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Forrest: Partners Are Key
As the keynote speaker at the annual Grand Angels Conversation at Hope College, Forrest told an audience of about 100 investors, investment professionals, business leaders, academics and students that the state has no time to waste in responding to its troubled economy.
"I've seen a lot of the country and I would say, without a doubt, Michigan is the least entrepreneurial place in the U.S.," declared Forrest, a former faculty member at Princeton University in New Jersey and the University of Southern California. "The business and academic communities have become incredibly risk-adverse," thanks to generations of well-compensated blue collar jobs with low education requirements.
"The feeling we get in Michigan is one of isolation, that the U.S. just doesn't care," Forrest continued. "Here we are, struggling. They don't seem to be paying attention at all, with all the boom economies happening in the Northeast and the West.
"Well, they'd better care, because we are a millstone around the nation's neck," he said, adding that Michigan and its neighboring states must zero in on alternatives to the declining manufacturing sector.
"The U.S. cannot afford to write off two-thirds of its population which exists in the center of the country. It can't afford to write off its manufacturing center."
In fact, advanced manufacturing is one of the brightest economic opportunities in the state today, Forrest said, along with health sciences, energy and information technology.
Ninety percent of university research and development — $1.4 billion worth — is conducted at the University of Michigan, Michigan State University and Wayne State University, Forrest said. He urged colleges to promote entrepreneurship among professors, particularly in applied sciences such as engineering.
He cited Stanford University, the University of California at Berkley and Massachusetts Institute of Technology as models of faculty who've ventured into entrepreneurship. Together, revenues from businesses started by faculty and graduates of MIT alone would be the 24th largest economy in the world, he noted.
"All significant innovation centers in the U.S. have leveraged their university resources," Forrest said.
The University of Michigan's research expenditures amount to $805 million per year, the highest in the country, Forrest said. "We have a lot of research going on. The questions is, how do we use it?"
Yet getting from the point of basic research to a viable company requires several stages, and several stages of funding, Forrest said. The biggest gap in funding is what he called "pre-commercialization," the leap between basic research to the first rung of establishing a marketable product. That's where foundations can step in by using their investment caches, he said.
Michigan's future demands structural and cultural changes, a priority on education and a break from the past, Forrest said.
"Rapid transformation requires all sectors to work together as a team," he said.
Grand Angels members, who invest as individuals, have placed $3 million with nine Michigan businesses. The event was sponsored by Comerica Bank and the Council of Michigan Foundations.