ANN ARBOR — The Michigan Venture Capital Association’s annual report, released this week, shows the good news and bad news of the Michigan VC industry.
Let’s get the bad news out of the way first: The amount of venture capital under management in Michigan remains only a small fraction of the national total as of 2016, $2.4 billion of $333.5 billion nationally, or 0.7 percent.
But there’s good news too. That $2.4 billion in venture capital management in 2016 is up 60 percent from $1.5 billion under management in 2011. Nationally, the growth rate in VC under management over those five years is far lower, 22 percent.
The report shows there were 141 active venture-backed startups in Michigan in 2016, a 48 percent increase over the past five years. And 54 startups in Michigan received more than $222 million from Michigan VC firms in 2016. That’s down from $282 million in 2015 and $242 million in 2012, but up from $204 million in 2014, $120 million in 2013 and $191 million in 2011.
The report found 25 venture capital firms headquartered in Michigan, unchanged from a year earlier and up from 20 in 2011. Another eight venture firms based elsewhere have a Michigan office.
Also, the report said that in the last five years, the number of venture capital investment professionals living, working and investing in Michigan has increased by 41 percent.
Tech remains the focus of VC investment, with 42 percent of capital invested by all venture firms in Michigan going to life science or healthcare firms, 31 percent to IT firms, 7 percent to media firms, and 5 percent each to mobility and unclassified firms. The rest was scattered among alternative energy, business services, and consumer products firms.
The report found that 10 of the existing venture firms in Michigan are currently raising funds, with the average target fund size just over $65 million.
Diversity among VC firm staff remains a challenge, with women comprising 14 percent of VC professionals (though that’s better than the national figure of 11 percent) and minority group members just 7 percent (far below the national figure of 26 percent).
And perhaps most importantly, the report found that every dollar invested in a Michigan startup by a Michigan-based venture capital firm attracts $4.61 in investment from outside of Michigan.
The report was prepared by the VCA with assistance from the National Venture Capital Association, Pitchbook, the U.S. Census Bureau, and the Angel Capital Association.
To view the full report, visit this link. http://michiganvca.org/wp-content/uploads/2017/04/2017-MVCA-Research-Report-spreads.pdf