Venture capital rises in Michigan in '08


Venture capital investment in Michigan companies soared last year, reaching a level not seen since the peak of the technology boom in 2000, a report released Friday shows.

Michigan also improved its standing as an attractive place for venture capital. It ranked 16th among the states in terms of venture capital investment last year, up from No. 25 in 2007, according to the MoneyTree report from PricewaterhouseCoopers and the National Venture Capital Association.

The sharp increase in Michigan venture capital activity is welcome news for the state's battered economy, which is moving rapidly away from its traditional reliance on the auto industry.

In recent years, entrepreneurs have launched a number of start-up companies and some of them are starting to gain traction.

The dramatic increase in venture investment, however, isn't likely to be repeated this year.
Last year, venture capital firms invested $245.7 million in 43 Michigan companies. That's more than double the activity of the previous year, when 22 Michigan companies received $104.7 million from venture firms.

That was the best showing since 2000, when 53 Michigan companies raised $337.2 million from venture capitalists.

Even in last year's fourth quarter, venture firms poured $47.1 million into nine Michigan companies. Pioneer Surgical Technology Inc., a Marquette medical device maker, led the list, obtaining $15 million from Pharos Capital Group, River Cities Capital Funds, Hopewell Ventures and one firm whose identity was not revealed.

Danotek Motion Technologies Inc., an Ann Arbor provider of electrical conversion systems, generators and other technologies, followed close behind, garnering $14.5 million from CMEA Ventures and Statoil Innovation.

Michigan's strong performance came despite a national slowdown in venture capital investment last year.

Nationwide, $28.3 billion went into 3,808 deals in 2008, down 8.4% from $30.9 million in 3,952 deals in 2007.

The only sectors to gain investment dollars were clean technology, information-technology services and media and entertainment. Clean technology refers to alternative energy, pollution and recycling and power supplies and conservation.


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