Venture Capital

Huron River Ventures builds startup ecosystem in Kerrytown

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May 21, 2014

Huron River Ventures isn't just a venture capital firm looking to build a portfolio of startups and investors. It’s working to build its own little entrepreneurial ecosystem in Kerrytown. The 4-year-old VC, which specializes in early stage investment, opened up its first office this spring in Kerrytown. It is sharing the space with a handful of other venture capital firms and a few startups, including Local Orbit and TurtleCell. The idea is to create a concentration of techies and investors in a cool space in one of Ann Arbor's most cosmopolitan neighborhoods. "We wanted to see if we could create a little space with some critical mass," says Ryan Waddington, partner of Huron River Ventures. "We wanted to create a space where people could bump into each other more frequently." Huron River Ventures renovated the old Ann Arbor Observer space on the 1st floor of the Market Place building at 303 Detroit St. Arboretum Ventures already occupies the third floor of the building. Huron River Ventures was also able to recruit the Ann Arbor offices of a number of VCs, including Draper Triangle, Cultivian Sandbox, Arsenal Venture Partners, and Detroit Innovate. "It doesn't make a lot of sense to build out a big office when you're a staff of one," Waddington says. Huron River Ventures, which has a core staff of two people, closed on a $11 million investment fund (its first) in 2011. It has made 11 investments, has 10 portfolio companies, and has recorded one exit. It currently has one term sheet out for another investment and is looking to make three more investments by the end of this year. Source: Ryan Waddington, partner of Huron River Ventures Writer: Jon Zemke Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.

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Wolverine Venture Fund scores win with Silverpop exit

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Economic Development

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April 16, 2014

The Wolverine Venture Fund, an investment vehicle run by students at the University of Michigan, is celebrating a win now that it has recorded its fourth profitable exit with the IBM's acquisition of Silverpop. Silverpop is a software company offering marketing automation and real-time personalization technology services. The Wolverine Venture Fund invested $200,000 in 2000. The size of the return hasn’t been released yet besides the managing director of the fund saying the exit "makes us very happy." "What's nice about this one is that it's a company that was founded during the Dot Com boom," says Erik Gordon, a professor of entrepreneurship at the University of Michigan’s Ross School of Business and managing director of the Wolverine Venture Fund. "Very few of these companies were standing three years later. This is one of the few Dot Com companies that was able to survive and pivot a few times." The Wolverine Venture Fund got its start in 1997 with $2 million donated by supports of U-M’s business school. It has since grown to $6.5 million, recording four successful exits. The fund specializes in making early round investments in startups of around $100,000 to $200,000. The fund currently has about a dozen active portfolio companies. The students who run the Wolverine Venture Fund number about 25 each year. About a dozen students sign up for a two-year stint of managing the fund each year. Most of those students are MBA students at the Ross School of Business but a few others are often graduate students in science and technology fields of the university. "It's a huge commitment," Gordon says. "You come in and do it for two years, including through the summer. This is a real deep dive. They become real venture capitalists." Some of the Wolverine Venture Fund’s recent alumni include Jake Cohen, a partner with Detroit Venture Partners, along with Michael Godwin and Jason Townsend, co-founders of Resonant Venture Partners. "That's the fund's real accomplishment," Gordon says. "We are training our students to get up and make it happen." Source: Erik Gordon, a professor of entrepreneurship at the University of Michigan's Ross School of Business Writer: Jon Zemke Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.

Avegant raises $1.9M in investment, $1.5M in crowdfunding

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Economic Development

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April 2, 2014

Most startups are excited to have seven figures worth of seed capital coming in. Avegant has managed to score two in its first year. The downtown Ann Arbor-based startup has raised $1.9 million in a Seed Round. It also raised $1.5 million from a crowdfunding campaign earlier this year. And all of these people willing to throw money at the company can’t wait to see its night-vision technology. "We smashed our (crowdfunding) goal (of $250,000) in a matter of three hours," says Edward Tang, CEO of Avegant. Avegant co-founders Tang and Allan Evans met at the University of Michigan. They were approached by military contractors about creating better night-vision equipment for military drivers during wartime. Soldiers were experiencing better results using thermal night vision while driving. The problem was the display was in their vehicle’s dash instead of over their eyes. Tang and Evans found that the computer screen and eye fatigue often downgraded the viewing quality. In response they created a night-vision goggle that projected the image directly on the users eye, providing a big step forward in picture quality. "It was a higher picture quality that I had ever seen before," Tang says. Avegant's team of 11 employees and one intern has created three different evolutions of the prototype since landing the $1.9 million in a Seed Round last August. The Michigan Angel Fund, an angel investment group, led that investment round. Tang expects to ship the first commercial units of the night-vision goggles before the end of the year. "We're considering doing pre-orders on the website," Tang says. "It's going really well." Source: Edward Tang, CEO of Avegant Writer: Jon Zemke Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.

