Mahendra Ramsinghani is our guest blogger this week. Ramsinghani is part of Plymouth Venture Partners in Ann Arbor.Check back here weekdays for more.
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Read Ramsinghani's previous posts below and check back weekdays for updates. Send comments to email@example.com.
Photograph of Mahendra Ramsinghani Copyright Peter Schottenfels
Welcome to Michigan, now start a company…
recently read a bumper sticker which commanded, “Welcome to
America….now speak English.” Whoever came up with idea was probably
tired of bad accents. I am glad the Immigration and Naturalization
Service does not have such signs at the entry points of the country.
But if we extend the idea to attracting entrepreneurs to Michigan, what
would the tag line be?
I have noticed a very
interesting trend where entrepreneurs who have built successful
companies on the coasts are returning back to Michigan to repeat the
Take for example, Doug
Neal who spent several years on the West coast, built a successful
venture backed company, survived various ups and downs and eventually
had a nice exit. Now, Doug has moved to Brighton and is using his
expertise to help build start-ups in Michigan. His family ties brought
him back to Michigan.
Bob Poloskey and Tom
Bollum built a successful company in California which raised over $30mm
of venture capital. The company was sold within four years and Bob and
Tom brought back their expertise (and wealth, thank you very much) to
Michigan, where they became a part of Osiris Innovations.
Osiris is based in Auburn Hills & is focused on sales of cutting
edge supplier management software. With marquee customers like Office
Depot, TRW and Detroit Medical Centers, Bob & Tom are well on their
way to replicate the success, this time in Michigan.
Veeragandham was the founding member of Juniper Networks, now a public
company with $10 billion market capitalization. Sreeram was a part of
the team that helped develop and re-tool the initial product line that
led Juniper to eventually grow and compete with the likes of CISCO.
Sreeram came to Michigan to get his MBA at the University of Michigan
and decided to stay. He worked tirelessly to build Accuri Cytometers,
an Ann Arbor based University of Michigan spin-off that is selling
research instruments. Sreeram also invested capital and helped raise
initial rounds of funding for Accuri. Sreeram now spends time with
Plymouth Ventures to help build Michigan companies.
how can the State of Michigan attract more of the ilk… entrepreneurs
are unique beasts who are highly independent. Charlie Rothstein,
founder of Beringea,
one of the successful venture funds in Michigan shared a brilliant
idea: “Destination Michigan” where any entrepreneur in any part of the
country who can raise the first million of venture capital would get a
matching investment from state programs. A simple elegant idea which
can attract entrepreneurs, start-ups and investments to Michigan – all
without any tax incentives. You can spot a good idea whose time has not
yet come… hopefully we will see this get launched sometime soon. Till
then, some bumper stickers maybe?
Ramsinghani is with Plymouth Venture Partners, an “all immigrant”
venture firm with an Australian (Ian Bund) and two Indians (Mahendra
& Sreeram) working hard to build Michigan’s economy. Thank God, at
least two of the three speak English well.
Supporting small businesses in creative ways
Listening to yesterday's “State of the State 2007”
address you couldn't help but agree that when Governor Granholm speaks,
she spreads a lot of enthusiasm, cheer and positive energy. Rumor has
it she was once an aspiring actress. Her talents at the podium are
In her address, Governor Granholm
highlights several initiatives that could help small business in
Michigan. Unfortunately, nothing in her speech came close to what I
will term as the “Orabone model”.
back, my friend and maverick entrepreneur Bill Orabone proposed an
interesting idea worthy of pursuit. Bill suggested that the state adopt
a simple policy of putting its money where the mouth is, i.e. setting
aside no more than 2% of its buying budget to purchase products and
services from Michigan-based small businesses.
Bill has a selfish interest in pushing his own products to the state,
but if his company’s products can save Michigan tangible resources
(say, by extending the life of the state’s roads), why not give it a
close look? I know that Bill struggled mightily to get the attention of
the right audience at MDOT in Lansing.
a venture backed small company based in Okemos, Michigan offers
software products for effective management of the insurance industry.
States like South Dakota, Indiana, Nevada, Wisconsin and Wyoming have
all bought their products. I did not see Michigan on their list. If
insurance regulators from 15 other states can see the value of Sircon’s
products, why not Michigan?
Or take the example of Xoran Technologies,
a University of Michigan spin-off focused on selling mini CAT scan
machines. The company can sell their products everywhere, but not in
According to an obscure rule, the
state’s 'Certificate of Need' requirement stipulates that users of CT
scanners must demonstrate they will use the equipment for at least
7,500 scans a year. Per Xoran, most doctors don’t use the device for
more than 300 scans a year. Good luck, Xoran!
