On Jan. 13, Gov. Gretchen Whitmer signed House Bills 5651, 5652 and 5653, sponsored by Reps. Alabas Farhat, Jason Hoskins and Greg VanWoerkom, which will create the Michigan Innovation Fund. This $60 million fund will provide critical funding to Michigan’s existing early-stage evergreen venture funds, emerging evergreen funds and the entrepreneur ecosystem. The Michigan Innovation Fund is designed to provide long-term investments in Michigan’s startup companies, grow and diversify the economy, create jobs and build a strong, competitive and sustainable financial network to support startup companies across Michigan. This marks the first major program for entrepreneurs, founders and funds in over a decade.
“For too long, we overlooked the importance of helping grow all areas of our economy, especially Michigan entrepreneurs and the impact they can have on future jobs and economic growth,” said Farhat. “With the Michigan Innovation Fund, we have a powerful tool to support new business creation and stop the trend of companies leaving Michigan to find the startup capital they need. The investments we make in budding entrepreneurs, innovative technologies and new industries today will power Michigan’s economic future as well as help support an innovation economy and attract talent.”
“The Michigan Innovation Fund will be a key component to the state’s economic ecosystem by supporting entrepreneurs to create the next great Michigan business,” said VanWoerkom, Republican vice chair of the House Appropriations Subcommittee on Labor and Economic Opportunity. “This fund will fill a missing component to help our risk-takers be successful.”
Recent studies show that Michigan is losing significant jobs, talent and investment opportunities due to the lack of early-stage investment capital available to would-be entrepreneurs. The $60 million Michigan Innovation Fund is a big step forward in giving Michigan a chance to become a leader in early-stage, pre-seed funding, combining entrepreneurial support services and early-stage capital to create and nurture an entrepreneurial ecosystem that can grow over time, reinvest in new and growing assets and develop a sustainable network of support for entrepreneurial activity across the state.
“Michigan has amazing talent and strong research institutions,” said Hoskins. “There is real potential to be a leader in creating and growing innovative startups. Other states, especially on the coasts, figured this out a long time ago and more recently our neighboring states. The Michigan Innovation Fund is key if we truly want to generate more opportunities for entrepreneurs, leverage the state’s research universities and see our state emerge as a leader in business growth and compete with our Midwest states.”
Under the plan, funding would be awarded to nonprofit and university-backed funds with proven track records and all investment returns would be recycled back into the respective funds for future investment in Michigan companies, ensuring long-term impact. The five established, evergreen funds include:
- MSU Research Foundation
- ID Ventures at Invest Detroit
- Ann Arbor SPARK
- University of Michigan’s Accelerate Blue Fund
- Western Michigan University’s Biosciences Research and Commercialization Center
In addition to supporting the early-stage evergreen funds above, the program will help establish and grow three new early-stage emerging evergreen funds around the state that will be located in Grand Rapids, Traverse City and the Upper Peninsula. The program will also provide additional funding to key partners in the ecosystem that support startup companies, founders and funds.
The Michigan Innovation Fund's investment in these funds will go a long way to creating evergreen, self-sustaining funds that recycle capital and provide long-term investments in Michigan startups. Many companies that get their start in this state have been forced to leave to follow investment capital in other states, increasingly to Ohio. The Michigan Innovation Fund will help provide critical early-stage funding and keep companies here in Michigan.
"This is an exciting moment for our state's entrepreneurial future," said Jeff Wesley, executive director of ventures at the MSU Research Foundation, which manages Red Cedar Ventures and Michigan Rise Pre-Seed Fund III. "This bipartisan achievement is the first step toward establishing sustainable funding pathways for Michigan's most promising startups and innovators. By leveraging our existing ecosystem and creating new evergreen funds, we're investing in Michigan's long-term economic growth and innovation leadership."
This story originally appeared on the MSU Research Foundation website.
