Michigan Venture Capital Association’s (MVCA) continued its statewide tour, presenting its Annual Report on venture capital activity in Michigan, at a reception hosted by ArborMetrix in Ann Arbor. The event offered over 100 attendees a deep dive into the report’s findings, with particular focus on the venture community’s impact on Ann Arbor.
Maureen Miller Brosnan, executive director of MVCA, told the audience that this year’s in-depth analysis of venture capital activity in the state indicates a steady and consistent trend of success in Michigan. “The number of investors, the amount invested in Michigan-based companies, and the number of successful, active angel- and venture-backed companies located and hiring in Michigan are all trending upward, showing significant increases in the last five years,” she said. The 2015 Report also reflects members’ request that the organization examine venture activity in specific geographic regions of the state. “With over half of all Michigan venture firms operating in the Ann Arbor area, it really is a hub of entrepreneurial and investment activity in our state,” said Brosnan. “The high concentration of early-stage capital in the Ann Arbor area has also led to increased cooperation among venture firms to ensure startup companies are able to fill their funding rounds.”
A panel discussion at the event featured Emily Heintz, Associate Director of MVCA, plus several other members of Ann Arbor’s entrepreneurial and early-stage investment community (Tony Grover, RPM Ventures; Patti Glaza, Invest Detroit; Brett Furst, ArborMetrix; and Paul Krutko, Ann Arbor SPARK). “Ann Arbor is one of the most established and active venture communities our state has,” said Heintz. “It’s interesting to examine success stories over the long-term in Ann Arbor and see how they might benefit more emerging entrepreneurial environments elsewhere in Michigan.”
Furst, CEO of ArborMetrix, talked about his experiences leading a venture-backed company. “Ann Arbor is unique with respect to how collaborative the venture community is when presented with the opportunity to fund a new or growing startup,” he said. Chris Gibbons, CEO of venture-backed Histosonics, recounted a similar sentiment in the Annual Report when describing why her company calls Ann Arbor home: “Locating in Ann Arbor has allowed us to position ourselves in the midst of a thriving entrepreneurial community with access to investors, other entrepreneurs and service providers who support them.” Her life science company is one of 44 in the Ann Arbor-area that have received a total of $590 million in venture funding.
About the Report’s Findings—Ann Arbor Specific
- There are currently 44 growing Ann Arbor area companies that have received more than $590M in venture capital funding.
- 18% of these startups have a CEO who is a woman.
- 11% of these startups have a CEO who is a minority.
- The Information Technology and Life Science sectors have been the main focus of capital deployment in the Ann Arbor area.
- 5% of these startups have a CEO who is a woman.
- 0% of these startups have a CEO who is a minority.
- In 2014, in Ann Arbor, 100% of all venture-backed companies that received investment in 2014 received support from at least one Michigan venture firm.
- 37% of these venture-backed startups received support from more than one Michigan venture capital firm in 2014, which is an indication that the Ann Arbor area has a very collaborative entrepreneurial ecosystem.
About the Report’s Findings—General
Venture capital and angel investment in Michigan continues to contribute to the state’s economic recovery, according to the report. The in-depth analysis of venture capital activity in the state indicates a steady and consistent trend of success in Michigan’s entrepreneurial economy. The number of investors, the amount invested in Michigan-based companies, and the number of successful, active angel- and venture-backed companies located and hiring in Michigan are all trending upward, showing significant increases in the last five years.
Notably, the report also forecasts a disparity between the demand and the amount of venture capital available for new and follow-on investments in Michigan startups. Founders typically locate and keep their businesses geographically near the sources of the capital they need for growth.
“We’ve spent more than a decade building a venture capital community in Michigan that can support the state’s extraordinary startup companies and contribute to the diverse economy that is crucial to the state post-recession. We’re now at a point where, despite significant increases in venture capital under management at Michigan-based venture firms, it’s still not enough to meet future funding demands by Michigan startups,” said Brosnan. “In order to continue to have a positive impact on our economy, we must ensure Michigan-based venture capital firms are able to grow their available capital while at the same time able to attract out-of-state venture firms to invest more in Michigan.”
Key highlights of the 2015 MVCA Research Report include:
- There are currently 129 venture-backed companies in Michigan, a 70 percent increase in the last five years.
- Michigan venture capital firms invested in 97 percent of all Michigan startups that received any venture capital in 2014.
- Last year, Michigan-based venture capital firms had $1.7 billion in capital under management, an increase of 45 percent in the last 5 years.
- Fifty one companies in Michigan received more than $204 million from Michigan venture capital firms in 2014. This is an 89 percent increase in the last five years.
- The number of venture capital investment professionals living, working, and investing in Michigan has increased by 98 percent in the last five years.
- The number of venture firms with an office or headquarters in Michigan has increased by 48 percent in the last five years.
- There are currently 214 startup companies in Michigan that have received funding from a Michigan angel group, a 206 percent increase in the last five years.
- In 2014 there were nine Angel Groups in Michigan with 272 Active Angel Investor Members, a 45 percent increase in membership in the last five years.
About The Michigan Venture Capital Association
The Michigan Venture Capital Association (MVCA) is a non-profit trade organization designed to bring together venture capital industry experts in the state of Michigan. The organization’s goal is to grow and sustain a vibrant venture capital community in Michigan. MVCA membership includes private and corporate venture capital funds, angel investors, universities and economic development participants, and service providers. More than 400 individuals are members of MVCA, representing over 100 organizations across the nation. www.MichiganVCA.org