The amount of venture capital invested in the Midwest grew at a compound annual rate of 17 percent from 2013 to 2018, the third highest in the U.S., behind the West Coast at 28 percent and the Mid-Atlantic region at 22 percent.
The growth rate was one of the reasons the National Venture Capital Association and the University of California Berkeley chose Ann Arbor as the place to launch a new education program, VC University LIVE, on May 15-17 at the University of Michigan Ross School of Business. The event piggybacks off of the annual Midwest Growth Capital Symposium.
Maryam Haque, senior vice president of industry advancement at the NVCA, spoke to MiBiz about VC University LIVE and why the organization is launching it in the Midwest.
What is VC University LIVE?
We’re having two in-person events each year and we’re partnering with a local university. For this one (it’s) the University of Michigan and in September we’re partnering with Tulane University.
The topics we’re planning to cover are more industry issue or macro trends. What is the current state of venture? How do LPs view the industry? A lot of the importance and focus is placed on the educational side. For anyone new to the industry, (it’s) how to think about negotiating with a potential investor if they’re going to invest in your funds.
Why launch this program in Michigan?
There’s a lot of favorable interest, excitement and robust activity happening in the broader Midwest, as well as in Michigan, that really caught our eye. Also, our incoming chair is Jan Garfinkle of Arboretum Ventures (in Ann Arbor), so we’ve been talking more about the ecosystem there and learning more about the growth and how this can be really well placed given the strong academic institution of the Ross School.
Some of the favorable trends have been the strong talent pool and some of the large exits that have come out of the Midwest and Michigan. Duo Security (in Ann Arbor) is a prime example that happened last year when they were acquired by Cisco for over $2 billion. We’re definitely bullish on the region and the state and this is an opportunity to engage more in the local community.
Is the event intended for people working in the industry or to bring new talent into venture capital?
It’s a little bit of both in that we do have dual tracks at the event. If you are newer, younger, or maybe a bit more junior in the industry, there’s a track that covers the fundamentals or basics of venture. Then we have a second track that’s geared more toward seasoned investors and making sure we’re covering things that are top of mind, so issues like succession planning, or culture ethics and equity, and LP and GP relations.
What do you want to accomplish through VC University LIVE?
Our goal is to bring together both Midwest leaders with influencers in Silicon Valley and New York and some of the large, more traditional hubs. Some of the goals are just facilitation and convening these different networks that may not always have a chance to be in a room together for a few days. We’re also hoping to provide some valuable educational content that an investor can take back to their firm or their portfolio companies and really walk away with some tangible value in terms of learning something to take back to the day-to-day work.
We’re also hoping to open the eyes to educate the non-Midwest investor about the investment opportunity and build those connections in terms of potential deal sourcing or follow-on deals, or just have the connection that will, hopefully, open the eyes of some investors that haven’t looked closely at the Midwest as they invested previously.
The last one is just being more accessible for folks in the Midwest not having to travel to Silicon Valley all of the time for some of this content — they can just stay on their home turf. Showcasing the strong ecosystem there is going to be definitely a highlight.
How does the rest of the VC world in America view the Midwest as a place to invest?
Some areas that we have seen just in terms of what might compare and contrast with other venture ecosystems, it does have a lot of strong and favorable characteristics going for it. A lot of the valuations and pricing on deals in the larger venture hubs is getting quite high. We realize no certain geographies have a monopoly on talent or these strong academic networks that are producing a lot of technologies through tech transfer or just producing talent. What the Midwest also has as a favorable characteristic are some of the large traditional industries that have been there or large corporations that are there that are now looking to do corporate venture capital.
That’s a trend we’re seeing across the country, in terms of corporate venture capital activity. Given that a lot of these corporations are based in the Midwest, that’s an area that is a positive in terms of capital and also a strategic benefit.
Is the Midwest done being a “flyover” region for venture capital?
I pulled out some stats to include in a blog post, and we saw that there were 211 active investors in the Midwest and about $13 billion in venture capital assets under management. There is definitely activity happening, and if someone still does consider it a flyover, I think they’re losing sight of the opportunity. As venture investors, they’re always looking for the next big thing and they’re looking in areas not everyone else is looking in. It’s definitely an opportunity for those investors who are willing to be more thoughtful and thinking more outside of where they’re based in terms of where they want to make investments.