FOR IMMEDIATE RELEASE — MAY 20, 2013 – ANN ARBOR, MICH. — The Michigan Venture Capital Association’s annual research report, a compilation and analysis of investment activity, shows that 2012 was a banner year for venture capital (VC) in the state.  Compared to the national trend of declining VC funds and activity, funding activity and fund sizes in Michigan continued strong and steady growth last year.  In 2012, Michigan jumped from 25^th to 15^th in the national VC ranking — one of the largest increases in venture funding last year.

“The data reported in MVCA’s research report tell a compelling story about Michigan’s success in growing and nurturing an innovation-based economy,” said Carrie Jones, MVCA executive director.  “The venture capital community in Michigan continues to mature, with more VC under management among firms here than ever before as well as a steady increase in out-of-state funds establishing a presence in the state.  In tandem, Michigan’s entrepreneurial ecosystem continues to mature and strengthen, and more companies than ever before are attracting VC funding.”

The MVCA data shows that there are 29 venture capital firms doing business in Michigan. In 2012, venture capital firms invested $242 million in 33 deals in Michigan.  An additional $12.5 million in a combination of angel and pre-seed funding was invested into these same deals.

The state has 106 active companies that have received venture capital or angel investment. While the majority of these companies are in the life sciences, the number of companies in other sectors are growing, most notably those focused on information technology.

Growth in Michigan venture funds has been steadily trending upward.  In 2012, the amount invested by VCs, average fund size, capital under management all increased, as did available capital for new investments and the number of investment professionals. This growth has, in part, come from out-of-state funds opening offices in Michigan to tap into Michigan’s growing deal flow.

“Attracting outside investment to Michigan infuses the economy with new money that can help a company grow here,” Jones added.  “Entrepreneurs are taking notice of this trend; thanks to the successful venture community in Michigan, more entrepreneurs are considering the state as a destination to locate and grow their business.”

About the Michigan Venture Capital Association

The MVCA is a non-profit trade organization designed to bring together venture capital industry participants in the state of Michigan. The organization’s goal is to grow and sustain a vibrant venture capital community in Michigan. Membership includes private venture capital funds, corporate venture capital funds, private equity firms, angel investors, and entrepreneurial infrastructure participants. The MVCA is a vehicle to bring together industry participants and to provide a concerted voice for Michigan’s venture capital industry. For more information, visit www.michiganvca.org.

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Carrie recently was interviewed by Chris Holman, Michigan Business Beat on the Michigan Business Network.com. Carrie spoke about the growth of the venture capital industry in Michigan and about retaining and recruiting entrepreneurs.

Listen to the PodCast.

Our second annual Deals in the Garden took place on April 22 at Frederik Meijer Gardens & Sculpture Park in Grand Rapids. Emceed by Jody Vanderwel of Grand Angels, the event gave the following companies the opportunity to pitch their businesses to investors.

are you a human, Detroit
Vestaron, Kalamazoo
Nanorete, Lansing
Arborlight, Ann Arbor
Covaron, Ann Arbor
Gema, Ann Arbor
Current Motor, Ann Arbor
FlockTag, Ann Arbor
Optofluidic Bioassay, Ann Arbor
Savvy Languages, Lake Orion
Grand River Aseptic Manufacturing, Grand Rapids
Compoto, Holland

Grand River Aseptic Manufacturing booth, and from L to R: Tom Ross, Managing Director, DWH; Connie Degen, Chief Operating Officer, Grand River Aseptic Manufacturing; Jerry Scott (back to camera), Grand Angels’ member; and Nick Bykerk, Controller, Grand River Aseptic Manufacturing

We were extremely pleased with the quality of the presentations and delighted with the high number of attendees and that the audience was so engaged.

Current Motor’s scooter, and Grand Angels members, from L to R: Andy Keller, Paul D’Amato, and Bob Sprotte

Ask Josh Linkner what’s got him, and the team at Detroit Venture Partners, fired up, and you’ll get a simple response: Detroit.  The VC firm’s “crazed mission” is to back companies that are committed to rebuilding the Detroit area by entrepreneurship.

