MVCA Releases 2020 Annual Research Report on Venture Capital in Michigan
By Laura Cowan
Laura K. Cowan is a tech editor and journalist whose work has focused on promoting sustainability initiatives for automotive, green tech, and conscious living media outlets.
Today, the Michigan Venture Capital Association released its annual research report on the state of venture capital in Michigan. As with other recently published reports on the state of business investment, the MVCA Research Report show record-breaking investment in the recovering state's new business ecosystem, followed by challenges brought by COVID-19.
Ara Topouzian, Executive Director of the MVCA, tells Cronicle that "efforts are underway to maintain these trends during COVID-19." Here are some highlights from the report. The 2020 MVCA report includes an increase in "minority-led startup companies" according to Topouzian.
The MVCA Board. Left Executive Director Ara Topouzian. Front center right is Doug Neal of eLab Ventures out of Ann Arbor and Silicon Valley.
Highlights From the 2020 Michigan Venture Capital Association Annual Research Report
- 71 Michigan-based startup companies received $2.0 billion in Venture Capital from Michigan Venture Capital firms; $964 million needed for continued growth of Michigan startup companies
- The 2020 MVCA Research Report shows that Michigan had a record-breaking year in 2019, with 71 startups in the state receiving more than $2.06 billion in venture capital investment, a 39% increase in the
number of startups and a 913% increase in the amount of capital over the last five years.
- Major drivers for this substantial increase is due to the fundraising efforts of Rivian, a Plymouth, Michigan-based mobility company.
- Excluding Rivian, 70 startups received more than $515 million in venture capital investment in 2019. This is a 152% increase in startups over the past five years, and this trend is on the upswing.
- However, MVCA recognizes that another successful year during this time of uncertainty requires creating a variety of strategies to keep the venture capital community engaged in the state’s economy and its lucrative potential.
How Can Michigan Keep Investment in Startups On the Rise During COVID-19?
“MVCA is holding webinars focused on providing valuable information that can be useful to members as well as the wider entrepreneur community,” says Topouzian. “This includes keeping abreast of legislation that can affect businesses and monitoring new programs which may offer startups and smaller companies financial relief. In addition, Michigan venture capitalists are working with their portfolio companies to properly guide them through these troubling times and provide sound advice as they move forward. A challenging economic climate doesn’t dampen the determined entrepreneurial ethos reflected in this report, one makes Michigan a desirable destination for venture-backed investments, especially in the life science and technology sectors,” said Topouzian.
According to the MVCA, "MVCA survey respondents estimate $1.2 billion of additional venture capital will be required to adequately fund the growth of Michigan’s 144 startup companies in the next two years. In 2019, Michigan had 1,322 angel investors, a 415% increase over the course of the last five years. Additionally, 106 startups raised over $73.6 million from angel investors."
More Highlights of the 2020 MVCA Annual Research Report on Startup Investment in Michigan
Key Findings from the 2020 MVCA Research Report:
● There are 144 venture-backed startups in Michigan, an increase of 12 percent over the last five years.
● 71 Michigan-based startups received $2.0 billion from Michigan venture capital firms.
● There are currently 19 startup companies in Michigan led by a CEO who is a racial minority, a 138% increase over the last six years.
● Every dollar invested in a Michigan startup by a Michigan-based venture capital firm, it attracts $45.71 of investment from outside of Michigan.
● There are 26 venture capital firms headquartered or with an office in Michigan.
● Total venture capital under management in Michigan is $4.3 billion.
● 542 venture firms from outside of Michigan have invested in Michigan-based startups.
● In Michigan, 106 startups raised over $73.6 million from angel investors.
You can read the entire 2020 Michigan Venture Capital Association Annual Research Report here.