The amount raised by the two-year-old Michigan Accelerator Fund is 50-percent more than originally targeted, an indication of growing awareness among high-net worth individuals and institutional investors on the viability of venture investing in the marketplace, the fund’s Co-Managing Director Dale Grogan said.
“There is an unmet need there,” Grogan said. “We’ve just seen in the last two years where the level of education and understanding has gone up substantially as it relates to venture investing and access to capital.”
Funding for the $15.1 million Michigan Accelerator Fund I (MAF-1) came from 70 individual and institutional investors including Van Andel Institute, the Michigan State University Foundation, Grand Valley State University and Davenport University, Grogan said.
The fund formally closed on fundraising in late July, but waited until this week to announce the amount because it was hoping for additional funding from the state’s $120 million Venture Michigan Fund II. The state-sponsored fund, which is managed by Credit Suisse, chose not to invest at this time because the two-year old MAF-1 has not had any exits from investments in portfolio companies, Grogan said.
“It was kind of a longshot at best,” Grogan said.
Formed in late 2010 with $6 million in state seed money, Michigan Accelerator Fund I primarily targets life sciences startups in Michigan. It has invested $4.8 million in six companies and may do three more deals by the end of 2012, Grogan said.
“There are companies in the pipeline we like,” he said.
Another four or five deals could come in 2013.
In scouting for deals, Michigan Accelerator Fund I will examine 450 to 500 business plans this year from startup companies, Grogan said.
Exceeding the initial $10 million fund-raising goal by $5.1 million enables the venture fund to get a look at better prospects and to do more syndicating with other venture funds, Grogan said.
“It just means we can be more effective,” he said.