UW-Madison among top universities for VC-backed entrepreneurs

September 19, 2016 By Mike Klein

UW-Madison ranked 14th worldwide among universities in a new report measuring how many graduates became entrepreneurs backed by venture capital.

UW had 397 entrepreneurs emerge from its undergraduate programs who’ve raised a total of $2.6 billion in venture capital, according to the report from PitchBook Data, a Seattle-based deal tracker, titled “PitchBook Universities Report 2016-17 edition.”

The high ranking of UW alumni is impressive, says Dan Olszewski, director of the Weinert Center for Entrepreneurship at UW–Madison.

“It’s a measure that shows how venture capital investors view the value of the startup ideas, and it is clear that UW alumni are creating very attractive firms,” Olszewski says.

UW was ranked 16th in last year’s report. This year’s study tracked founders of companies that received a first round of venture capital funding between Jan. 1, 2006, and Aug. 15, 2016.

The top five companies founded by UW graduates, based on venture capital raised, were OneRoof Energy of San Diego, Calif.; SHINE Medical Technologies of Monona; Cellular Dynamics International of Madison; T2 Biosystems of Lexington, Mass.; and Doximity of San Francisco.

Of the companies started by UW entrepreneurs, 35.7 percent were in software, 11.1 percent in healthcare services/supplies/systems, 8.3 percent in commercial services and 6.6 percent in consumer goods and recreation, the report says.

“It’s great to see in the PitchBook report another independent confirmation of UW–Madison’s strength in producing entrepreneurs whom the venture capital industry has supported with investment dollars and operating expertise alike,” says Leigh Cagan, chief technology commercialization officer for the Wisconsin Alumni Research Foundation.

Cagan says the report also is to be credited for calling out the challenges faced by entrepreneurs.  “Entrepreneurs here in Wisconsin must overcome the additional headwinds posed by their geographic distance from major sources of early stage investment capital, as one finds much more readily on the coasts and especially in Silicon Valley,” says Cagan.

Wisconsin ranked third among Big Ten schools, after Michigan (7th) and Illinois (10th).

Olszewski says venture capital is a high-risk, high-reward investment class, often targeting companies with the potential for very large returns.

“The ideas with that sort of potential usually have a strong technological component,” Olszewski says. “As one of the premier research institutions, UW exposes students to many cutting edge ideas both in the classroom and in the lab. They take this knowledge and help start the high-potential companies that will require VC funding to bring their entrepreneurial ideas to fruition.”

Venture capital investments are often used to hire employees, buy equipment or expand marketing efforts, he says. “Those activities are tied to immediate job growth and likely a very good predictor of future job growth, as some of these start-ups transition into successful, large companies.”