Ann Arbor SPARK closed out 2024 celebrating a major coup for Michigan’s entrepreneurial ecosystem: the $60 million Michigan Innovation Fund, approved by the Michigan Senate on Dec. 20. Michigan Gov. Gretchen Whitmer proposed the fund in her fiscal year 2025 budget. The fund will offer startup capital for Michigan-based companies. SPARK will receive approximately $9 million from the Michigan Innovation Fund, further strengthening its ability to power entrepreneurial innovation and growth.
"With the lame-duck session, we weren't sure if it was going to get voted on. I think everybody was waiting with bated breath right before the break, and then on the last day the senate was in session they voted on it," says Mike Flanagan, SPARK's vice president of capital programs. "It worked out and I think it's going to be good. The state just hasn't had a lot of this in the last 10 years. We kind of feel like we're playing catch-up. But this will be a big boost."
SPARK was part of a coalition of entrepreneurial support organizations that created the Michigan Innovation Fund concept and advocated for the state to support it. The new program is budget-neutral for the state, with the funding coming from investment returns to the Venture Michigan Fund (VMF) program. VMF is a prior state effort to invest in venture capital funds, started in the early 2000s.
Flanagan underscores that startup companies tell SPARK their number one biggest need is capital. They don't have the money to grow, and they don't often have much revenue, so early-stage capital is the hardest to get. The new fund addresses the gap and keeps startups in the local ecosystem.
"Because we've lacked enough capital in Michigan, when companies go to raise it, eventually if they're not finding it in Michigan they're going elsewhere to raise money," Flanagan says. "So there's a lot of examples of companies leaving the state, because when you're a very early-stage company investors typically prefer you to be closer to them."
Flanagan is looking forward to seeing the impact of the Michigan Innovation Fund, which is projected to assist over 500 Michigan-based startups.
"We're going to be able to expand basically our volume of investing, how many companies we're able to invest in," he says. "The number of companies we're investing in versus the number of companies that are asking for money is still pretty low, percentage-wise."
Jaishree Drepaul is a writer and editor based in Ann Arbor. She can be reached at jaishreeedit@gmail.com.
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