Wisconsin Startup Funding: Q3 2025

According to the data from Dealroom, Wisconsin startups raised just $18 million in the third quarter of 2025, marking the state’s lowest quarter in approximately decade.

That compares to $66.3 million in Q2 and the $131 million raised by Wisconsin companies last year in Q3 2024, a steep drop by any measure.

But before anyone starts sounding the alarm and our local venture capital firms start panicking, it’s worth remembering: when it comes to Midwest startup funding, one misplaced round can completely rewrite a state’s quarter and how it compares with the historical context for local startups.

The Reporting Conundrum

In the last quarter we included C-Motive Technologies in data for Wisconsin startup funding rounds, the 12-year-old Madison company developing electrostatic motors, had raised a $13.5 million late-stage VC round. The public announcement came on July 7, but our research placed it across May and June.

In smaller ecosystems, timing matters.

Because Q2 closed on June 30, and the official announcement didn’t come until a week into Q3, we faced a data dilemma.

After some back-and-forth, we made the call to leave it in Q2’s numbers, where it chronologically belongs.

That single decision meant the difference between two very different headlines, in both this quarter and the previous. By keeping it in Q2, that quarter for Wisconsin startups was up 49% versus Q1, and 13% year-on-year.

If we had included C-Motive in the third quarter, Wisconsin’s total would have hit $31.5 million - still modest, but less grim. Even at that level it would've been the lowest for funding rounds since Q1 2020.

As it is though, Wisconsin’s third quarter becomes the lowest for startup investment in the the state in ten years.

Without C-Motive, the top four disclosed funding rounds tell a smaller but still interesting story.

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A Midwest Slowdown, But Not a Collapse?

It’s also not just Wisconsin startups.

Across the Midwest, third quarter 2025 numbers were among the weakest for any single period since early 2020,  that awkward period when the world was stuck indoors and most everything slowed down.

Nationally, Q3 was close to the heady days of 2021 and 2022, but the distribution of funding rounds tell a bigger story. Unlike that crazy year when the distribution was wider, most of the capital continues to be sucked into a handful of colossal AI rounds, led by Anthropic, OpenAI, and xAI. Together, those three companies accounted for $28 billion of California’s total of $51.5 billion.

The result of all this? Coastal averages climb while Midwest startup medians fall.

In the second quarter, the Midwest actually bucked the national trend. But the pendulum appears to have swung back.

Global Context

Zoom out even further and the divergence gets stranger.

The U.S. activity was matched by countries like Israel, the U.K., and France all posting near-record quarters.

So is this a Midwest startup lag? Or are we simply adjusting to a new cycle?

On the cultural side of building early-stage startups, founders like Ben Kvalo of Midwest Games are proving that Wisconsin can export creativity just as much as code. His studio is helping build a new category of gaming that feels unmistakably regional, an antidote to the homogenized stories of the coasts.

We’ll share more about that in his upcoming Founder Story, but for now, his seed funding round was one of the few bright spots for Wisconsin companies in a challenging quarter.

The Road Ahead

Smaller ecosystems have quarters like this. Messy, lopsided, quiet. But Wisconsin investors should keep in mind the macro situation, which indicates that things may change in the next few months. As we head into the last quarter of 2025, with national interest rates holding steady and AI capital trickling into applied industries, it’s entirely possible we’ll see a catch-up effect of working capital.

If the last ten years of data have taught us anything, it’s this: you can’t measure momentum by any individual single quarter, and Midwest states have unique needs. None moreso than Wisconsin.