Venture Capital

Kontextual spins out of Leon Speakers, scores VC investment

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July 31, 2013

Leon Speakers is known for its high-end, custom-built, home-entertainment technology. So why is the Ann Arbor-based company spinning out a tech start-up focused on creating software platforms that helps businesses communicate and run with more ease and efficiency? Kontextual is the result of a company innovating new ways to overcome operations problems and discovering a whole new business in the process. The 1-year-old start-up's software helps streamline the way companies internally communicate, find information and measure results. "We have something that seems interesting to people, but we need to see how it creates value and for whom," says Kurt Skifstad, CEO of Kontextual. That's start-up speak for, 'We think we have a winner but we're still figuring out how to make it profitable.' Kontextual's team of four employees and one intern aren't the only group who believes they have something special. RPM Ventures, an Ann Arbor-based venture capital firm, has invested $200,000 in the start-up. That's one of the early investments in a seed capital round that has reached $650,000 and is aiming to raise about $1 million before the end of the year. Kontextual describes its technology as a platform that "helps companies build transparent, metric-driven cultures. Our cloud- and mobile-based platform helps companies share important information locked in planning spreadsheets, walled off in expensive enterprise platforms, and lost in the black hole of the corporate inbox. The result is strategic alignment of resources, increased efficiency, and significant cost savings for the business, and greater job satisfaction for employees." "It's about decreasing the friction to get the information you need in a company," Skifstad says. Kontextual is in the late stages of its Beta development. It expects to begin shipping the first commercial versions of its software platform in September. It is also looking to hire two more software developers and expects to have a staff of eight people by the end of the year. Source: Kurt Skifstad, CEO of Kontextual Writer: Jon Zemke Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.

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ArborMetrix moves to bigger offices in downtown Ann Arbor

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Economic Development

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July 24, 2013

ArborMetrix is preparing to move to a new home in downtown Ann Arbor, taking space next to Google's office on Liberty Street. The move is expected to help accelerate the start-up's growth, which is on track to be exponential. The health-care software firm has hired 17 people over the last year, mostly new employees in business development, clinical project management and sales. The company now has a staff of 28 employees and two interns and has its sights set on employing 60 people by the end of the year. "We're fighting for space here," says Brett Furst, CEO of ArborMetrix. "We want to create a destination that will attract talent." Helping fuel growth is a newly closed Series B round of funding worth $7 million. ArborMetrix closed on a $1.5 million Series A round two years ago. The money will go toward expanding the company's staff and expanding its sales and marketing operations so the firm can go national. The seed capital will also help ArborMetrix improve its software platform. The start-up offers real-time clinical performance analytics tools for hospitals. The platform helps healthcare providers and payers to improve the quality, safety and cost-effectiveness of surgical and other specialty care. "We provide the clinical evidence so hospitals and surgeons can make better decisions," Furst says. Source: Brett Furst, CEO of ArborMetrix Writer: Jon Zemke Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.

Michigan Angel Fund closes 1st investment vehicle at $2M

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Economic Development

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July 24, 2013

The recently formed Michigan Angel Fund has closed on its first fund and made its first investment this month. The angel-investment equity fund, which is managed by Ann Arbor SPARK, will provide early stage investments in Michigan-based start-ups. The idea is to help meet the increased need for seed funding from the Great Lakes State's deepening pool of start-ups. "Entrepreneurship has grown dramatically in the last decade in our state," says Skip Simms, managing member of the Michigan Angel Fund and a senior vice president at Ann Arbor SPARK. "The demand for early stage capital has grown with it." The Michigan Angel Fund has 70 members which have contributed $2 million to its first fund. The fund's first investment went to East Lansing-based BioPhotonics Solutions. The Michigan State University spin-out produces technology that automates the process of shaping and compressing ultrashort (femtosecond) laser pulses, ultimately improving their utility. Simms expects the fund to make 8-10 investments each year. The average investment will range in size from $250,000 to $700,000. Source: Skip Simms, managing member of the Michigan Angel Fund Writer: Jon Zemke Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.

