MICHIGAN — Venture capital investing in Michigan had one of its best years ever in 2012, as both deal volume and the amount invested rebounded and surpassed pre-recession levels with a boost from three larger deals.
Investors put $232.31 million into 47 deals in Michigan last year, easily exceeding the $84.75 million invested in 36 deals in 2011, according to the quarterly MoneyTree report from the National Venture Capital Association and PricewaterhouseCoopers.
The 2012 totals represent the third best year for venture investing in Michigan since the quarterly MoneyTree report started in 1995. The year was exceeded only by the $356.44 million put into 55 deals in 2000 and, in terms of just dollar value, the $253.47 million invested in 44 deals in 1999.
More than half of the money invested in Michigan last year went into three companies: $72.64 million for Protean Electric in Auburn Hills that’s developing drive systems for electric and hybrid vehicles; $32.5 million to EcoMotors Inc. in Allen Park; and $16.44 million to medical device company CertoPherx Inc. in Ann Arbor.
West Michigan-based companies that received venture funding in the fourth quarter were:
- Tolera Therapeutics, a Kalamazoo drug development company that received $5.41 from Hopen Life Science Ventures in Grand Rapids, the Kalamazoo-based Southwest Michigan Life Science Venture Fund, and Cincinnati, Ohio-based Triathlon Medical Ventures.
- Intervention Insights Inc., a Grand Rapids company that provides genetic tests that are designed to match cancer patients with drugs that will best treat their tumor. The company, spun out of the Van Andel Institute, received $1.6 million from undisclosed investors, according to the MoneyTree report.
In reviewing the 2012 MoneyTree data, Sam Hogg, a partner at Open Prairie Ventures that manages the Southwest Michigan Life Science Venture Fund, noted a “very noticeable uptick in the number and quality of investments in the $10 million range, basically B or C rounds of funding.” Hogg attributes that to “an increasingly vibrant technology and talent landscape in Michigan that can be linked back to the state really investing in technology businesses five, 10 years ago via the 21st Century Jobs Fund.”
“Every state wants a technology industry but few are willing to invest and wait the length of time it takes for it to take shape. I think we are seeing just that here in Michigan, so kudos to the folks that fought hard for those programs then,” Hogg said.
In the life sciences sector alone, VC investments in Michigan totaled $107.1 million through 16 deals, which compares to $30.8 million in 16 deals in 2011, according to Cleveland-based BioEnterprise, a biomedical accelerator that tracks biotech and health care venture investing in the Midwest. In terms of dollar value, the amount was the best year for life sciences VC investing in Michigan since before the recession.
Most Midwest markets saw increases in VC investing in life sciences during the year.
“As with the rest of the country, Midwest health care investing fell dramatically in 2009 after strong years in 2007 and 2008, but it appears investors are again optimistic about Midwest deals. 2013 should be an interesting year to watch,” BioEnterprise interim President Aram Nerpouni said.
The 2012 increase in VC activity in Michigan came as the industry declined nationally.
Across the U.S., venture capitalists invested $26.5 billion in 3,698 deals, a 10 percent decline in dollar value and a 6 percent decline in deals from 2011, according to the MoneyTree report.
Venture investing nationally in the fourth quarter alone declined 3 percent to 968 companies, although the dollar value increased 5 percent to $6.4 billion.
“General economic uncertainty continues to hinder capital investments, and venture capitalists are no different,” said Tracy Lefteroff, global managing partner of the venture capital practice at PricewaterhouseCoopers.