For the Michigan Venture Capital Association, 2017 will be the Year of the Entrepreneur. Over the next 12 months, the MVCA plans to ramp up its efforts to build a larger pool of capital, including co-investment dollars from out-of-state venture investors, to fund the growth of high-traction Michigan startups and to attract and retain talented entrepreneurs who want to launch new ventures in the state.
In addition, the venture investment trade organization intends to turn its full attention to the Michigan legislature after the New Year and fire up support for a proposed multi-million-dollar public-private partnership that would seed new venture capital funds.
“We’re still wrapping up the year-long planning process, but the bottom line is that we need to adjust our focus slightly to make sure entrepreneurs are at the heart of MVCA’s mission and message,” says Tony Grover, MVCA chairman. “A critical effort for MVCA also will center on bringing more venture capital to Michigan to support its growing entrepreneurial economy. Access to funding is vital to Michigan’s continued economic diversification and strength. MVCA will be placing emphasis on programs that create more capital, more talent and more connections for entrepreneurs.”
MVCA Executive Director Maureen Miller Brosnan says she and her team will expand their nationwide outreach efforts in 2017 to attract a greater amount of co-investment money from angel and venture capital investors in other states. This year, the outreach program will be driven by the association’s own members who have well-established relationships with venture investors outside Michigan. “Those relationships will open the doors to VCs and angel groups in other locales and enable us to tell them about the great entrepreneurs and investors we have here in Michigan,” Brosnan says. “We hope to come away with some new potential out-of-state syndicate partners.”
In 2015, 74 Michigan startups received more than $282.5 million from venture capital firms, according to the MVCA’s 2016 annual research report. This investment amount represents a 48 percent increase over five years earlier, and a 174 percent increase over the level of investment a decade ago. The report also revealed that every $1 invested in a Michigan startup by a Michigan venture capital firm attracted $4.31 of investment from outside the state. “The amount of money flowing into the Michigan economy from out-of-state investors is an important gauge of our success,” Brosnan says. “The opportunity to attract capital to Michigan is real, and we need to take advantage of this momentum to drive that co-investment figure even higher.”
Another priority for the MVCA in 2017 will be buttonholing Michigan legislators to build support for the creation of a third venture capital fund-of-funds in Michigan. The state legislature created two earlier funds ─ the $95 million Venture Michigan Fund I in 2006 and the follow-up $120 million Venture Michigan Fund II in 2010 ─ which many industry observers credit with jumpstarting and underpinning the state’s venture investment industry. With the 2010 fund already fully deployed and scheduled to sunset in 2018, the MVCA will make a big push for the passage of legislation to establish a successor fund-of-funds.
“We will continue to drive home the message among Michigan legislators that the state needs to remain committed to providing support for venture capitalists who invest in entrepreneurs,” Brosnan says. “We’re looking at a $100 million public-private partnership, where the state would contribute a small amount of money and the bulk of the funding would come from private sources, such as institutional investors.” A number of limited partners in Michigan have indicated interest in funding entrepreneurs and startups through venture capitalists and are potential financial partners for a fund-of-funds, according to Brosnan. “This is where the state can take a leadership role,” she adds. “We won’t continue to move in the right direction, if we all don’t continue to row the boat. We need the legislature’s help.”
One of the state of Michigan’s greatest strengths, Brosnan insists, is its broad-based collaborative approach to building its entrepreneurial ecosystem and rolling out the welcome mat to entrepreneurs and startup founders. “The state government, the MVCA and the University of Michigan’s Zell Lurie Institute all have poured considerable resources into supporting entrepreneurship,” she says. “Programs such as the Michigan Growth Capital Symposium are integral to driving co-investment in Michigan-based startup companies and making sure that number continues to rise.”