EAST LANSING, MI — A bipartisan group of lawmakers in Lansing has introduced three new bills to establish the Michigan Innovation Fund that would provide critical funding support to Michigan’s existing early-stage evergreen venture funds and entrepreneur ecosystem. Michigan House Bills 5651, 5652 and 5653, sponsored by Representative Alabas Farhat (D-Dearborn), Jason Hoskins (D-Southfield) and Greg VanWoerkom (R-Norton Shores), would provide $105 million to a coalition of five impactful, established Michigan based nonprofit early-stage evergreen funds. It would also provide increased funding to key partners that support startup companies, founders, and funds.
“House members on both sides of the aisle recognize the importance of supporting Michigan startups and entrepreneurs,” said Rep. Alabas Farhat. “We can’t continue to overlook 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.”
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. Overall, new early-stage, pre-seed investment capital in Michigan has decreased over 40 percent in the past several years, creating a major challenge to companies looking for early-stage funding. 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.
“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 Rep. Greg 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.”
Michigan suffers one of the largest disparities between academic research expenditures and invested venture capital. For every $149 of academic research expenditures in Michigan there is $1 of funding. By comparison, the ratio is $7 of academic research expenditures for $1 of funding in California. Additionally, many companies that get their start in state are 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.
“Michigan has amazing talent and strong research institutions,” said Rep. Jason 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 proposed legislation, 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. The creation of the fund would not affect the General Fund, but re-direct returns from the Venture Michigan Funds I and II (VMF) which were created in 2003.
The MSU Research Foundation demonstrated its support for the Michigan Innovation Fund by participating in a press event held at Newlab in Detroit on April 19, 2024.
“We’re excited to stand alongside our experienced early-stage investment fund peers and the state legislature in championing the creation of this new fund,” said Jeff Wesley, Executive Director of Ventures at the MSU Research Foundation. “This initiative is a testament to our shared vision and marks a crucial step toward advancing our collective entrepreneurial ecosystem. It will help the state of Michigan be more competitive with our neighbors across the Midwest, reinforcing our commitment to driving the innovation economy.”
Learn more about the Michigan Innovation Fund at idventures.com/mi-innovation-fund
This story was originally published by the MSU Research Foundation.
About the MSU Innovation Center:
The MSU Innovation Center is dedicated to fostering innovation, research commercialization, and entrepreneurial activities from the research and discovery happening across our campus every day. We act as the primary interface for researchers aiming to see their research applied to solving real-world problems and making the world a better place to live. We aim to empower faculty, researchers, and students within our community of scholars by providing them with the knowledge, skills, and opportunities to bring their discoveries to the forefront. Through strategic collaborations with the private sector, we aim to amplify the impact of faculty research and drive economic growth while positively impacting society. We foster mutually beneficial, long-term relationships with the private sector through corporate-sponsored research collaborations, technology licensing discussions, and support for faculty entrepreneurs to support the establishment of startup companies.
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