ANN ARBOR ? Two state funds that will invest in venture capital companies that will in turn invest in Michigan technology start ups will have a significant impact on developing a stronger entrepreneurial environment in the state, Mary Campbell, the new president of the Michigan Venture Capital Association, said in an interview this week.
The Venture Michigan Fund and the 21st Century Fund will each invest in eight to 12 Venture Capital funds, starting in late December or January 2007.
?The number of institutional investors who have invested in Michigan-based funds is a short list,?? Campbell said. ?To have one or two more with a particular focus on venture funds that reside here and invest here, percentage wise will be a huge increase.
?Sometimes looking at this in percentages doesn?t make sense, but I?d guess there are not more than 10 funds that have invested in the state,? she said. ?So two funds more would represent a 20-percent gain.?
The Venture Michigan Fund will invest $95 million over the next three years, with an initial commitment late this year. The 21st Century Fund, which will invest about $115 million, will make its first commitment by the end of the year or the first few weeks in 2007.
Each fund will invest from $7 million to $10 million in Venture Capital funds ? not necessarily based in Michigan ? with the commitment that these funds invest in Michigan companies. The twin funds can not become more than 25 percent of the total invested in any individual Venture Fund.
What this investment strategy means is at least $800 million will be made available through 2010 for investments in Michigan companies, since the private sector fund must come up with at least $600 million of its own money to pool with the $200 million from the state.
Campbell said the state is appropriately targeting money where it is most challenging for entrepreneurs to access.
?We just have to be a little patient on job production. These are leading investments with lagging results.?
Campbell said anything the state can do to diversify the economy, which isn?t at the expense of Michigan?s core manufacturing, is a good first step.
?In areas where we can draw upon the talent base we have, such as engineering, alternative energy and advanced manufacturing – and a hoped for cross over into medical devices – makes sense,? Campbell said. ?The more we can engage universities in near term economic impact and job creation for their graduates, the better for Michigan.?
