The Michigan State University Foundation in East Lansing has been named administrator of the Michigan Pre-Seed Fund III by the Michigan Economic Development Corp. The $3 million award, approved by the Michigan Strategic Fund, fits the nonprofit mission of the MSU Foundation and will help further drive economic development by deploying this early stage capital to startup companies across the state.
Founded in 1973, the MSU Foundation’s mission is to assist Michigan State University in fulfilling its land grant mission as it relates to economic development. In the past six years, the MSU Foundation has invested resources into programs that help commercialize new technologies. Its investments include accelerator programs (via Spartan Innovations), a pre-seed and early stage venture fund (Red Cedar Ventures), and facilities and incubators via its University Corporate Research Park organization.
“Our objective is to contribute to the state of Michigan’s entrepreneurial ecosystem with the goal of creating jobs, attracting and retaining talent, and creating value,” says David Washburn, executive director of the MSU Foundation. “Administering the Pre-Seed Fund III award will enhance our impact and help us extend our reach across the state.”
The award, which was approved by the Michigan Strategic Fund on April 14, will further the foundation’s endeavors by allowing it to work with pre-seed stage companies throughout Michigan, provide capital support, coaching, and assistance with grant funding, and provide access to entrepreneurship resources available across the state.
The Pre-Seed III dollars will be deployed to early stage venture companies as either convertible notes, equity investments, or SAFE agreements, and the size of the investments will vary depending on the opportunity. The program will be overseen by Jeff Wesley, executive director of the MSU Foundation’s Red Cedar Ventures fund. The organization will leverage its relationships throughout the entire state to source investment opportunities.
“With this award from the MEDC, we’ll work with statewide SmartZones, university tech transfer offices, business acceleration service providers, and incubators and accelerators,” says Wesley. “We want to leverage existing relationships to support these startups.”
In some cases, the MSU Foundation, via Red Cedar Ventures, will co-invest alongside of the Pre-Seed Fund III and seek support from the angel and early stage investors across the state.
“We have built a strong network across the state of Michigan through our membership with the Michigan Venture Capital Association and have received commitments of support from several investor groups within the region,’ says Wesley. “By combining investment dollars from a number of sources, we can spread the risk while surrounding the new startups with a nurturing ecosystem of aligned partners.”
The Pre-Seed Fund III is industry and sector agnostic but will have an emphasis on high-growth opportunities that commit to staying in Michigan. Investments from the Pre-Seed Fund III are expected to begin in May upon completion of contractual negotiations between MEDC and MSU Foundation.