Trade Group Seeks to Grow Venture Capital in Michigan by Growing Talent

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(Courtesy of MI )

Wanted: New venture capitalists. Willing to learn the ropes from seasoned professionals. Perhaps, eventually form their own fund.

That’s basically the gist of the Michigan Venture Capital Association’s new initiatives that seek to seed a new generation of talent to work in the state’s growing venture capital industry.

Among them is a fellowship program aimed at graduate students at Michigan universities whose career goals include becoming involved in the venture capital industry.

“We realize that for Michigan, five to 10 years from now, we need more capital with so many new companies and entrepreneurs here,” association Associate Director Manisha Tayal said. “The best way to get new venture funding in the state is to get new talent. We’re sowing the seeds of that talent — the next generation of venture capitalist in Michigan.”

Participants chosen for the Michigan Venture Fellows Program will spend 18 to 24 months working at a Michigan-based venture firm. The three to four fellows chosen annually over the next three years will earn a salary and receive training through the Venture Capital Institute.

Applicants to the fellowship program must have “strong ties” to Michigan, preferably as a graduate student at a state university. They have until Nov. 30 to apply.

The fellowship program is one way to keep graduate students who want a career in VC in Michigan by creating more opportunity, association Director Merril Guerra said.

“If you’re graduating from a program and you want to get involved in venture capital, you have to figure out something on one of the coasts because there is not a lot of opportunity locally,” Guerra said. “It’s all about creating more opportunities locally so we can continue to strengthen the system as a whole.”

The association is also accepting applicants for the its new Angel Network Growth Program and an ongoing executive-in-residence initiative.

The Angel Network Growth Program gives up to $18,000 annually to the six Michigan-based angel investor networks — including Holland-based Grand Angels and First Angels in Kalamazoo — to hire new personnel or an intern, organize an angel investor education event for members and prospective members, or hold a networking or deal-sharing event.

The executive-in-residence initiative matches executive talent with venture-backed firms. The association seeks to place three to four executives annually.

The initiatives are funded by a $3.1 million grant from the Michigan Economic Development Corp.’s 21st Century Jobs Fund.

Michigan has made steady gains in recent years in attracting venture capital and growing the industry. Three new firms formed in 2010, including the Grand Rapids-based Michigan Accelerator Fund I.

From 2006 to 2010, venture investors put more than $735 million into more than 120 deals in the state, a 40 percent increase in the number of investments made and capital invested in Michigan over the first half of the decade, according to the Michigan Venture Capital Association’s 2010 annual report issued in March.

Nineteen venture firms are now based in Michigan with $1.2 billion in capital under management, a total that has grown by $100 million annually since 2007. Another six venture firms based in other states have offices in Michigan. That pushes the amount of capital under management to $2.6 billion, a $200 million increase from 2009 and more than twice the amount in 2006.

The increases came as those key categories posted declines nationally.

More VC firms have since opened offices in Michigan, Tayal said. Eight firms have joined the association as members this year, seven of which are based outside of Michigan but have a presence here, she said.

“They want to be plugged into the Michigan deal flow,” she said.

Despite the progress, Michigan as of 2010 still ranked with seven others as a fourth-tier state, and 18th nationally in 2010. That’s up one spot from 2009 for venture capital, recording 30 investments totaling $215 million.

The association has an ambitious goal of having at least six funds of $100 million or more in Michigan by 2016 and at least $500 million in venture capital available “at any given time” for new or follow-on investments.

Michigan recently had its first $100 million fund close with a $140 million fund by Arboretum Ventures in Ann Arbor.

Venture investing through August of this year totaled $73 million, down 40 percent from the $123 million, though the number of deals increased from 10 to 13, according to the association.

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