Ann Arbor, Mich. – The Venture Michigan Fund II, Limited Partnership (“VMF II”) announced today that it has launched a new fund to invest in high quality venture capital funds committed to investing in Michigan based high technology companies.
VMF II has capital totaling $120 million to invest in venture capital funds targeting seed and early stage capital Michigan companies in a wide variety of high growth, emerging industries including advanced manufacturing, health care and life sciences, information technology, alternative energy, and homeland security and defense.
Venture capital fund managers participating in the VMF II program will be required to invest at least as much in Michigan-based companies as they receive in capital commitments from VMF II.
“The growth of the venture capital industry in Michigan will be a very important part of the transformation of the Michigan economy,” said Tom Kinnear, Chairman of the Venture Michigan Fund Board. “A healthy and active Michigan venture capital industry results in investment in attractive, growing high technology companies and industries. This means new jobs for the Michigan economy. VMF II should play an important role in this process.”
The formation of VMF II follows the successful commitment of the $95 million Venture Michigan Fund I, Limited Partnership (“VMF I”). Formed in August 2006, VMF I is now fully committed with 11 venture capital fund commitments.
With approximately 36 percent of VMF I capital deployed, VMF I fund managers have invested more than $38 million in 15 Michigan-based companies to date representing more than 200 Michigan jobs. The total capital invested in these Michigan companies by the VMF I fund managers and other venture capital investors was $186 million, indicating attractive capital leverage of nearly 5-to-1.
In 2006 when VMF I was formed, there were 26 Michigan venture capital transactions completed aggregating $117.3 million, according to Thomson Reuters. In 2010, an estimated 44 deals were completed in the State totaling $231.1 million, representing good growth in overall venture capital activity.
The Venture Michigan Fund Board selected the Credit Suisse Customized Fund Investment Group (“CFIG”) to manage VMF II and to structure its financing, which is supported by State of Michigan tax vouchers. CFIG is also the manager of VMF I.
“We are very excited and honored to have the opportunity to continue the significant work CFIG has done to further develop the Michigan venture capital community through the management of VMF II,” said Kelly Williams, Managing Director and Head of the Credit Suisse Customized Fund Investment Group. “Michigan is an extraordinary environment for investment, given its mix of sophisticated venture capitalists, centers of excellence in technology and innovation and highly skilled work force. We are delighted to have been able to structure this innovative financing to continue our dedication to serving Michigan in the building of a strong and growing venture capital industry, which will contribute to the creation of a healthy Michigan economy.”
CFIG’s Michigan office is based in Troy and is managed by Bob Payne and Sean O’Donnell. Bob joined CFIG in 2006 after heading fund investment due diligence efforts for Hamilton Lane and previously managing Comerica’s private equity investment activities. In March 2009, Sean joined Bob in the Michigan office to work on in-state investment activities. Prior to joining CFIG, Sean was with Donnelly Penman & Partners with corporate finance and fund management responsibilities. CFIG expects to add an additional professional to the office in 2011.
Investments will be made by VMF II over a three-year period commencing January 2011. Fund Managers will be selected to receive capital from VMF II through a competitive process. The application process will begin immediately following the VMF II launch event on Feb. 14.
The Venture Michigan Fund was formed under the Michigan Early Stage Venture Investment Act of 2003, as amended. VMF, a Michigan nonprofit corporation, stimulates Michigan’s economic health by fostering job creation, retention, and expansion through the promotion of investment in venture capital funds specializing in seed and early stage investments. For more information, visit the VMF website at www.venturemichiganfund.org.
CFIG is one of the largest and deepest investment teams dedicated to private equity investing. The group is headed by Managing Director Kelly Williams, who founded CFIG in 1999. As of Dec. 31, 2010, CFIG manages over $27 billion in commitments to private equity funds of funds and co-investments, both in the United States and internationally. CFIG’s more than 125 professionals are based at the group’s offices in New York, London, Hong Kong, Columbus, Detroit, Indianapolis, Los Angeles, Portland and Raleigh.
In addition to the $120 million VMF II program, CFIG manages three other in-state programs in Michigan, the $95 million VMF I, the $109 million Michigan 21st Century Investment Fund, L.P. and the $80 million co-investment portion of the Michigan Growth Capital Partners, L.P.