“We view business building as a palette for creative expression and an opportunity to make a difference and change the world. If not, why bother,” explained Linkner, who is managing partner of Detroit Venture Partners.

Linkner and the Detroit Venture Partners team aren’t shy about getting in the trenches to make sure these world-changing businesses succeed.  “We are willing to get down and dirty with our entrepreneurs in order to drive results. We look at venture investing as a full-contact sport, and are ready to do whatever it takes to help our portfolio companies win. You’ll find us hands-on and deep behind enemy lines while other VCs are enjoying their French-vanilla, no-whip, mocha frappuccinos.”

Detroit Venture Partners’ commitment to entrepreneurial warfare has helped the firm achieve a key goal to re-establish Detroit as a beacon of innovation and entrepreneurship.  “We’ve led the way and set a path for others to come invest in Detroit, and for startup leaders to build their businesses here,” Linkner said.  “We believe that this region has tremendous untapped potential and this last year was about laying the foundation to harness it.  With the groundwork in place, Detroit is now poised to take off as one of the most important startup cities in the country.”

The firm’s investment portfolio is a telling reflection of Detroit Venture Partners’ commitment to backing entrepreneurs who are making their mark in the Detroit area… and beyond.  Over the last year, it’s invested in several exciting Detroit-based companies, including:

• LevelEleven, a company that develops enterprise gamification and CRM solutions that help sales and other managers keep their teams focused on the right things. The company’s flagship product, Contest Builder, is a salesforce.com app that gives companies new ways to motivate salespeople to make more calls, book more meetings, and close more business, which in turn spikes adoption of Salesforce.
• Chalkfly, which is becoming known as the ‘Zappos for office supplies.’ It offers 50,000 products, 24/7 customer services, free over-night shipping, and a 365-day return policy. Most importantly, Chalkfly gives 5 percent of all sales directly to teachers in your local community.
• iRule, LLC, a cloud software company offering a platform for the connected home and home entertainment control. iRule’s control and automation software, available for both iOS and Android, is loved by its customers for its functionality, versatility, and value, and is sold by professional dealers in 50 countries.

Linkner is careful to point out that Detroit Venture Partners’ “crazed” mission is really rooted in a common sense, practical approach to investing.  “Michigan offers real advantages to other locations,” he said.  “The state, and the Detroit area in particular, are ripe with top talent that are attracted to what’s unique here: Affordable housing, and accessibility to business leaders and networks.  Plus, there’s a low cost of doing business here that makes an investment go far.”

While pursuing their favorite pastime of changing the world’s mind about VC opportunities beyond the coasts – and in Detroit, specifically – Detroit Venture Partners will continue to work hard at being an illustration of all that’s going right here. “We’re excited to add eight to 10 more companies to our portfolio this year,” Linkner said.  “While we continue to grow, we’ll continue to work deep in the trenches with our existing companies to help them win.”

MVCA member RPM Ventures recently hired Josh Lin as part of the Michigan Venture Fellows Program. Lin is serving as an associate with the firm.

Prior to joining RPM Ventures, Lin was a senior consultant in strategy and transformation at IBM Global Business Services. In this role, Lin was part of the customer value strategy practice, which led the acquisition of a $5 billion semi-conductor manufacturing client. He was also co-founder of Nexecon Consulting Group in Ann Arbor.

“I believe that start-up companies bring ideas to this world that invoke innovative growth, and the capital, expertise, and resources venture firms provide help make these ideas real,” Lin said. “I am energized by entrepreneurism and being a Michigan Venture Fellow affords me the opportunity to work with entrepreneurs everyday. In this capacity, I can be an active participant in bringing these ideas to the world, rather than sit as an observer peering in through the news.”

The Michigan Venture Fellows Program provides emerging leaders a chance to work full-time for a Michigan-based venture firm for 18-24 months.

We’re pleased to announce that the MVCA and the Michigan Economic Development Corporation (MEDC) are teaming up on a new initiative to attract out-of-state venture capital to Michigan.  Our goal is to get more regional VCs investing in great Michigan deals.  This summer, our team plans to visit venture capital hotbeds in the Great Lakes region and meet with the top VCs to build stronger regional connections, promote Michigan as a great place to do business, and most importantly promote our most compelling investment opportunities. Our first visit is slated for June 19-21 to Chicago, IL.

