Rural Wisconsin startups are on the decline, but a pandemic-era trend could reverse that trend

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Rural Wisconsin has more start-ups than the state’s urban centers, but the state’s startups have been in steep decline for decades, according to a new report.

An increase in the number of new business filings over the past two years could be a sign of change, but proponents say Wisconsin still has a long way to go in fostering new businesses and funding those with the potential to grow. develop.

The new report from researchers at the University of Wisconsin-Madison looks at the state of rural innovation in Wisconsin. The long-term trajectory is austere: the rural entrepreneurship rate has declined by 50% since 1978. The state has long lagged in national entrepreneurship rankings, and urban and suburban rates have followed a trajectory similar descent, although less steep.

That’s a problem, said Matt Cordio, director of the Wisconsin Startup Coalition, because new businesses create jobs at a higher rate than established businesses and that growth can keep the state’s economy on solid footing.

“This report should be a wake-up call for policymakers,” Cordio said. “We need to do everything we can to support high-growth startups in the state of Wisconsin.”

The report – by UW-Madison agricultural and applied economics researchers Tessa Conroy, Steven Deller and Ted Callon – notes that “Even though start-up activity has generally been higher in rural Wisconsin than in more urban, start rates generally declined, and relatively steeply, in distant Wisconsin.”

In 1978, there were 16 new businesses for every 1,000 workers in rural Wisconsin. In 2018, the rate was eight new businesses per 1,000 workers.

If a pandemic-era trend continues, it’s possible the state will see that trend reverse. Data from the report shows a jump in new business filings, from about 3,500 new businesses per month in the state before the pandemic to more than 5,000 per month this year. The researchers write that it’s unclear whether this is a “short-term effect of COVID or a more permanent change for people wanting to be self-employed.”

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Cordio said it will take a few years to judge the answer to that question. One metric he tracks with the Startup Coalition is whether new businesses reach the point of seeking venture capital or angel investment funding as opposed to bank loans. Indeed, venture capital funding indicates that a company is ready to grow, and potentially a lot.

A local café may provide good jobs for its owners and employees, but its ability to expand and create jobs may be limited. By contrast, one of the rural startups profiled in the report is Ruby Coffee Roasters in central Wisconsin, which has built a national following for its mail-order coffee beans and inspired people to move to the area. to work there.

“Our vision is… starting in 2026, we’ve doubled the number of start-ups receiving their first rounds of funding,” Cordio said of the coalition’s work.

The lack of funding for startups has been seen as a challenge to Wisconsin’s economy for at least a decade, with new initiatives in different parts of the state who tried to solve the problem. Cordio said it wasn’t resolved.

“We still see a continued shortage of people willing to write the first check at a high-growth Wisconsin startup,” he said.

And that means missed opportunities for Wisconsin’s economy.

“I’ve seen it too many times: young people are leaving the state,” Cordio said. “They have great ideas, find capital elsewhere, and start and grow these businesses elsewhere, where they want to live, other than the state of Wisconsin.”

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