Huron River Ventures closes on $11M fund

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Economic Development

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June 19, 2013

Huron River Ventures has closed on its first investment fund worth $11 million. The downtown Ann Arbor-based venture capital firm specializes in clean-tech investments in the energy, transportation infrastructure and agricultural fields. Tim Streit and Ryan Waddington launched the venture capital firm in 2011. The pair have raised $6 million from the state of Michigan, a couple of local institutions including DTE Energy and fewer than 50 private investors. "We are less than 30 percent deployed," says Streit, managing partner of Huron River Ventures. "We have significant capital resources from our existing portfolio to help them with their growth." Among Huron River Ventures' initial investments are include SideCar Technologies, University of Michigan spin-out Ambiq Micro, Ann Arbor-based OptoAtmospherics, Ann Arbor-based FarmLogs, Root3 Technologies and Ann Arbor-based Covaron Advanced Materials. The firm has closed one deal last week, which is plans to announce soon. Streit expects to close on another 1-2 more deals before the end of the year. Huron River Ventures has a staff of two people and a stable of independent contractors and interns. It has offices in Ann Arbor and Grand Rapids. Source: Tim Streit, managing partner of Huron River Ventures Writer: Jon Zemke Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.

2 Ann Arbor VCs score Pure Michigan Venture Dev Fund investment

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Community Development

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June 19, 2013

Two Ann Arbor-based venture capital firms have scored millions of dollars in backing from the Pure Michigan Venture Development Fund, which plans to make two more investments later this year. The Pure Michigan Venture Development Fund is a fund of funds, which means it's a venture capital firm that invests in smaller VCs. The $9 million fund invests in first- and second-generation venture capital firms that call Michigan home. It's first two investments were in Michigan eLab and Reasonant Venture Partners, both new VCs based in downtown Ann Arbor specializing in investing in tech start-ups. Each venture capital firm received $2.25 million each. "I anticipate by the end of the summer we should have awards announced for two more funds," says Mike Flanagan, manager of equity capital programs for the Michigan Economic Development Corp, which overseas the Pure Michigan Development Fund. Each of those funds will receive $2.25 million in investment. The staff at the MEDC and some members of Credit Suisse decide which firms qualify and which ones will receive the awards. It takes about 6-7 months to complete the due diligence. Source: Mike Flanagan, manager of equity capital programs for the Michigan Economic Development Corp Writer: Jon Zemke Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.

Augment Ventures expands portfolio with latest investment

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Economic Development

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June 12, 2013

Augment Ventures made its third investment last week since launching out of Ann Arbor nearly two years ago. The venture capital firm participated in the $2 million Series A investment in Mercatus. The California-based start-up offers origination and syndication management technology for the energy project finance industry, helping investors make asset-class portfolio decisions. Mercatus, formerly SCS Renewables, has assessed over 3.2 GW of solar projects, while enabling $250 million in investments and transactions. It currently serves more than 40 percent of the U.S. commercial and utility solar markets. "It's solving a pain point in energy generation solutions across the board," says Sonali Vijayavargiya, founder & managing director of Augment Ventures. Augment Ventures and its team of three people specialize in making investments in start-ups in the clean-tech/sustainability sector. It has made three investments so far, including in downtown Ann Arbor-based LLamasoft last year. "We anticipate making two more investments this year," Vijayavargiya says. "We are evaluating a number of opportunities from Michigan. Source: Sonali Vijayavargiya, founder & managing director of Augment Ventures Writer: Jon Zemke Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.

Wisconsin sees Michigan as venture capital model

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Economic Development

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June 5, 2013

Michigan's mix of public and private investments in venture capital is garnering not only a jump in the VC stats (in one year it moved from 25th to 15th in national VC investment rankings), but also attention around the country. Excerpt: "In many ways, Michigan looks a lot like Wisconsin. It shares hundreds of miles of the same Great Lakes shoreline, and usually votes "blue" in presidential elections and "red" when it chooses governors and its state legislature. It also boasts major research universities that rank among the nation's best. Unlike Wisconsin, however, Michigan began investing in its emerging economy years ago — even as the state’s automobile manufacturing base was teetering on the edge of collapse. The success story of how Michigan has surged onto the national radar when it comes to venture capital investment in tech-based, "knowledge economy" companies should be instructive to Wisconsin policymakers as they prepare to vote on creating a state-leveraged fund." More here.