In anticipation of the Roadshow we need your input! To realize maximum returns, we’d like to construct an impressive deal-book of your best Michigan portfolio companies that will be in the market for additional funding within the next 6-12 months. We want to help attract any additional capital you need to fund your next round(s). Please complete a Portfolio Company Profile for any companies you wish to be included, and forward your entries to Emily Heintz at heintze@michigan.org no later than May 15, 2013.

Subsequent to receiving any interest from VCs in your portfolio companies, we will contact your firm directly to arrange introductions. We then plan to host any interested out-of-state funds here in Michigan, and with your help, to facilitate the path to investment and leave a great impression for future activity.

We’re excited about this opportunity to help expand the Michigan venture market and would appreciate any feedback you have in making this a successful initiative. Feel free to contact us with your questions, concerns, or input at your earliest convenience.

Contacts:

Carrie Jones                                                                                     Mike Flanagan

Executive Director – MVCA                                                             Director, Equity Capital Programs – MEDC

PH:  734-929-9970                                                                          PH:  517-373-1465

cjones@michiganvca.org                                                              flanaganm@michigan.org

Michigan Economic Development Corporation (MEDC) is preparing to release a Request for Proposals (RFP) for a study covering the entire capital continuum in Michigan. The study will be designed to assess the strengths, weaknesses, opportunities and threats in the capital markets in Michigan.

Within the MEDC, the Capital Markets group is responsible for increasing the availability of capital for Michigan companies, primarily through market-driven strategies that work directly with private sources of capital. When state intervention is appropriate the MEDC works directly with private capital sources in the target area(s) to craft and execute viable solutions.

Generally, the RFP will seek proposals for a study focusing on the following areas:

• Capital available for operating companies at all stages of the Capital Life Cycle
  o Including pre-seed, seed, angel, venture, and private equity, mezzanine and bank/bond capital
• Capital available for investment real estate including pre-development, project equity, mezzanine, construction, and permanent debt

Click here for more information and guidelines.

Investment To Fuel Company Expansion Into SDN Market

NetSocket, a leading provider of network service assurance solutions for unified communications (UC), announced today that the company has secured $9.2 million in Series B funding. The round was led by new investor Venture Investors, with participation by existing investors Sevin Rosen Funds, Silver Creek Ventures and Trail Blazer Capital.

The new capital will be used to accelerate the launch of a new solution, aimed at the dynamic and growing Software Defined Networking (SDN) market. The product announcement and launch are planned for this summer. “NetSocket has been innovating in the Unified Communications (UC) service assurance solutions space, as evidenced by the traction generated from our recently announced expanded collaboration with Microsoft. NetSocket’s Cloud Experience Manager (CEM) now optimizes Microsoft Lync UC service management and user’s experience,” said John White, president and CEO of NetSocket. “We plan to apply that same innovation and focused vision to the SDN market which we expect to experience explosive growth this year.”

Joining the Board of Directors at NetSocket will be Jim Adox, managing partner at Venture Investors. “NetSocket has the right mix to become a major market force; a proven leadership team experienced in service assurance and networking technologies, an incredible portfolio of intellectual property and patents, along with a strong communications-focused syndicate of investors,” commented Jim. “I’m very excited about how the new solution will apply the power of NetSocket’s service assurance, routing and policy control software into virtualized networks in an SDN architecture.”

About NetSocket
NetSocket is a leading innovator of network service assurance solutions, providing a trouble-free unified communications experience in enterprise and service provider environments. For more information, visit www.netsocket.com.

Plymouth Management Company, an Ann Arbor-based VC, focuses on Great Lakes growth-stage opportunities, but does not focus on a particular segment.  It’s a strategy that has helped the firm carve out a niche in helping growth-stage companies across a wide range of industries.

“We look for any regional company that is growing or shows strong growth potential,” explained Plymouth Management’s principal Mark Horne.  “Information technology, software services, telecom, advanced manufacturing and medical devices have all been attractive investments for Plymouth; we want to back companies that have the innovation and talent to succeed.”

