Last year's growth capital symposium drew 40 companies to pitch their businesses to potential investors. Courtesy Midwest Growth Capital Symposium
In response to a continued venture capital shortage in Michigan and a growing Midwest tech ecosystem, one of the state’s leading investor-startup matchmakers is broadening its guest list.
In 1980, David Brophy founded and is director of the Michigan Growth Capital Symposium at the University of Michigan in Ann Arbor, where he also directs the Center for Venture Capital and Private Equity Finance.
Last year, the MGCS decided to change its name to the Midwest Growth Capital Symposium in an effort to expand its focus to the entire “tech ecosystem” of the Midwest. The organization just announced its 2019 event will take place May 14-15 at the Marriott Resort in Ypsilanti.
The venture fair draws startup leaders from West Michigan and all over, and they can apply ahead of time to be one of 40 companies selected to pitch their businesses to potential investors in attendance.
Applicants who aren’t selected to pitch can still attend, network and watch the other pitches to learn what to do. Brophy said it’s not unusual for a startup to make 100 pitches in the early stages of their business before ever getting funding.
More than 400 attendees are expected, including venture capitalists, angel investors and technology transfer professionals from across the U.S., as well as founders and CEOs of early-stage and emerging, high-growth companies from around Michigan.
Brophy said he wanted to expand the boundaries of MGCS to draw more capital investment to Michigan and the Midwest, where costs are low, and a “tech-based, entrepreneurially based economy” is emerging.
He also said the Midwest is strong in venture funding sources, such as pension funds, university endowments and institutional investors, so expanding the MGCS event geographically will pull companies from other parts of the nation into the region seeking capital.
“We have this tremendous interest being shown in the Great Lakes Basin, which is an economy in and of itself, and we’re part of that and we’re a supporter of that,” Brophy said. “We think we’re the place that people should consider coming to show their jams and jellies to investors and raise their money.”
Opening the field to startups from outside Michigan will dial up the competition for funding, but Brophy said it’s a necessary step.
“Everybody’s competing. This is a meritocracy,” he said. “What we have to do in the Midwest and in Michigan is to build better companies … and improve them consistently and then we will be able to compete with not only the rest of the country but with other countries as well because China, India and these other places are producing technology and other kinds of companies that challenge on the world stage. Our sights have to be raised.”
Brophy said southeast Michigan and metro Detroit continue to breed automotive, life sciences and tech startups, but it’s not enough; the whole state of Michigan has to be strong on innovation and talent attraction, or it will fall behind.
West Michigan seems to be on the right path, he said, with fostering partnerships and incubators that nurture startups.
“Grand Rapids has always been a great place for entrepreneurship,” he said. “The culture there is very, very positive.”
He added Kalamazoo’s startup ecosystem benefited when Pfizer shut down its Kalamazoo research operation, as the professionals who were left behind got busy forming new life sciences companies, and many of those companies have led to partnerships with ventures in other parts of West Michigan, such as Grand Rapids.
Kim Pasquino, a partner at the DeVos family office Wakestream Ventures, told the Business Journal last year that her firm looks at five-year investment trends, and West Michigan continues to be an attractive place for outside investors.
“Our strongest value proposition is being on the west side of the state,” she said. “We stack up alongside any founder in New York or (Silicon) Valley. We see quality companies and founders here.”
However, Brophy said he thinks Michigan startup companies are failing to secure their own home state’s capital from endowments, family offices and economic-development funds.
“I see our institutional investors in this state investing very happily in early-stage companies all around the country with a very small allocation, if any at all, to the same kind of companies here in Michigan. And that’s why I keep saying I guess we have to make better companies, better companies that can compete for our own money,” he said.
Part of the problem is that Michigan universities are providing the fundamentals but failing to help students commercialize their technologies, Brophy said.
“In a sense, if we could learn to eat our own cooking, we wouldn’t have any of these problems; we’d have plenty of funding.”
The MGCS created an antidote for that weakness. In addition to hosting investment pitches at its event in May, the MGCS will host a “university research track” to showcase the commercialization landscape, “tech transfer” success stories from the top 10 research universities and emerging startups coming out of Midwest-based schools.
The event program also will include guest speakers and panel presentations by some of the nation’s top investors and entrepreneurs. Previous speakers have included Wendell Brooks, Intel Corporation and Intel Capital; Clay B. Thorp, Hatteras Venture Partners; James Flynn, Deerfield Capital Management; and Adam Lilling, Plus Capital.
Individual event registration is $225-$425 at michigan-gcs.com. Startup companies have until March 5 to apply for the pitch portion of the fair.