Madison’s startup community is a growing economic engine, providing more than 800 jobs and bringing in more than $66 million from investors in 2015 alone.
The annual survey by Capital Entrepreneurs shows some impressive gains, said Forrest Woolworth, a co-founder of the networking organization.
Of 57 young companies that responded to the survey about their 2015 achievements:
- They created 215 full-time jobs, up from a net increase of 175 full-time jobs in 2014.
- They now employ more than 675 full-time and 165 part-time workers, compared with 500 full-time employees a year ago.
- They raised $66.5 million in outside financing, a jump from $44 million raised in 2014.
- Fifteen companies drew $1 million or more from investors in 2015, up 50 percent over the prior year. EatStreet, a mobile and online restaurant ordering tool, got $15 million, the largest investment.
Woolworth said the results were surprising.
“I thought last year’s numbers, as far as job creation and funding raised, were really strong,” he said.
With investment running 50 percent higher than the year before, “that raises the bar” and prompts the question: “Can we maintain this level?” Woolworth said.
For the third straight year, tech startups have raised at least $40 million, and two were acquired. Social media marketing firm Shoutlet was purchased by Spredfast, of Austin, Texas, and Quickstep Technologies, with a fast way to process data, became part of Pivotal, of Palo Alto, California. Terms of the deals were not announced.
Two industry clusters began to come together last year with new meetup groups formed: health IT (information technology) and digital game development. They “tie us together as an industry more,” said Woolworth, who also is chief operating officer of game development company PerBlue. He said food tech came to the forefront, too.
The survey shows the startup economy in the Madison area is not just a fluke. “There is success happening,” he said. “This is an actual foundation that’s emerged and is becoming stronger.”
Slated to be built in the 800 block of East Washington Avenue, with groundbreaking anticipated before the end of this year, StartingBlock plans to start by providing some interim space as early as June, executive director Scott Resnick said.
“We are touring spaces this week,” Resnick said. “We have narrowed our search to several spaces between East Washington and the Capitol Square.” He said StartingBlock hopes to be able to house three to seven companies when the temporary facility is available.
Having a physical presence for startup activity will boost the entrepreneurial climate further, Woolworth said, and will “act as a beacon to attract entrepreneurs in Madison and outside of the city, at the national level.”
Both Woolworth and Resnick caution, though, a lot more is needed for the entrepreneurial ecosystem to flourish.
“Though many great things are happening in the Madison startup world, it’s still relatively small and fragile,” Woolworth wrote in his 2015 summary.
Resnick said Madison will “move into a new tier of startup communities in 2016.” But, he added, “Not every startup will make it. Judging by national market trends, Madison will see our own growing pains in 2016, but we have a bright future with a growing pool of experienced entrepreneurs and solid ideas.”
To further fuel that community, Capital Entrepreneurs will host the fourth annual Startup Fair on Feb. 3 at the UW-Madison’s Gordon Commons, open to UW students and alumni.
FUNDS RAISED: Two Madison companies are reporting new investments:
• Centrose, a biopharmaceutical company, has raised $1.45 million. The company is working on several drug compounds, including one that would enhance the effectiveness of Rituxan, used to treat patients with non-Hodgkins lymphoma, said CEO James Prudent.
• Kiio reported receiving $850,000 in convertible debt, which can be turned into equity at a later date. It amounts to a net increase of about $700,000, to be used as working capital, and about $150,000 to retire previous bridge loans, CEO Dave Grandin said. Kiio is developing products to measure and record a patient’s progress with physical therapy after an injury or illness.