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Sunday, 26 April 2015 22:00

VC investment in Michigan reaches highest level in 15 years for first quarter

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Venture capital investing in Michigan got off to a strong start in 2014, as the amount invested in the first quarter reached the highest value in 15 years.

Twelve companies across the state collectively received $75.3 million in venture capital investments from January to March, according to the MoneyTree report from the National Venture Capital Association and PricewaterhouseCoopers using data from Thomson Reuters. That compares to 14 deals for $37.1 million in the same period in 2014 and was the best first quarter since the 17 deals for $142.9 million to start 2000.

Two of the recent deals included companies in West Michigan.

Apjohn Ventures invested $3.5 million in Kalamazoo-based Armune BioScience Inc., which is commercializing a new-generation blood test for men suspected of having prostate cancer.

Meanwhile, Grand Rapids-based software firm Buoy76 LLC received $950,000 from Start Garden LLC, Huron River Ventures in Ann Arbor, Detroit Development Ventures and an undisclosed investor, according to the report. Buoy76 is developing Sportsman Tracker, a mobile application that forecasts the best time and location for hunters and anglers as well as their probability of success.

The Buoy76 deal was among the $36.6 million that venture capitalists invested into Michigan’s software sector in the first quarter — or about half of the total VC dollars pledged in the state. Much of that came in a $30 million deal for Ann Arbor software firm Duo Security Inc., which was the single-largest VC investment in Michigan during the first quarter.

Electronics and instrumentation was the second-largest sector for VC investments in the quarter at $20.0 million, followed by biotechnology at $9.5 million.

After largely flowing into the life science sector for the last decade — the industry accounted for more than half of the venture capital dollars invested in Michigan in 2014 — investors lately have begun moving more toward software and other technology sectors.

The migration reflects the rise in the technology sector in Michigan and how it requires less capital and can get innovations to market and begin generating a return on investment faster than investments in other industries.

“There’s a certain capital efficiency,” said Ryan Vaughn, founder of Grand Rapids-based Varsity News Network LLC.

Founded in 2012 and backed by venture capital and angel investors, VNN provides hundreds of high schools across the country with a web-based platform to distribute content on sports programs.

Speaking at an event last week in Grand Rapids where the Ann Arbor-based Michigan Venture Capital Association presented its annual research report, Vaughn noted that Varsity News Network secured its first seven customers using just $600.

“That’s appealing from an investor perspective to get that sort of validation and that sort of attraction for very little money,” he said.

Most recently, Grand Rapids venture firm Start Garden formed a new business accelerator with six corporate partners to support startup companies seeking to design Internet-connected devices. Through the venture, professionals from the six partners will work with startup companies and entrepreneurs to create the next generation of connected devices and “cross the streams” between information technology and advanced manufacturing, Start Garden founder and CEO Rick DeVos said at the MVCA event.
“It’s a huge opportunity,” DeVos said.

Nationally, software continued to rank as the top sector for VC investment in the first quarter with 434 deals for $5.6 billion, followed by biotechnology with 124 deals for $1.7 billion, and the industrial/energy sector at 63 deals for $1.4 billion.

Across all sectors nationally, venture capitalists put $13.4 billion into 1,020 deals during the first quarter, versus $14.9 billion through 1,103 deals in the prior fourth quarter of 2014 and 951 deals for $9.5 billion in the January-to-March period a year earlier, according to the MoneyTree report. 

Read 5857 times Last modified on Wednesday, 29 April 2015 09:29

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