Venture Investors begins investing out of 5th fund

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Economic Development

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May 22, 2013

Venture Investors has a new investment fund, and the venture capital firm is aiming to spread some seed capital across Michigan this year. Venture Investors' fourth fund was worth $118 million and made 18 investments, including in local companies like Incept BioSystems, HistoSonics, NanoBio and Tissue Regeneration Systems. The venture capital firm is currently fundraising for its fifth fund, which has already made three investments. "We are currently working on a couple in Michigan," says Jim Adox, managing director of Venture Investors. "One will hopefully be within the next 60 days." Venture Investors has offices in Madison, Wisc., and Ann Arbor. Adox overseas the Ann Arbor office, which also employs a full-time intern. He is also looking to add an executive in residence. Venture Investors has traditionally made investments in university spinouts in the bio-technology and life sciences areas. Adox plans to expand that target area to include technology companies with this new fund. "The investment potential and prospects for tech companies have improved in the last few years," Adox says. Source: Jim Adox, managing director of Venture Investors Writer: Jon Zemke

Current Motor Co. finds success in fleet electric scooter sales

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Economic Development

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May 22, 2013

Current Motor Co's business plan has focused on expanding its sales of electric scooters into South America, where the vehicles are popular. That plan is starting to gain traction this summer with the beginning of the company's first fleet sales. The Ann Arbor-based start-up manufactures an electric scooter that provides the same sort of mobility and capability as regular gas-powered scooters, but with a much smaller carbon footprint. Many of the two-stroke gas engines of the millions of scooters in South American countries like Brazil produce a lot of air pollution. That isn't an issue with Current Motor Co's electric scooters and solar-power charging stations. "It's actually a very practical fleet addition," says Lauren Flanagan, executive chair & interim CEO of Current Motor Co. "It's very popular, particularly with mobile, solar-powered charging stations." Flanagan says the company is in the midst of completing its first fleet sales in Brazil this spring and expects to complete more by the end of the year. It is also looking at making similar fleet sales in the U.S. as it attempts to hit the break-even point of selling 500 scooters within the next year. "We have a very lean model so we think that is possible," Flanagan says. Current Motor Co and its team of a dozen people closed on a Series A round of financing worth $2.4 million last year. Flanagan expects to begin fundraising for a Series B round worth somewhere between $5 million and $10 million early next year. The company is currently looking to hire a director of fleet sales and a couple of software engineers to develop mobile apps for its scooters. Source: Lauren Flanagan, executive chair & interim CEO of Current Motor Co Writer: Jon Zemke Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.

Michigan jumps from 25th to 15th nationally in VC investment

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Economic Development

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May 22, 2013

Venture Capital investment in Michigan is on the rise, bucking a national trend of shrinking VC investment, according to a new report from the Michigan Venture Capital Association. The report shows Michigan venture capital firms invested $242 million in local start-ups in 2012, allowing the Great Lakes State to jump to from its rank of 25th to 15th in a national venture capital ranking. "We have had growth with a lot of firms," says Carrie Jones, executive director of the Michigan Venture Capital Association. "We have had firms from out of state opening up offices here." The number of venture capital professioals in Michigan has jumped by 53 to 62 over the last two years. In comparison, the pool of national venture capital professionals has shrunk from 6,328 in 2010 to 5,887 last year. Ann Arbor is arguably the de facto capital for local VCs because of its large concentration of venture capital firms that specializes in investing in spin-outs from the University of Michigan in the life sciences, bio-technology and technology sectors. The total capital under management for Michigan has also spiked over the last two years, going from $1.2 billion to $1.5 billion. The average fund size has jumped by $3 million to $43 million. "Michigan is a real bright spot for the whole industry," Jones says. Source: Carrie Jones, executive director of the Michigan Venture Capital Association Writer: Jon Zemke Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.