Once upon a time, venture capital in Michigan was small and inconsequential. Today it's powering the Great Lakes State's new economy, growing at a time when the industry has shrunk. Concentrate takes a long look on what that means for our local entrepreneurial ecosystem.
A couple of Ann Arbor-based startups have taken the lion's share of seed funding from the initial round of the Innovation Fund Macomb Community College, Powered by JPMorgan Chase & Co. MyFab5 and TurtleCell received the top awards, $100,000 each, from the Innovation Fund. The $100,000 investments are focused on helping push those startups toward large-scale funding. "We're laying the foundation to accelerate our growth," says Omeid Seirafi-Pour, co-founder & CEO of MyFab5. MyFab5's platform works through Instagram, allowing its users to take pictures of their meals at restaurants and then rank their experience. The 2-year-old company got its start allowing users to rank their top five businesses in certain genres in local areas, but transitioned to a photo-based version when it noticed its users liked using it with Instagram. MyFab5 averages more than 300,000 users each month. That is more than double its user rate from last fall. MyFab5 users have shared over 1.25 million restaurant recommendations and photos. It now employs a staff of four and three interns. The platform also streamlines social media marketing for restaurants, providing a dashboard that enables creation of custom marketing plans, analyzing audience, generating leads, creating and publishing social media posts, tracking and engaging fans, and creating analytics reports. TurtleCell makes a smartphone case with retractable headphones so users can avoid tangled, broken or lost headphones. The Innovation Fund made five investments overall in startups based in Metro Detroit. The total investment package from the came to $275,000. The $2.7 million fund focuses on stimulating economic development and job growth among promising Metro Detroit entrepreneurs and next-stage businesses with high-growth potential. Investments range from $25,000 to $100,000. Source: Omeid Seirafi-Pour, co-founder & CEO of MyFab5 Writer: Jon Zemke Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.
Ann Arbor-based startups are taking the lion’s share of the new early stage seed capital from the Michigan Pre-Seed Fund 2.0. Promising small businesses from Tree Town made up three of the last five recipients from the fund. Ann Arbor-based ventures have also comprised 10 of the 18 investments made so far. "The recent activity has been concentrated in Ann Arbor," says Charles Moret, president of Invest Michigan, which manages the Michigan Pre-Seed Fund 2.0. He adds that there are plenty of other promising startups at the front of the line for funding, including several from the west side of Michigan and Metro Detroit. Invest Michigan launched a little more than a year ago and currently employs a staff of four people in downtown Detroit. It oversees the Michigan Pre-Seed Fund 2.0. The $5.8 million fund is capitalized by the Michigan Strategic Fund, which is administered by the Michigan Economic Development Corp. The Michigan Pre-Seed Fund 2.0 makes small investments ($50,000 to $150,000 in a convertible note or equity investment) in early stage startups looking to rapidly grow their businesses. All companies that receive funding are required to secure a minimum of 1:1 in matching co-investment funds. Some of the industries it is targeting include automotive, agriculture, alternative energy, defense, IT, and life sciences. Startups that do well can receive a follow-on investment worth up to $500,000 from the fund. "Our strategy in Michigan is to enable investors to pool their money together to support early stage startups," Moret says. The most recent companies to receive funding include ENT Biotech Solutions, NanoRETE, Arborlight, Cribspot and Picospray. The last three are based in Ann Arbor. Arborlight makes architectural lighting that mimics daylight. Cribspot serves as clearinghouse for rentals on and near college campuses. Picospray is developing technology that makes small engines more fuel efficient and produce fewer emissions. Moret expects to make another 10-12 investments in Michigan-based startups before the end of the year. "We have funding for the next two years if we maintain our current pace," Moret says. Source: Charles Moret, president of Invest Michigan Writer: Jon Zemke Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.
Three Leaf Ventures is opening an Ann Arbor location to serve as the venture capital firm’s Midwestern office. The Denver-based firm, an affiliate of The Broe Group, aims to invest in healthcare companies that specializes in everything from IT to genomics to consumer medical devices. "We have already drummed up a lot of venture capital activity," says Sean Kearney, managing director of Three Leaf Ventures. "We believe a lot of deal flow will come from Ann Arbor, Detroit, and Michigan." Three Leaf Ventures will lease space in Kerrytown. It's office will be staffed by Kearney who plans to move to Ann Arbor this summer. A couple of part-time staffers are expected to join him later this year. The 3-year-old venture capital firm is stage agnostic when it comes to its investments, meaning it is willing to invest in either early, middle or late-stage startups. Three Leaf Ventures hasn’t made an investment in a Michigan-based startup yet but Kearney expects that to change before the end of the year because there are already a couple of good candidates in the pipeline. "That (one investment this year) is a conservative goal," Kearney says. Source: Sean Kearney, managing director of Three Leaf Ventures Writer: Jon Zemke
Blaze Medical Device accomplished a big milestone many other bio-tech startups never even get close to. "For the first time we are generating revenues," says David Weaver, CEO of Blaze Medical Devices. The Ann Arbor-based startup made its first sale of its blood analysis services earlier this year. Blaze Medical Devices' platform enables medical researchers and product developers to better understand blood damage from all causes. "They didn't want to wait," Weaver says. "It has a huge upside for us. It shows that the market is real." Blaze Medical Devices is now working on adding more clients by the end of the year. The 9-year-old firm is also in the midst of raising a $2 million angel found. Late last year it landed a $200,000 SBIR grant and has since landed more angel investor capital. So far the company has raised $1.3 million toward its $2 million goal, which it expects to close on by the end of the year. Blaze Medical Devices employs a staff of six employees and is looking to add some summer interns. It has hired one lab technician earlier this year. Weaver expects his staff to continue to grow as it generates more revenues and closes out on its angel round. Source: David Weaver, CEO of Blaze Medical Devices Writer: Jon Zemke Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.
