At the start of 2014 when Jim Adox began his two-year term as chairman of the Michigan Venture Capital Association, he outlined three broad initiatives to strengthen Michigan’s entrepreneurial and venture capital community. Now a little over halfway through his term, we asked Adox, who is managing director of Venture Investors, how these initiatives played out over the past year and what other events made 2014 significant for the MVCA and Michigan investors.
MGCS: Your first initiative involved the launch of a new state-funded fund of funds that would invest in VC funds located in Michigan.
Adox: The new fund of funds has not launched, but there was a lot of activity focused on examining different structures for the fund. Early in 2014, we worked with state legislators, who were in favor of continuing to support venture capital in Michigan, given all the excellent results. The Michigan Economic Development Corporation (MEDC) has been working on the fund of funds initiative quite a bit. It is a very important goal, and one that certainly will roll over to next year. In fact, it will be the first goal for the MVCA in 2015, because it’s so vital to maintain the momentum of venture capital and to fund entrepreneurs in Michigan. Now that the elections are over, we can make some progress toward this goal.
MGCS: Your second initiative was to foster professional-development programs that enhance venture capital and entrepreneurial talent in our state.
Adox: Those programs have gone well. Earlier this year, the MEDC awarded grant funding to the MVCA so we could continue our Venture Fellows program, which enables venture funds to bring new, younger people into their firms as analysts or associates. This is the second session of this program. In the past, the venture funds and the Fellows have liked the program and felt it was beneficial. This is a potential route for Michigan MBAs to get involved in venture capital and become part of a VC team. We also have a new program, Executive Connect, which builds and curates a list of talented C-level executives and CEOs, both current and retired, in Michigan who want to continue contributing to the state’s economy and entrepreneurial companies at a board level. These individuals would serve as board members for Michigan start-up and early stage companies. It’s an innovative program that fulfills a great need and desire by start-ups to attract more seasoned board members. These executives have been working in big companies during their careers and have been involved in different networks. This program combines the two networks of the entrepreneurs and the executives, and brings these two groups together. We have received an MEDC grant award, and this year we’ll launch the program and start to fill the pipeline.
MGCS: Your third initiative was to bolster marketing and communications efforts to raise the visibility of Michigan’s venture capital community.
Adox: We’ve focused on increasing our visibility outside Michigan, and two events in 2014 were noteworthy in that regard. We staged our first meeting and networking session for Michigan VCs and local VCs in the Bay Area in conjunction with the National Venture Capital Association’s annual meeting, VentureScape, in San Francisco in May. Our networking session attracted more than 100 people, and really got the word out. In the fall, MVCA Associate Director Emily Heintz made a presentation to the NVCA board detailing Michigan’s success in growing venture capital in the state during a time when venture investment was declining elsewhere. She outlined what we’ve accomplished with our programming, marketing, fund of funds and other initiatives. The NVCA board members are prominent venture capitalists from around the country. Informing them about Michigan is beneficial, because when they go back to their firms to do their day jobs as venture capitalists, they think more highly of our state and recognize the level of venture investment activity going on here.
MGCS: Are there other MVCA activities you’d like to highlight?
Adox: We supported the Accelerate Michigan Innovation Competition, as well as the Michigan Growth Capital Symposium. A number of MVCA members attended this year’s Detroit Venture Partners’ DVP Demo Day. And we held an MVCA town hall meeting in August to update our membership on new initiatives and to get their feedback.
MGCS: Overall, how well did Michigan’s venture capital sector perform in 2014?
Adox: Venture capital continues to do well in Michigan. During the first three quarters of 2014, according to the PwC Moneytree Report, Michigan companies received $167 million in funding from in-state and out-of-state venture capitalists. That figure represents a 150% increase over last year’s total venture capital investments in Michigan companies. In the final analysis, the amount of venture capital going into financing these companies is one of the key external metrics of how well our talent and entrepreneurial programs are working. We’re successfully preparing our entrepreneurs and their start-ups, and making outside investors aware of Michigan companies.