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Study: Reach of venture capital firms growing in Ann Arbor and the state

Tuesday, April 7, 2015   (0 Comments)
Posted by: Katie Trevathan
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From MLive
By Matt Durr

More than half of all venture capitalist companies in Michigan call Ann Arbor home. That's according to a report released Monday by the Ann Arbor-based Michigan Venture Capital Association.

There are 20 venture firms located in Ann Arbor which represents 54 percent of firms with offices in Michigan. The study also shows that 23 percent of venture capital managed in Ann Arbor is available for new investment.

Related: Read the full MVCA report here

 

The life science and information technology sectors receive the majority of funding as life sciences represents 39 percent of investment and information technology receives 46 percent of investment. Those numbers were reflective of how investing went in 2014.

The information technology sector received 57 percent of total VC funding last year and had a 36 percent share of money invested in startups in 2014. Life science and healthcare received 38 percent of total investment and had 64 percent share of startup investments in 2014.

Forty-four startup companies in Ann Arbor have accounted for $590 million in venture capital funding according to the study. In 2014 alone, 19 companies received more than $72 million in funding from venture capitalists.

The report echoes the 30th annual economic outlook report for Washtenaw County that was released last month. Prepared by U-M economists George Fulton and Donald Grimes for The Ann Arbor News, the report showed there continues to be job growth in the fields where most VC firms are investing.

The growth in those sectors has helped turn Ann Arbor into a destination for tech startups and companies seeking VC funding.

Overall, the state of Michigan has seen growth in the VC market as well. Total venture capital funds under management of firms that are headquartered in Michigan was $1.7 billion last year, an increase of 45 percent over the last five years.

The report also found the number of venture firms with an office or headquarters in Michigan is up 48 percent in the last five years.

With 129 VC-backed companies in Michigan, there are 70 percent more of those companies in Michigan than there were five years ago. Michigan venture capital firms invested in 97 percent of all Michigan startups that received any venture capital in 2014.

"We've spent more than a decade building a venture capital community in Michigan that can support the state's extraordinary startup companies and contribute to the diverse economy that is crucial to the state post-recession," said Maureen Miller Brosnan, executive director of the MVCA in a press release.

"We're now at a point where, despite significant increases in venture capital under management at Michigan-based venture firms, it's still not enough to meet future funding demands by Michigan startups.

"In order to continue to have a positive impact on our economy, we must ensure Michigan-based venture capital firms are able to grow their available capital while at the same time able to attract out-of-state venture firms to invest more in Michigan."

The MVCA is a non-profit trade organization with more than 400 individual members that represent over 100 organizations in the U.S.

Matt Durr is a business reporter for The Ann Arbor News. Email him at mattdurr@mlive.com or follow him on Twitter.

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