"Scaleups are a really important part of creating new jobs," says Mike Goodwin, project leader with Endeavor Insight. "They have the most potential for creating new jobs."
Huron River Ventures is nearly done raising its second investment vehicle, a multi-million dollar fund the Ann Arbor-based venture capital firm plans to use to further invest in its portfolio of tech startups. The 5-year-old firm raised a $11 million fund at its onset, which it used to make early stage investments into 15 startups like FarmLogs and cribspot. Many of them are based in Ann Arbor, including a few that it shares shares office space with in Kerrytown. The second fund, the Huron River Venture Opportunity Fund, will focus on making follow-on investments into the best of the best of the firm’s portfolio of startups. It has already made a follow-on investment into FarmLogs. "It's all for follow-on investment in our portfolio," says Ryan Waddington, partner with Huron River Ventures. "But only for companies that reach a certain size or hit certain milestones." Huron River Ventures has executed a first close worth $3.5 million and expects to do a final close worth a combined $5 million by July. "This is all private capital in the Opportunity Fund," Waddington says. "It's all individuals and family offices." Huron River Ventures expects to make one more follow-on investment later this year and a handful more after that. The firm has also hired a new venture partner over the last year, expanding its staff to three people. Source: Ryan Waddington, partner with Huron River Ventures Writer: Jon Zemke Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.
Investment in Michigan startups hit a 15 year high in the first quarter of 2015. Excerpt: "Twelve companies across the state collectively received $75.3 million in venture capital investments from January to March, according to the MoneyTree report from the National Venture Capital Association and PricewaterhouseCoopers using data from Thomson Reuters. That compares to 14 deals for $37.1 million in the same period in 2014 and was the best first quarter since the 17 deals for $142.9 million to start 2000. Two of the recent deals included companies in West Michigan. Apjohn Ventures invested $3.5 million in Kalamazoo-based Armune BioScience Inc., which is commercializing a new-generation blood test for men suspected of having prostate cancer. Meanwhile, Grand Rapids-based software firm Buoy76 LLC received $950,000 from Start Garden LLC, Huron River Ventures in Ann Arbor, Detroit Development Ventures and an undisclosed investor, according to the report. Buoy76 is developing Sportsman Tracker, a mobile application that forecasts the best time and location for hunters and anglers as well as their probability of success." Read the rest here.
The Michigan Angel Fund has closed on its second fund worth $2.05 million. The firm specializes in making early stage investments in Michigan-based tech startups. Those investments usually range from $250,000 to $2 million. The fund expects to make between eight to 10 investments over the next two years, mostly in startups too young for traditional venture capital investment. "It is designed to fill that need as well for our tech startups," says Skip Simms, managing member of the Michigan Angel Fund, which is overseen by Ann Arbor SPARK. The Michigan Angel Fund was also designed to introduce more high-net-worth individuals into angel investing. The fund launched three years ago with 72 members. The second fund has 62 members with more than half of the investors in the first fund. "The investors come from all over the state and some outside of the state," Simms says. "Some of the investors in the first fund come from as many as four different states." The first investment vehicle from the Michigan Angel Fund is fully invested. Some of the portfolio companies include Avegant, Arborlight, BioPhotonics Solutions, Eco-Fueling, Epsilon Imaging, Larky, stkr.it, and Varsity News Network. 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.
Cyber-security startup TowerSec has landed an investment from venture capital firm IncWell, helping bring its technology to the automotive industry. "It's something we see scaling very quickly," Sophia Kahn, project manager for IncWell. The Ann Arbor-based startup specializes in beefing up cyber security for automobiles. The idea is that as cars are becoming bigger targets for hackers now with the advent of infotainment and driverless automotive technologies. So not only could hackers steal a motorist’s identity while driving but even take control of the car. "It's a growing concern with cars becoming more connected," Kahn says. IncWell is a Birmingham-based venture capital firm that invests in technology startups. Some of its other investments include CureLauncher (a Bloomfield Hills-based startup that refers to itself as the Wikipedia of clinical trials) and iRule, a downtown Detroit-based home entertainment startup. ?IncWell's investment in TowerSec was part of seed round for the startup. Kahn declined to say who led the seed round, who else participated in it, the total amount raised in the round, or the size of IncWell's investment. Kahn also declined to detail much about TowerSec’s platform besides that it is designed as a business-to-business play aimed at commercial and fleet vehicles. She adds that TowerSec's platform is "integration ready" in its development but wouldn't explain further what that specifically meant. Source: Sophia Kahn, project manager for IncWell Writer: Jon Zemke Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.
Our Partners
Common Ground Is Brewing
Support local stories and receive our signature roast straight to your door when you join at the Standard level (or above).
Drink Better, Read Local
