By Ilene Wolff
As venture investment is increasingly attracted to Michigan companies, the state’s lack of capital is slowly being reversed.
In fact, life sciences companies are the hottest investment sector for venture fund money in Michigan, according to the Michigan Venture Capital Association’s (MVCA) 2016 Research Report. Within the life sciences sector, nearly 60 percent of the companies attracting investment are focused on pharmaceuticals and medical devices.
“I think a lot of that can be traced to some of the early funds doing well,” says Jim Adox, past chairman of the MVCA and managing director of Venture Investors in Ann Arbor, Mich. He says Venture Michigan funds were a catalyst too. “This is definitely an area where success breeds success.”
In the investment community, Great Lakes region venture firms are attracting the attention of a broad national investor base contributing to ever increasing fund sizes, but healthcare investor Arboretum Venture’s 2015 fundraiser broke state records (in the Great Lakes region it’s one of the top five largest funds raised). Arboretum, in Ann Arbor, raised $220 million for its Arboretum fourth investment fund. The latest round builds on the success of the firm’s previous healthcare-focused funds.
Overall in Michigan, venture capital activity continues to increase.
The number of venture capital firms headquartered in the state, their total capital under management and the number of venture capital investments made in Michigan has doubled and in some cases tripled in the last five years. Nationally, these numbers have decreased.
The angel investment community has also grown substantially. In 2015, nine angel groups in Michigan were made up of 294 investors, a 59 percent increase in angel participation from the previous five years, with a 10th angel group in formation. Angel groups invested more than $16 million in Michigan startups in 2015, and Michigan’s Grand Angels group was listed among the three most active angel groups in the country.
“Our report, comparing 15 years’ worth of data contributed by 100+ member organizations, shows steady and consistent growth of the venture and angel capital industry in Michigan, in many cases outpacing national trends,” according to a letter to readers in the report from Maureen Miller Brosnan, MVCA executive director.
Report: 1/3 of companies attracting investment in 2015 were med tech
Out of 74 Michigan startups receiving venture capital investments in 2015, 23 were life sciences/health care companies. They include:
Akadeum Life Sciences
Algal Scientific Corporation
Celsee (formerly Denovo Sciences)
Delphinus Medical Technologies
Tissue Regeneration Systems
Source: 2016 MVCA Research Report