Michigan's growing venture capital industry is starting to gain a few footholds outside of the Great Lakes State's traditional strongpoints in the automotive and life science industries.
"We're starting to see signs of the venture capital industry growing into new markets, like IT or alternative energy or advanced manufacturing," says Mike Flanagan, manager of equity capital programs for the
Michigan Economic Development Corp.
The MEDC is the organizer behind the latest effort from the state to grow Michigan's venture capital community, an effort a decade in the making. The latest initiative is the
Pure Michigan Venture Development Fund, which looks to invest millions of dollars into new venture capital firms that are based in Michigan and looking to invest in local firms.
The Pure Michigan Venture Development Fund offers the matching funds to first- and second-generation venture capital funds in Michigan. The idea is to help them raise additional funds and become viable entities, with the ultimate intent of increasing the number of venture investments in the state. The Pure Michigan Venture Development Fund plans to invest up to $2.25 million each in as many as four new Michigan-based venture funds. Those venture funds must raise additional capital from the private sector, at least 4.5 times the state's investment, and use that cash to invest in Michigan companies.
"I don't think we're ever going to get to the size of California (the largest state for venture capital) anytime soon, but we can compete with Illinois or Minnesota or other states in the Great Lakes region," Flanagan says.
To qualify, venture funds are required to have raised $1 million in private capital from at least three unrelated investors at the time of application. Funds that have raised more than $25 million or have target sizes greater than $50 million are not eligible. For information, contact the MEDC at VDF@Michigan.org.
Source: Mike Flanagan, manager of equity capital programs for the Michigan Economic Development Corp
Writer: Jon Zemke
Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.
Enjoy this story?
Sign up for free solutions-based reporting in your inbox each week.