North Coast Technology Investors start off year with big exit

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Economic Development

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March 19, 2014

One of Ann Arbor's venture capital staples officially scored a big exit early this year, and chances are you haven't heard about it. NTT Communications, a Tokyo-based multinational corporation, acquired Denver-based Virtela Technology Services for $525 million. The deal was finalized in January, and Ann Arbor-based North Coast Technology Investors was one of the early investors in Virtela Technology Services. "These don't happen everyday," says Hugo Braun, partner with North Coast Technology Investors. "We're pretty excited about it." The 15-year-old venture capital firm is currently in the midst of deploying its third investment fund worth $30 million. North Coast Technology Investors' team of three people have made nine investments from the fund and recorded two exits. The other exit was Ford's acquisition of Ferndale-based Livio last fall. "We're still in investment mode," Braun says. "We have half of our money left in our fund. Some of it is committed to other investments but we think we will make a few more this year." One of its most recent investments is in VNN, formerly Varsity News Network, which recently raised a $3 million Series A round. The Grand Rapids-based startup is pushing forward a collaborative effort between traditional and community sports journalists to provide media coverage for every high school sport. It took first place and $500,000 in seed capital in last fall’s Accelerate Michigan Innovation Competition. Source: Hugo Braun, partner with North Coast Technology Investors Writer: Jon Zemke Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.

Grand Angels expand investment reach into Ann Arbor

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Economic Development

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February 26, 2014

Grand Angels has been spreading its wings across Michigan, making investments across the Great Lakes State including in Ann Arbor. That's a significant step for the Grand Rapids-based angel investment group. Angel investors are high-net-worth individuals (think millionaires) who invest in early stage startups. The Grand Angels started a decade ago with the idea of investing in those startups in the Grand Rapids area. It quickly realized that opening up that area meant more opportunities to invest. "We said we will look at deals anywhere in Michigan as long as it looks like a good deal," says Jody Vanderwel, president of Grand Angels. "That opened up the pipeline quite a bit." One of those deals is in Local Orbit. The Ann Arbor-based startup is developing software that helps connect food producers (think farmers, co-ops and farmers markets) with grocers, restaurants and other eateries. Local Orbit's online marketplaces are active across a dozen states. That enabled local farmers' sales through Local Orbit to grown 300 percent between 2012 to 2013. Local Orbit is leveraging its investment from Grand Angels to expand its targeted regions. Source: Jody Vanderwel, president of Grand Angels Writer: Jon Zemke Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.

Michigan Business Challenge sends 113K to student startups

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Economic Development

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February 26, 2014

A wide variety of student-led startups scored thousands of dollars in seed capital at the most-recent Michigan Business Challenge. The annual business-plan competition at the University of Michigan awarded $113,000 from the Michigan Business Challenge and Dare to Dream grant program. The competition awarded money to 16 teams that ranged from $200 to teams that made it past round one to $20,000 for the top placer. Among the winners were clock generator technology for the microprocessor market and a workout water bottle that can be turned inside out so it can be washed. "When you have that kind of diversity of really smart people all in one place it is unusual if you don’t see that sort of breadth of diversity when these competitions come up," says Stewart Thornhill, executive director of the Zell-Lurie Institute for Entrepreneurial Studies, which organized the competition. Among the top winners are: Movellus Circuits won the Pryor-Hale Award for Best Business (worth $20,000) for its patent-pending clock generator technology for the microprocessor market. Flipsi won the Pryor-Hale runner-up award for best business ($10,000) and the marketing award ($2,500). Flipsi is creating a reusable drinking bottle that flips completely inside out to facilitate easier cleaning. A group of three U-M graduate students studying engineering ands business won the Erb Institute award for Sustainability ($7,500). The trio is developing an energy system that installs heavy-duty power electronics and battery storage units in commercial buildings for fast-charging services to electric vehicle drivers. MyDermPortal won the Outstanding Presentation award ($2,000) and the Marketing award ($2,500) for its web-based app for dermatologists to provide follow-up treatment via the Internet for the most common diagnoses in significantly less time than an in-person visit. Lab Compass won the Most Successful Undergraduate Team award ($2,500) for its cloud-based software enabling more efficient collection, storage and sharing of sensitive healthcare data used in medical research. Nodify won the Best Written Plan award ($2,000) for its mobile apps that automatically refine a user’s professional network into a manageable group of important contacts and suggests relevant reasons to stay in touch. "The ones that did emerge at the tip of the heap are the one that showed the most promise," Thornhill says. Source: Stewart Thornhill, executive director of the Zell-Lurie Institute for Entrepreneurial Studies Writer: Jon Zemke

