Renaissance VC 'fund of funds' drives $300M to Michigan startups
Who funds Michigan's venture capital funds?
One source is Renaissance Venture Capital Fund — an Ann Arbor-based venture capital fund of funds that makes primary investments in Michigan venture capital funds.
RCVF recently announced that since its inception in 2008, its initial investment of $16.7 million in 11 different venture capital funds has attracted $300 million of venture capital to 20 new Michigan companies, making a ratio of $17 of venture capital investment coming into Michigan for every dollar invested by RVCF.
This led to the creation of hundreds of high-paying jobs across the state, each averaging $80,000 per year.
23x higher than rest of nation
The fund of funds said Michigan’s venture capital investment has grown 69 percent since 2008, while venture capital on a national average has grown only 3 percent, making Michigan "the fastest-growing state in the nation for venture capital."
The two biggest elements Michigan has in its favor are research and engineers, said Chris Rizik, RCVF CEO.
“Venture capital follows research. We have great research here (and a) pool of engineers. There’s no greater concentration of engineers anywhere,” he said.
“Despite having those two things, Michigan was the middle of the pack for years," he said. "It’s only been in the last few years it’s begun to move up.”
Entrepreneurship in Grand Rapids
Rizik said a lot of good venture capital is finally going into Grand Rapids, but, unfortunately, the city had a later start than other parts of the state.
The places with the biggest research universities saw the best venture capital prosperity, he said, but the entrepreneurial revolution occurring in West Michigan has helped shift venture capital attention to Grand Rapids.
“What Grand Rapids has that I think is very attractive, is the best pool of entrepreneurs in the state and that in addition to having good research institutions in Grand Valley and Van Andel, you start to see elements that could make Grand Rapids quite strong in venture capital,” he said.
“In addition, there’s a number of venture capital groups growing, but still a shortage," he said. "If I’m looking at parts of the start where venture capital could grow, Grand Rapids and Detroit are the two places I think venture capital will grow in the next couple of years.”
A new model
The RVCF formula for beig a fund of funds has worked well, Rizik said, calling it the largest privately funded entity of its kind in the U.S.
In 2012, RVCF’s pool more than doubled its size, growing to $110 million through partnerships with corporate, nonprofit and public investors: DTE Energy, Blue Cross Blue Shield of Michigan, Meijer, Inc., Ford Motor Company, AAA-Michigan, CMS Energy, Huntington Bank, R.L. Polk & Company, La-Z-Boy, Wolverine Worldwide and Atain Insurance; foundations such as the Herbert H. and Grace A. Dow Foundation, the W.K. Kellogg Foundation and the McGregor Fund and Wayne State University.
“Our investments are not only profitable, but have already created hundreds of excellent Michigan jobs,” he said. “All this while at the same time providing strong financial returns, proving to the world that Michigan is an attractive state in which to invest and to start a business.”
RVCF was originally established by Business Leaders for Michigan to bring together the state’s venture capital, business, industrial and entrepreneurial communities in a way that will help the state grow and diversify.