The Michigan Venture Capital Association (MVCA) in Ann Arbor, a nonprofit trade association founded in 2002, announced the release of its 2018 MVCA Research Report.
The study, released annually, collects data from 29 Michigan venture capital firms and provides analysis of investment activity occurring in the state.
According to the report, Michigan’s entrepreneurial community continues to grow, but there is need for more capital to fund new and existing companies in the state.
“The data in the report shows Michigan is driving innovation and creating an attractive startup environment for entrepreneurs,” says Tom Shehab, the MCVA’s newly appointed chairman and managing director of Arboretum Ventures. “While Michigan has the fundamental elements needed for a robust economy – research, talent, and ideas – increasing capital availability for Michigan entrepreneurs remains a top priority to ensure the state’s economic health in the long run.”
According to the report, approximately $627 million of additional venture capital will be required in the next two years to adequately fund the growth of Michigan’s 134 venture-backed startups. However, there is $403 million of venture capital available for existing portfolio companies that are based not only in Michigan, but across the country. This highlights a significant gap in the funding necessary to fuel the growth of Michigan startups.
“Michigan investors are trailblazers who are vital to building Michigan’s entrepreneurial community,” says MVCA executive director Maureen Miller Brosnan. “Local investors are often the first to identify innovative companies emerging in the state and have the networks necessary to support their growth through deal-leadership and connections to potential out-of-state syndicate partners to help companies stay in Michigan rather than relocate to other areas where they may find greater funding sources.”
While more funding is needed, the report did uncover some optimistic findings. In 2017, 68 startups in Michigan received $179 million of venture capital investment. That marks a 100 percent increase over the last five years. In addition, the report found that every $1 invested in a Michigan startup by a Michigan-based venture capital firm attracts $3.83 of investment from outside Michigan.