According to data released last week by the National Venture Capital Association (NVCA), the third quarter of 2014 was a busy one in the state of Michigan.
The NVCA’s report, based on information collected by Pricewaterhouse Coopers and Thomson Reuters, says that Michigan-based startups raised a total of $2.2 million in four venture deals during the third quarter of this year. There were three deals worth $4.1 million reported in the first quarter of 2014, and one deal worth $1.8 million in the second quarter, for a total of $8.1 million in so far this year—compared to $13.4 million for the same period in 2013.
Though there are only four deals detailed in this quarter’s report and the numbers appear to be down from the same period last year—one reason is that VC firms self-report deal data and often don’t do so in a timely manner—Emily Heintz, associate director of the Michigan Venture Capital Association (MVCA), says 2014 is on track to be another banner year for venture activity in Michigan.
“Firms don’t have time to report back because they’re too busy investing in deals, so it’s kind of a catch-22, but we’re way ahead of where we were last year,” Heintz explains, noting that, so far this year, Michigan companies have raised 150 percent as much venture capital as they did for all of 2013. “We also anticipate that the fourth quarter will be really solid. Overall, the year has been great already. Things are looking up, for sure.”
The four third-quarter deals outlined in the report are:
—ENT Biotech Solutions: The Detroit-based medical device startup, which has developed a surgical tool for use in tonsil, adenoid, and soft tissue removal, raised $940,000 from undisclosed investors. In July, we reported that ENT Biotech received $100,000 from the Michigan Pre-Seed Fund 2.0, a state government-backed investment fund.
—Loveland Technologies: The software company headquartered in Detroit raised $780,000 from the University of Michigan’s Social Venture Fund and six other undisclosed investors as part of a Series A round.
—BoostUp: Formerly known as Motozuma, BoostUp is a Detroit startup that allows users to set up free online savings accounts where they can put money towards things like a new car and invite friends and family to help contribute. BoostUp scored $1 million from Detroit Venture Partners, Cornerstone Opportunity Partners, angel investor Patrick Sullivan, and IncWell, a venture capital firm in Birmingham, MI, headed by former Chrysler CEO Tom LaSorda.
—Grand Circus: Part technology training institute, part co-working space, and part event space, Detroit’s Grand Circus raised $250,000 from Detroit Venture Partners.
According to MVCA’s most recent research, one third of all active venture-backed companies in Michigan are now located in Detroit.
Heintz says one indication of robust venture activity in Michigan is the number of venture fellows the MVCA has placed in 2014. She also regularly gets phone calls from VCs in places like California or Boston who are Michigan natives and interested in moving back. “The applications we’re seeing through the venture fellows program has been tremendous,” Heintz says. “There’s been a big increase in the number of VCs located in Michigan, and we’re really starting to get national attention.”
In addition, Heintz mentioned the recent fund closures at Plymouth Ventures and Resonant Venture Partners as signs of venture success in the Great Lakes State: “Between the universities and the incubators, there’s a ton of great deal flow. There’s been a 45 percent increase in the amount of venture capital in Michigan over the past five years. What’s great is that 97 percent of VC-backed companies here get money from at least one Michigan fund.”
Heintz says the MVCA will host an awards dinner open to the public celebrating the year’s VC successes on Dec. 1 at the Inn at St. John’s in Plymouth; e-mail [email protected] for ticket information.
