Eighty-eight Michigan-based startup companies received $257 million in venture capital from Michigan venture capital firms in 2020, according to the Novi-based Michigan Venture Capital Association’s 2021 Research Report.
The $257 million in 2020 investment was down from $514 million in 2019, due in no small measure to the COVID-19 pandemic.
The report, a comprehensive analysis of investment activity in the state, also points out the need for $1.2 billion in venture capital funding over the next two years for the continued growth of Michigan startup companies.
“What jumps out to me is the continued strength and resilience of the ecosystem given COVID-19,” says Ara Topouzian, executive director of MCVA. “Pre-pandemic we were heading toward a record-breaking year. After a small pause, what the report shows us is that we have a strong ecosystem for both investment and those in the pipeline.”
Michael Gross, MVCA chairperson and managing director of Beringea, says, “As we look to a post-pandemic future, MVCA members can lead a new chapter of economic expansion in Michigan, building on the deep heritage of innovation in our great state. I’m proud of the perseverance and fortitude reflected in the latest MVCA Research Report and optimistic our members will carry forward the important lessons of this difficult year into a brighter 2021.”
In addition to the 88 Michigan startups receiving more than $257 million in venture capital investment in 2020 and the additional $1.2 billion in venture capital needed in the state, the 2021 MVCA Research Report finds:
- There are 165 venture-backed startups in Michigan, an increase of 17 percent over the last five years.
- Total venture capital funds under management of firms headquartered in Michigan in 2020 was $2.8 billion, an increase of 28 percent over the last five years.
- Total venture capital under management in Michigan is $3.7 billion, a decrease of 31 percent over the last five years.
- Every dollar invested by a Michigan startup by a Michigan venture capital firm attracts $9.70 of investment from outside of Michigan.
- In Michigan, 102 startups raised more than $49.5 million from angel investors in 2020.
The report also shows that 15 percent of Michigan venture-backed startups were led by a CEO who is a person of color, compared to 7.4 percent of CEOs of Fortune 500 companies nationally.
“Of course, that needs to be better,” Topouzian says. “There is a big disparity both in capital investment and the diversity within the entrepreneurial community. It’s going in the right direction in Michigan, but there’s much more work that needs to be done.”
Gross says, “We must continue to come together as entrepreneurs and investors to make sure we harness the diverse talents of our fellow Michiganders and welcome the contributions of everyone regardless of background, socioeconomic status, gender, or race.”
MVCA is a nonprofit trade association with more than 400 individual members representing more than 100 organizations that advocates for more capital and talent for Michigan’s entrepreneurial and investment community. For more information, visit here.
