State trails in venture capital

Venture capitalists around the country invested $7.1 billion in the third quarter despite the market turmoil, bringing the total amount invested through Sept. 30 to almost exactly the same amount as it was for the first nine months of 2007.

Wisconsin, however, saw a year-over-year decline.

State companies pulled in $6.87 million of venture capital in the quarter, according to MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association, based on data compiled by Thomson Financial.

That brought the total amount of venture capital invested in Wisconsin to $50.36 million through Sept. 30, a 28% decline from $70.07 million through the same point in 2007, according to the MoneyTree numbers.

“Wisconsin’s numbers are always lumpy because of the small number of total deals,” said John Neis, a senior partner at Madison-based Venture Investors, the most active Wisconsin-based early-stage venture capital firm.

Big funding rounds such as the $21 million raised in September 2007 by Virent Energy Systems of Madison, a renewable energy developer, can have a huge impact on the Wisconsin figures, Neis said.

The state’s two biggest fundings in the third quarter were the $2.5 million raised by Alfalight Inc. and the $2 million raised by Soft Switching Technologies Co., according to the MoneyTree Report.

Alfalight is a Madison maker of high-power diode lasers for industrial and military applications, and Soft Switching is a Middleton maker of UPS and power disturbance equipment.

Wisconsin, which had $90.14 million of venture capital investment in 2007, would have to have $132 million a year of venture capital investments to have its pro rata share of the national total on a per-capita basis, Neis said.

“It clearly shows that we have a lot of work to do,” he said.

A lot more venture capitalists have been visiting the state in recent months, and there should be a number of out-of-state investors at the Early Stage Symposium in Madison next month, said Tom Still, president of the Wisconsin Technology Council.

“The pipeline for deals in Wisconsin is better developed than it’s ever been,” he said.

http://www.jsonline.com/story/index.aspx?id=807416

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State trails in venture capital