Venture Capital Grows in the Great Lakes State

By Governor Rick Snyder | May 05, 2014

Venture capital isn't just for the coasts anymore. Now, investors are seeking out opportunities on the freshwater shorelines of Michigan.

Here in the Great Lakes State, we're seeing an incredible surge in venture capital growth. And that means more resources for nascent tech companies looking to grow.

A new report shows how strong entrepreneurship and venture capital is in Michigan. Just take a look at the numbers.

According to the Michigan Venture Capital Association, since 2009, total capital under management among Michigan-based firms increased by 45%. Similarly, there's been a 44% increase in the number of venture capital firms headquartered in Michigan (compared to 6% nationally). And there's been an 84% increase in the number of venture capital professionals in Michigan, compared to a 13% decrease nationally.

This success has come as a result of Michigan's public and private efforts to attract venture capital investors over the last decade, including State-sponsored 21st Century Investment Fund, Venture Michigan Funds I and II, and InvestMichigan!  And four years before I became governor, I helped to create the Renaissance Venture Capital Fund, the nation’s first major privately sponsored venture capital fund aimed at regional growth. It has been a great success and has become a model for other parts of the country that are trying to increase venture capital investment.

Since 2006 alone, the State of Michigan has invested $475 million through its venture capital and private equity initiatives, which have resulted in investments into 294 Michigan companies and have leveraged roughly $6.5 billion in private investment.

What's so remarkable about this growth is that it comes while the national venture capital landscape has seen a contraction. Mark Heesen, the former president of the Arlington, Va.-based National Venture Capital Association, has called this phenomenon "the Michigan Miracle," as writer Gary Anglebrandt explains in Crain's Detroit Business.

Venture capital is an important driver of the American economy. According to a study by IHS Global Insight, venture capital-backed companies grow 50% faster and create jobs at eight times the pace of the economy as a whole. And while venture capital accounts for only 0.2% of the investment capital in the United States, companies with venture capital legacies now account for 11% of the jobs and 21% of the GDP in the nation. So when a state such as Michigan develops into one of the fastest growing regions for venture capital, it is a bellwether of strong future economic growth.

Though this latest "miracle" of venture capital expansion is recent, Michigan certainly is no stranger to investors supporting high-tech industries. While a bicycle craze was sweeping the nation in the 1890s, investors in Michigan were betting on gasoline-driven car companies led by the likes of Henry Ford and Ransom E. Olds. Their investment made possible an explosion of innovation that would build the Motor City, change the landscape of America, put the world on wheels and construct the Arsenal of Democracy.

Likewise, Michigan today is home to innovators and entrepreneurs whose potential for success is boundless. And innovation leaders, from technologists to venture capital investors, are taking notice.