The Ann Arbor Business Review
carried a detailed article on the subject & funnily enough, six
months prior to this story, the Governor announced the expansion of
Xoran in Michigan via tax cuts. I am not sure the tax cuts would help
Xoran as much as common sense (in other words, a Certificate of Need).
are plenty of small businesses that would thrive in Michigan if only
the state would set an example by creating a “buying program”. Venture
Capital and financial programs are good but customer relationships are
even better. Giving small businesses a meaningful opportunity to make
their case --as opposed to tax breaks-- would stimulate the economy.
would also send a powerful message to companies considering a move to
Michigan.The state might even attract these companies without giving
away tax breaks. Or maybe, I'm just naïve…
a naive immigrant, Mahendra cannot vote for either Red or Blue but
strongly believes that government can play a positive role in
stimulating the economy. If you have ideas that can top the “Orabone
model”, please email them to Mahendra at firstname.lastname@example.org
Achieving success through social capital
According to an experiment conducted by University of Virginia, now known as the Oracle of Bacon
at Virginia, actor Kevin Bacon is at the "Center of the Universe."
has worked with various actors and is connected to pretty much, the
entire acting universe with the shortest links or "degrees of
separation." Similarly, Sand Hill Road
in California is considered to be the center of the venture capital universe.
brightest minds of capital work closely with entrepreneurs &
technology to create intrinsic value, build anchor companies leading to
strong financial returns. To build Michigan’s venture capital
infrastructure, Venture Michigan Fund, a Fund of Funds with
approximately $100 million was launched by the State of Michigan in
Last week, fund manager Credit
Suisse picked its first three venture funds in which substantial amount
of capital, ranging from $5 million to $15 million, would be invested.
These funds have a mandate to invest in Michigan companies, which may
foster collaboration and trust within the financing industry.
In a well researched white paper
Steve Bird, of Focus Ventures analyzed returns from more than 8,000
venture financings from 1980-2003. Steve argues that “fortunes are
built on bonds of trust and reinforced by repeated success”. If you
analyze the investments made by Michigan venture capitalists over the
past five years, you’ll notice an interesting trend: very few companies
have raised capital from two or more Michigan venture capitalists.
While most venture capitalists offices are within a short driving (or
walking) distance, investments did not reflect "bonds of trust." How do
you build bonds of trust and camaraderie in a highly competitive
business where each one is independent, opinionated and trying to "get
more"? My friend, Marc Weiser, founder of Ann Arbor-based RPM Ventures
points out that venture capitalists in Colorado meet regularly at pubs
or bowling alleys to just enjoy the downtime & catch up. Maybe, I
am being naïve but I believe that Venture Michigan Fund, by virtue of
its in-state mandate, may foster collaboration amongst the financing
industry. That should be a reason for cheer. In my opinion, Michigan
need not aspire to become another Silicon Valley but rather aspire to
replicate the foundation of trust and partnerships that build Sand Hill
Road. Economic success and growth is a natural by-product in a
Let A Thousand Entrepreneurs Bloom!
Jim Carrey arrived in Hollywood Hills in 1987, like every other
aspiring actor: lot of dreams and energy, no track record. The story
goes: he wrote a check to himself for $10 million and dated it
"Thanksgiving 1995." In the memo line he added "For Services Rendered."
Carrey worked for years before he made
any money – and in moments, weak or strong, he would pull out the check
to remind himself of what he could create and the value of his
As Pfizer employees struggle with career
choices (in the coming months?), a few may explore the entrepreneurial
route and to them I suggest, write a check to yourself with the memo
line: "For forming a great life sciences company." After all, some of
the best life sciences entrepreneurs in Michigan have graduated from
Pfizer (or Parke-Davis/ Pharmacia / Upjohn).
example, the Newton-Mayleban team who were responsible for forming
Esperion Therapeutics - a great company creating a lot of wealth in Ann
Arbor. Roger Newton and Tim Mayleban formed and led this start-up to
its initial public offering in August 2000 followed by a $1.3 billion
acquisition by Pfizer in December 2003.
acquisition, Roger Newton has invested his time, wisdom and cash,
nurturing several entrepreneurs and venture funds in the region,
creating a ripple effect in the economy. Likewise, Mayleban is building
yet more start-ups, allowing his cranium to indulge in a never-ending
Or take the example of QuatRx,
an Ann Arbor based drug development company. The company is led by a
team of ex-Parke-Davis executives, who started it when Pfizer swallowed
their former employer. As a testimonial to the strength of the
management team and its technology, QuatRx has raised more than $67
million in venture capital since 2000 and is currently an IPO candidate.
Pfizer / Esperion executives have recently formed Cerenis, a company
focused on developing small molecule HDL products for cardio-vascular
treatment. Most of the management team members are ex-Esperion or
Pfizer. Cerenis raised $53.5 million in venture capital in November 2006.
example that comes to mind is Felix de la Iglesia, who has a 34-year
career in pharmaceutical development. Felix co-founded Cambridge
Biotechnology Ltd. in 2001, which was then sold to a larger pharma
company in 2004. In 2003 he co-founded QRxPharma
Pty Ltd., a biopharmaceutical start-up company that raised venture
capital in August 2004. In Nov 2006, Felix organized the Michigan
Technology and Research Institute, a service laboratory and a
research-consulting consortium, which is led by two key Pfizer
executives, Michael Bleavins and Elizabeth Garofalo.
All of these companies could spawn the 'anchor company' effect in Ann Arbor.
to say, it will take time for start-ups to create a meaningful impact.
There is always the chance of high mortality and a lot of drop-offs.
But Jim Carrey never looked at the obstacles. By 1994 Ace Ventura, Mask and Dumb & Dumber
had grossed $550 million. Carrey was commanding $20 million a movie… a
year ahead of his prediction. When Carrey’s dad passed away in 1994,
the star no longer needed the check & slipped it in his Dad’s coat
pocket as he was lowered into his grave.
know it is hard to draw inspiration from a goofball such as Jim Carrey
but, heck, when was the last time you wrote a $10 million check to
yourself? Try it. You have nothing to loose and you might like the
feeling enough to do something about it.
Mahendra is looking to invest in the next 'Pfizer' entrepreneur. If you spot one, please email him at: email@example.com