Michigan doesn't lack for money. It's one of the wealthiest states in the union, but much of its investment capital ends up being deployed out of state.
"There is a lot of money in Michigan that is available for investing but it goes to the coasts mostly," says Merrill Guerra, executive director of the Michigan Venture Capital Association
. "Our challenge is to get it to stay here."
The Michigan Venture Capital Association's Annual Research Report shows that dynamic is starting to shift in Michigan's favor. Capital under management by Michigan-based VCs is up 64 percent over the last five years. That $3 billion under management also has nine figures worth of dry powder, coming to nearly $370 million available for new investments, the report states.
The report adds that four Michigan venture capital firms successfully closed funds last year, raising $348 million. Ann Arbor-based Arboretum Ventures
and Plymouth Venture Partners
led the way. Michigan-based VCs are also trending toward raising bigger funds. The Great Lakes State now has six funds worth more than $100 million, eight more funds with a value between $50 million and $100 million and another 13 funds smaller than $50 million.
"One of the great things about putting your money into Michigan venture capital firms is the higher return on investment," Guerra says. "The companies here are more capital efficient and can be bought at a lower price but when they exit it's on a national scale."
Source: Merrill Guerra, executive director of the Michigan Venture Capital Association
Writer: Jon Zemke
Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.