Michigan eLab’s portfolio company looks to open Ann Arbor office

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Economic Development

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February 12, 2014

Venture capital firm Michigan eLab made its first investment in a startup last year, and it’s now helping that company establish a presence in Ann Arbor. Fonemine is headquartered in Silicon Valley. The software startup scored an investment from Michigan eLab last fall and is working to open a sales office in Ann Arbor. "They have already hired one sales rep in Ann Arbor," says Doug Neal, co-founder of Michigan eLab. “They are partnering with (Detroit-based) VisionIT.” Michigan eLab launched about a year ago with the idea of funding startups in Michigan and bridging the gap between tech super hubs like Silicon Valley and the Great Lakes State. The firm has five partners, one administrative staffer and an intern. That team has raised almost half of its first fund, which has a goal of $40 million, and hopes to finish fundraising before the end of the year. Michigan eLab specializes in investing in early-stage tech startups. Its average investment is $1 million. Neal hopes to close on two more investments in the near term, including one with an Ann Arbor-based startup. "The pipeline is great," Neal says. "It's amazing how many opportunities we are seeing." Source: Doug Neal, co-founder of Michigan eLab Writer: Jon Zemke Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.

Renaissance Venture Capital Fund begins investing in startups

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Economic Development

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February 12, 2014

The Renaissance Venture Capital Fund made its name as a fund of funds in the venture capital world, making sizable investments in smaller venture capital firms either based in Michigan or establishing a presence in the Great Lakes State. Now the fund is starting to make headlines for investing directly into startups. The Renaissance Venture Capital Fund, which has its offices in both Detroit and Ann Arbor's downtowns, has made three direct investments in maturing startups that are backed by its own fund of funds. Those investments, all made in 2013, have a Michigan focus and more are in the pipeline. "Those funds (that the Renaissance Venture Capital Fund backs) tend to invest in early-stage companies," says Chris Rizik, CEO of the Renaissance Venture Capital Fund. "We have been monitoring them as they grow. Three of them reached a level of maturity that we could invest in them in 2013." That level was the $8.3 million Series B round invested in ArborMetrix late last year. It also includes venture capital rounds for Fidelis SeniorCare and Swift Biosciences. Those investments range between $500,000 and $750,000 per startup. "You will probably continue to see 1-2 direct investments per year for the foreseeable future," Rizik says. The Renaissance Venture Capital Fund has made 14 investments since its launch a few years ago, and is preparing to announce its 15th investment in a couple of weeks. It has committed $60 million of its initial $100 million fund. The fund is primarily capitalized by Fortune 1000 firms based in Michigan. Source: Chris Rizik, CEO of the Renaissance Venture Capital Fund Writer: Jon Zemke Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.

Flagship Ventures invests in local startup, plans to do it again

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Economic Development

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February 5, 2014

Flagship Ventures opened an office in downtown Ann Arbor a year ago and it has already starting to make some moves. The Massachusetts-based venture capital firm participated in a Series B round for Tangent Medical Technologies about a year ago. It co-led the $8.6 million round of investment with Arboretum Ventures. Tangent Medical Technologies is developing its NovaCath Integrated IV Catheter System, which is designed to address IV therapy challenges including catheter stabilization, healthcare worker safety, tubing management and patient comfort. NovaCath's passive needle shielding technology and closed system design is meant to minimize risk of needlestick injuries and occupational exposure to blood to the lowest feasible extent. The startup is led by Jeff Williams who also served as the CEO of bio-tech startups HandyLab and Accuri Cytometers, which were both acquired. "Tangent has a great team," says Mike Johnson, associate with Flagship Ventures. "Its IV catheter is a novel technology with FDA clearance." Johnson is optimistic that Flagship Ventures will make another one or two similar investments this year. "We're enthusiastic about the opportunities in Michigan," Johnson says. "We are evaluating a number of different companies." Source: Mike Johnson, associate with Flagship Ventures Writer: Jon Zemke Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.

Draper Triangle Ventures plans to open Ann Arbor office

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Economic Development

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February 5, 2014

Draper Triangle Ventures sees an opportunity in Michigan so the Pittsburgh-based venture capital firm has its sights set on Ann Arbor. The VC plans to make tech startups part of its newest investment fund and is opening satellite offices in Ann Arbor and downtown Detroit in order to be in the middle of Michigan’s most dynamic tech hubs. "We'll be actively making investments," says Jonathan Murray, managing director of Draper Triangle Ventures. "There is one that is pretty far along already that could be announced within the next couple of months." Draper Triangle Ventures invests in early stage tech ventures. Think: software and IT startups. It is in the midst of raising a $100 million investment fund with commitments for three quarters of that amount. Murray will be Draper Triangle Ventures' person on the ground in Michigan, manning the Ann Arbor and Detroit offices. Murray graduated from the University of Michigan with an MBA and serves as an advisor to the Wolverine Venture Fund at the Ross School of Business. He plans to make 1-2 investments in local startups each year. Those investments will be in the area of $1 million. "Our model is quality over quantity," Murray says. "We tend to be selective." Source: Jonathan Murray, managing director of Draper Triangle Ventures Writer: Jon Zemke