Want to rub elbows with the people most likely to play a critical part in reinventing Michigan's economy from brawn to brains? Then the Michigan Growth Capital Symposium is the place to be on May 11-12 at the Marriott Resort in Ypsilanti.
The event, in its 29th year, is widely regarded as one of the premier places in the Midwest for deals to get done and financiers to meet the cream of the crop in new businesses and emerging technologies. The symposium will feature more than 65 investment firms, 32 top Midwestern companies seeking funding and number of movers and shakers when it comes to the Midwestern entrepreneurial ecosystem.
David J. Brophy, the director of the Center for Venture Capital and Private Equity Finance at the University of Michigan's Ross School of Business, is one of the main organizers behind the Michigan Growth Capital Symposium. He agreed to answer some questions about the event and the entrepreneurial investment scene in Michigan over email.
Could you sum up The Michigan Growth Capital
Symposium's importance to a state like Michigan that is fighting to diversify and reinvent its economy?
Since its founding in 1980, MGCS has served as the focal point for the diversification of the State's economy, providing a venue for entrepreneurs and venture capitalists to meet for the purpose of building innovative businesses through which to capitalize on Michigan's productive capabilities. MGCS has brought Michigan entrepreneurs together with guest speakers and investors from around the US and has heightened the nation-wide awareness of Michigan's economic opportunities.
A recent MoneyTree Report by PriceWaterhouseCoopers and the National Venture Capital Association showed that nearly 90 percent of all the venture capital investment funds in Michigan during the first quarter of 2010 went to Ann Arbor-based companies. Ann Arbor is arguably the strongest center of Michigan's new economy but is it realistic to expect this kind of dominance on a consistent basis when it comes to venture capital investment?
Ann Arbor/ UM has been the natural leader in technological innovation in Michigan since the 1950's, especially in the days when UM's Willow Run Labs were world-class producers of new technology. This background has helped make Ann Arbor/UM continue as the leader today. Recently, as the auto industry has declined, other communities have partnered with the universities they host to develop entrepreneurial activity locally. As the start-up firms created in those communities become "venture capital ready" in quality, they are attracting VC and we are now seeing a productive dispersion of venture capital around the state.
Several micro loan funds have begun to pop up across Michigan over the last year. They seem to be serving a need of providing much-needed financing (loans between $1,000-$35,000) to small businesses for expansion and product development at a time when traditional lending sources have dried up. What sort of role, if any, do you think these funds will have a few years from now when financial markets have returned to a semblance of normal?
Micro loan firms play a different role than do VC firms, but both are important for the growth of small businesses in general and both should be encouraged. The recent shortage of bank credit has encouraged the development/expansion of many alternative sources of business credit, including private-equity funds. When bank credit becomes accessible for small business once again, these micro lenders will need to have business models that enable them to compete with banks if they wish to maintain their market edge. The current debate about federal regulation of financial institutions will have an influence on this issue.
Michigan is in the process of reforming its angel investor incentives so they provide an income-tax credit equal to 25 percent of an investment. What sort of impact, if any, could such a change make on the local angel investing community?
Because Michigan's hopes for a significant role in the national market for entrepreneurial firms hinges on our ability to form and fund new companies, the encouragement of angel finance is vital. A significant tax credit would accelerate angel investment especially by those who have been reluctant to invest in such projects during the strong automotive years, as well as those who are still on the sidelines with respect to risk capital investment.
Name an idea, policy or mindset from elsewhere that you would like to see this region adopt?
A mindset in which innovative, knowledge-based industry is recognized as a core opportunity for Michigan, toward which all aspects of our economy should bend their energies and strategic planning.
Source: David J. Brophy, the director of the Center for Venture Capital and Private Equity Finance at the University of Michigan's Ross School of Business
Writer: Jon Zemke
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