Reda Jaber could have gone in a few directions after graduating in 2014 from the University of Michigan with a trio of graduate degrees.
But rather than go into medicine or clinical research, Jaber opted instead to pursue a career in the venture capital industry. Jaber, who has an MBA, connected with Birmingham-based IncWell LLC, a venture capital firm that invests in early-stage startups where he’s now a partner.
Through IncWell, Jaber became a venture fellow in a program run by the Michigan Venture Capital Association that seeks to groom talent to work in the state’s growing venture capital industry.
The 29-year-old Jaber credits the MVCA’s Venture Fellows Program with giving him a deep knowledge of the venture capital industry in Michigan.
“It’s definitely helped me make the decision to stay in Michigan and work here and grow,” said Jaber, a recent graduate from the Venture Fellows Program.
Created in 2011 and backed financially by the Michigan Economic Development Corp., the Venture Fellows Program offers participants an opportunity for hands-on learning with investment professionals while working for a MVCA-member firm.
Participants spend two years working with a venture capital firm, starting in an associate-level position. At least $25,000 of their salary is subsidized by the MVCA using a grant from the MEDC. The venture firm then continues to employ the fellow unsubsidized for another two years.
Venture fellows also go through continuing education via periodic seminars and the MVCAcademy, an event organized by the industry group as a day-long series of sessions on a variety of topics.
In the venture capital industry, as with any sector, training and nurturing people remains critical for its survival, especially as venture capital grows in Michigan, said Jody Vanderwel, the president of Holland-based Grand Angels, an angel investment network that formed a small venture capital fund last year.
“Sustaining the industry depends on growing talent,” said Vanderwel, who serves on the MVCA’s board of directors and its talent committee.
Over five years, the Venture Fellows Program provided hands-on training for 15 professionals who now work in venture capital in Michigan, said MVCA Executive Director Maureen Miller Brosnan. The MVCA’s goal with the program is to ensure that Michigan has a sufficient pool of professionals as venture capital investing grows in the state. The professionals are needed to scout for deals, run financials, analyze investment prospects, conduct due diligence, and raise money for new funds.
BUILDING A NETWORK
Individuals accepted into the Venture Fellows Program after a screening process generally have at least three years of relevant industry experience — in Jaber’s case, he’s been involved in a number of startup companies — and hold a graduate degree, or have five years of relevant experience with an undergraduate degree.
Participants learn from the experience and knowledge of veteran investment professionals who provide the mentorship they need and the kinds of lessons they don’t necessarily get in a classroom.
Perhaps the biggest benefit Jaber gained from his fellowship was learning how to network and build business connections with peers around the state who often lead to the best investment deals.
“It’s really powerful to have that strong investor network behind you,” he said.
In creating the Venture Fellows Program in 2011, the MVCA and the MEDC recognized that venture capital is a small but specialized field that requires additional talent development beyond a formal education, Miller Brosnan said.
“They understood it was going to take a specialized, very talented group of people to sustain and continue to grow the venture capital industry,” said Miller Brosnan, who likens the program to apprenticeships for skilled trades.
Venture capital firms in Michigan on average have started two and a half funds. By comparison, firms based in California have raised an average of five funds, which indicates the venture capital sector in Michigan remains a young industry.
As Michigan firms seek to raise subsequent, larger funds, they’ll need more investment professionals, Miller Brosnan said.
“We find that we have smaller firms and they’re just on that cusp of trying to raise that third fund, but it’s going to mean more hands on deck in order to do it,” she said.
‘LEARNING ON THE JOB’
The MEDC presently funds the Venture Fellows Program with a $987,850 grant awarded in 2014 that expires in 2017. The MVCA hopes the MEDC will approve a subsequent grant next year to continue the program, she said.
There were 128 venture capital professionals who lived and worked in Michigan as of 2015, nearly double the number from five years earlier. The talent growth has trended with the 33-percent increase in venture capital firms based in Michigan and the near doubling of the amount of capital under management to $5.26 billion as of 2015.
MVCA Chairman Doug Neal, managing director of eLab Ventures in Ann Arbor, said venture capital firms in Michigan right now are in much the same situation as the startup companies in which they invest.
“Venture funds are formed and have to grow their talent just like the startups we invest in. And just like startups, a lot of the learning is on the job. A lot of entrepreneurs learn early on and hands-on how to do things,” he said. “In the startups and the firms, it’s all about the right talent.”
Editor’s note: This story has been updated to correct the spelling of Reda Jaber’s name.