Venture Michigan Fund II has $120M potential for Metro Detroit VC firms

A second Venture Michigan Fund, Venture Michigan Fund II, is being deployed this year, and the $120 million that comes with it has big implications for Metro Detroit.

The first Venture Michigan Fund, formed in 2006, made $96 million worth of commitments to 11 venture capital firms. All but one of those is either based in or has an office in southeast Michigan. Nine of those firms have Ann Arbor ties. About one third of that money has been invested in 15 Michigan-based start-ups, the vast majority of which are located in Ann Arbor.

The Venture Michigan Fund was created to help grow Michigan's fledgling venture capital industry. A Thomson Reuters study shows that there were 26 VC investments in Michigan in 2006, representing $117.3 million. Those numbers went up to 44 deals worth $231.1 million in 2010, the year the U.S. officially emerged from a recession. Bob Payne, who manages the Venture Michigan Funds on behalf of Credit Suisse, credits Michigan's emerging entrepreneurial ecosystem for that growth.

"One thing that Michigan has is a wealth of ideas and a number of companies being formed around those ideas," Payne says.

State vouchers are providing the capital for the Venture Michigan Funds. That money supported the creation of 200 new jobs and has leveraged $186 million from other investors.

Source: Bob Payne, manager of Venture Michigan Fund
Writer: Jon Zemke

Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.