Michigan Growth Capital Symposium

Joel Gray once sang, "Money makes the world go 'round." And while it's a cynical view of life, it brings with it the distinct ring of truth.

In terms of transforming Michigan's troubled financial state, a more appropriate tune might be: "Venture capital makes Michigan's economy go 'round."

Or, at least, it could, if the commitment were there.

But that's easier said than done. Though the state's $54 million in venture capital ranks 20^th in domestic investment, it's precipitously below the top slots held by California, Massachusetts and New York. The Golden State alone pumps $3.5 billion (yes, that's a "b") of venture capital into its start-ups, fueling and expanding its technological innovations with phenomenal success. Michigan's track record is, well, a little less stellar.

The reticence of local investors is understandable. They're used to the once monolithic automobile industry, where innovation was whatever the industry wanted it to be. Local investment was mostly relegated to sure-thing auto affiliates and spin-offs. But as Tom Meloche reminds in his terrific Metromode blog, "There was a time when Michigan was a lot dumber. Henry Ford stupidly wanted to sell affordable cars to everyone. The smart money kept telling him to focus on selling cars only to the rich."

Innovation, vision and a willingness to buck the 'common wisdom' of business know-it-alls, Ford exploded Metro Detroit's economic landscape for nearly a century.

Maybe it's time we stopped listening to yesterday's 'smart money' and start taking the risks necessary to nurture a new generation of homegrown entrepreneurship.
So, where's a hot new start-up to go if it's looking for investment and support? Other than the coasts, of course. For 27 years now, the annual Michigan Growth Capital Symposium (MGCS) has been dedicated to providing that very answer.

Held in Ypsilanti at the Marriott Resort at Eagle Crest this week (May 14 and 15), the MGCS is one of the longest running programs of its kind, drawing the support of the University Of Michigan's Ross School Of Business and attracting nearly 450 people over its two days of panel discussions, rapid-fire pitch sessions, and high-level networking. Started in 1979 by David Brophy, the centerpiece of this remarkably collegial symposium is its carefully screened group of 30 companies which will present to more than 65 investment firms.

"The MCGS was the first of its kind," said Ian Bund, Chairman of Plymouth Venture Partners, "and having the longevity they've had, allows them to keep improving their format." In Metromode interview last year, Bund boasted that he is a true veteran of the MGCS, having attended every symposium since its inception. "Michigan is well known for both its innovation and bright people. What we don't have is capital," Bund explained. "MGCS helps bring in the capital by attracting so many investors in one place."

One of the hallmarks of the MGCS is its decidedly Midwest focus and modest size. The majority of its participants are from Michigan and there is an intimacy and sociability that encourages relationship building. Representatives from Michigan Economic Development Corporation (MEDC), Ann Arbor Spark, MichBio and the local media are expected to swap business cards and tips with VCs and entrepreneurs, making the kinds of connections that lead to economic opportunity.

Yet, even with that strong Midwest focus, nearly a third of the attending investors come from outside Michigan. While interest from the outside is always welcome, founder Brophy believes local investors are key to any success Michigan's economy might capitalize on. Their knowledge of the companies, the products, services and management, puts them in the best position to determine which has the greatest chance for triumph. Which is very much a truism of venture capital –that investors prefer to get involved with companies that are close to home.

Not surprisingly, the focus of many of this year's attending start-ups is on alternative energy, life science and Internet / IT technologies. Many of the attendees hope to land investment from an "angel," and emulate the past successes of companies like NeoGen or Guidepoint Systems. The 800-pound gorilla is, of course, Esperion, which presented at the 1998 symposium and went on to be acquired in 2003 by Pfizer for $1.3 billion.

Each of the thirty companies gets 15 minutes to makes their case to attending venture capitalists, angels and investors. Demonstrating their product, charting their potential or presenting plans for growth, they hope to land the funds necessary to kick-start their business, secure first or second rounds of capital, or shift resources.

But the truth is, very few will come away with investment. Take last year's Spirit Shop. Developed by CEO Todd Sullivan while earning his MBA at the Ross School of Business, Spirit Shop is web-based custom apparel shop that caters to schools, clubs and teams. Despite a recent 25 percent growth per month track record, the company is still seeking venture capital to help it expand and evolve into a profitable enterprise. One has to wonder how it would be recieved in a more VC-aggressive setting.

While inspiration and perspiration are usually cited as the backbone of success, every entrepreneur knows, investment is the part of the equation that often gets overlooked.

The MGCS provides the perfect environment for bold initiatives and thoughtful investment. The presenting companies and, really, the entire state of Michigan, can only hope that local investors attending this year's symposium look to more aggressively put their support behind the future of both.

To get more information about the MGCS, go to their website or contact Managing Director Mary Nickson 734-615-4424 or mnickson@umich.edu. 

The keynote speakers for this year's MGCS include: Kenneth R. Pelowski, Founder & Managing Partner of Pinnacle Ventures and Alan G. Walton, Senior General Partner at Oxford Bioscience Partners.