sluggish as well, with the region’s birth-to-exit ratio tied for the lowest among the comparison metros.

Let’s take another look at the findings as they relate to the startup ecosystem.

Milwaukee lags in venture capital and business creation

Venture capital investing, which typically supports startup companies with strong potential for growth, has been a longstanding area of weakness for metro Milwaukee. Venture capital (VC) investing is highly concentrated in a small number of metro areas on the west and east coasts. However, metro Milwaukee trails even its Midwestern peers. On a per capita basis, metro Milwaukee ranked last among the 11 comparison metros in VC investment in 2023, after placing tenth in 2022 and ninth in 2021.

The tool’s data also shows that of the nearly $313 million in venture capital funding that Milwaukee area startups attracted between 2021 and 2023, less than 20% went to companies with at least one female founder. That includes 6.8% for companies founded solely by women, which is actually higher than the national rate of 2.1%, according to PitchBook.

Business creation is measured using U.S. Census Bureau data on the number of businesses that open (births) and close (exits) each year. Despite business births exceeding exits in metro Milwaukee for the fourth consecutive year in 2022, the region’s birth-to-exit ratio (1.05) was tied with two other metros at the bottom of the comparison group that year. This marked a change from previous years, when Milwaukee typically fell near the middle of the pack.

The full interactive report is available at Wisconsin Policy Forum’s website.

Solutions to consider

Milwaukee has data that explains its position in the startup ecosystem. The next step is to implement changes to create a place where scalable, high-growth startups launch and thrive. Below are a few ideas that may create positive changes in the region.

Boost venture capital investment: Milwaukee could develop region-specific venture funds, potentially backed by corporate partnerships, local government, or university endowments, to increase access to early-stage funding.

Tax incentives for investors: The state already offers incentives for investors that support Qualified New Business Ventures. Following the lead of that successful program, a new tax break for angel investors and venture capital firms investing in Milwaukee startups could help attract more capital.

Create industry-focused incubators: Milwaukee has a strong presence in manufacturing, engineering, and health sciences. Developing specialized incubators for these industries could help startups receive targeted mentorship and funding.

Expand corporate-startup collaboration: Large Milwaukee-based companies could be encouraged to work with startups as partners, customers, or investors, providing a built-in local market.

Raise Milwaukee’s profile as a startup hub: A coordinated effort to promote Milwaukee as an emerging tech and startup hub could help change perceptions and attract outside investment. Bringing national startup competitions, pitch events, and conferences to Milwaukee could connect local startups with investors and talent.

Do you have ideas for how Milwaukee could strengthen the startup ecosystem? Share your thoughts in the comments and we will publish a collection of promising ideas for MSUN readers to debate.