Plymouth’s broad view is enabled by the firm’s management team, which includes Michigan VC pioneer Ian Bund as well as Jeff Barry and Kevin Terrasi.  Combined, these leaders have an impressive track record of building and exiting growth stage companies, as well as a unique blend of financial and operational experience.

The firm’s management is able to support and structure deals in a way that sets it apart from other VCs– and helps Plymouth take advantage of opportunities that might not fit with other VC firm’s charters.

“Because we focus on regional, growth-stage companies versus a specific industry sector, Plymouth can look at a wide variety of potential investment companies,” Horne explained.  “This flexibility carries over into our deal structures that can be tailored to the specific needs of the entrepreneur.  Our deal terms can be quite creative.  We are minority investors who insist on strong corporate governance, but we have a negotiating style that is decidedly win-win.”

This past year was a banner one for Plymouth, which invested in seven companies – four in Michigan, one in Ohio and two in Illinois – through the $41 million fund it raised in 2011.  Plymouth’s recent Michigan deals included Lynx Network Group in Kalamazoo and FutureNet Group in Detroit.

Plymouth’s multi-stage investment in Lynx Network Group is helping the company build a new 2,500 mile 4G/LTE fiber project across Michigan, in conjunction with Department of Commerce and the Merit Group.  This “data railroad” will connect businesses and promote further economic development throughout the state.  Its investment in FutureNet, a rapidly growing construction, security and IT business, helped the company acquire a division of Smith & Wesson.  The acquisition is expected to propel the business to more than $100 million in revenues by the end of this year.

Horne and his team at Plymouth are finding that their home base in Michigan is a significant advantage.  “Michigan continues to be an underserved market,” he said.  “Unlike the coasts, there are more ideas here than capital.  In Michigan, VCs have tremendous choice between the best deals. Deal flow quality continues to be very good for our firm, and we expect we will near full fund deployment by the end of this year.”

We are pleased to announce that Kevin Terrasi has joined Plymouth Management Company (PMC) as
Partner effective March 1, 2013. Kevin has worked closely with PMC since our investment in Pump
Engineering Inc. (PEI) in 2008. In 2011 Kevin joined the firm as an Executive in Residence and he has
worked closely with several of the portfolio companies backed by Plymouth Venture Partners Fund II.

Kevin began his career at PEI in 1996 as a Michigan State University engineering co-op student. During
his tenure at the Monroe Michigan firm, Kevin was instrumental in developing a unique custom design
and manufacturing process utilizing state of the art computer aided software. By doing so he and the
firm’s founder, Robert Oklejas, were able to establish PEI as an industry leader in high efficiency pumps
and energy recovery equipment.

Kevin was promoted to Vice President of Engineering and a member of the Board of Directors at PEI,
where he successfully developed and executed plans that resulted in rapid growth. He was an active
member of the divestiture team that sold PEI to Energy Recovery Incorporated (Nasdaq: ERII) in 2009.
For 2 years following the sale, Kevin served as Vice President of the Turbo Machine Division at ERII.

Plymouth’s Managing Partner, Mark Horne, commented, “I’m delighted to welcome Kevin to the firm as
our newest Partner. His great instincts, experience and skills are well suited for our regional growth
stage investment strategy. As we look ahead to our own future growth plans, Kevin adds greatly to our
operational depth.” Horne added, “We’re also grateful to the Michigan Venture Capital Association and
the MEDC who jointly sponsored Kevin’s role as Executive in Residence. The EIR Program allows venture
firms like ours to retain talented executives like Kevin in the state of Michigan.”

About Plymouth Venture Partners II, L.P.
Fund II is a follow-on fund to Plymouth Venture Partners Fund I. PVP I became fully invested in 2009
after completing investments in 29 companies. Plymouth Venture Partners II invests in growth stage
companies in the Great Lakes region. For more information, please visit www.plymouthvc.com.

About Plymouth Management Company
Plymouth Management Company is the manager for Plymouth Venture Partners I and Plymouth
Venture Partners II. The company has four partners, Mark Horne, Ian Bund, Jeff Barry, and Kevin
Terrasi. It is headquartered in Ann Arbor, Michigan. For more information, please visit
www.plymouthvc.com.