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Sunday, 02 February 2014 14:11

Michigan VC: 2013 deal volume soars, funding levels plummet

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Venture capitalists cut more deals in Michigan in 2013 than in any other year on record, although the dollar amount of their investments declined sharply from the prior year.

Fifty-seven Michigan-based companies received $102.5 million from venture capital investors in 2013 through 68 different deals, according to the quarterly MoneyTree report from the National Venture Capital Association and PricewaterhouseCoopers.

That compares to $238.8 million invested through 49 deals in 2012.

Sixteen of these deals were funded by Grand Rapids-based Start Garden for between $10,000 and $30,000 each.

The results for 2013 show deal volume reaching a new high in Michigan, reflecting how VC investing in the state has grown for more than a decade.

The number of companies funded annually — not the amount invested — provides a better gauge of progress because it’s an indication of entrepreneurial activity, said Koleman Karleski, managing partner at Louisville, Ky.-based Chrysalis Ventures that invests in the Midwest. The dollar amount invested can vary widely from year to year based on the companies seeking funding and where they are in their life cycle, Karleski said.

Chrysalis Ventures’ holdings include Grand Rapids-based Intervention Insights, a company spun out of Van Andel Institute that conducts genetic testing to match cancer patients with the right drug regimen.

Karleski credits public and private-sector efforts that started years ago with creating more startup and entrepreneurial activity in Michigan. That in turn creates more companies ready for venture investments, resulting in the increased annual deal volume, he said.

“Michigan has become a hotspot in the Midwest for venture capital,” Karleski said. “It’s done so by increasing the quality of the assets available to the entrepreneurial community.”

In the fourth quarter alone, VC investors put more than $58 million into 26 Michigan companies, according to the MoneyTree report. That compares with 18 deals for $24.6 million in the previous third quarter and 15 deals for $49.2 million in the fourth quarter of 2012.

The October-to-December period for 2013 saw more deals funded in Michigan than in any other quarter since the MoneyTree report began in 1995.

Venture capital in Michigan right now “has great momentum,” Karleski said.

“You just have all of the pieces in place to carry on. It just takes time,” he said. “I would just keep the pedal to the metal and stay focused on the plan at hand and the results will be there.”

Nationwide, VC investing grew in 2013 to $29.4 billion in 3,995 deals. The amount invested grew 7 percent from 2012 and deal volume increased 4 percent.

According to the MoneyTree report, West Michigan-based companies that received investments in the fourth quarter included:

• ProNai Therapeutics in Kalamazoo and Ann Arbor, which the MoneyTree report lists as receiving $10.9 million from Capital Midwest Fund in Milwaukee and an undisclosed investor. The company is developing new drugs to treat cancer and genetic diseases. The company in January announced that it had closed on $12 million in Series C financing from existing and new investors, led by Capital Midwest.

• Axenic Dental Inc. in Kalamazoo, a maker of disposable dental products, received $3.45 million from undisclosed investors.

• Ablative Solutions Inc. in Kalamazoo, which is developing a new method to treat hypertension, received $2.0 million from undisclosed investors.

• RealBio Technology Inc. of Kalamazoo, which is developing cell and tissue culture technologies, received $490,000 from an undisclosed investor.

Additionally, seven startup companies got investments during the quarter from Start Garden that collectively totaled $1.2 million.

Axonia Medical in Kalamazoo also received an investment from an undisclosed investor for an undisclosed amount, according to the MoneyTree report.

Read 2194 times Last modified on Sunday, 02 February 2014 14:54
Mark Sanchez

Senior Writer

msanchez@mibiz.com

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