Why Michigan? Opportunities for Investment and Entrepreneurship Martin Dober

1. Why Michigan? Opportunities for Investment and Entrepreneurship Martin Dober Sr. VP, Entrepreneurship & Innovation Michigan Economic Development Corporation

2. New Leadership, New Direction • “We will not dwell on the past or the depth of our problems. The focus will be on agreed-on action, implementation, measuring results and continuous improvement…It is time to solve problems.” Governor Rick Snyder, State of the State, January 19, 2011

3. Mission The mission of the MEDC is: To market Michigan and provide the tools and environment to drivejob creation and investment.

4. Vision The vision of the MEDC is: • To reinvent the Michigan economy by: • growing and attracting business • keeping talented residents here, and • revitalizing our urban centers. • As a result, Michigan will be a top ten state in: • employment • GDP growth • per capita income, and • young adult population growth.

5. Strategy The MEDC’s jobs strategy consists of seven initiatives aligned to drive job growth. Unemployment rate in the lowest 10 states GDP growth in the top 10 states Real personal income per capita in top 10 states Population increase of people 25-34 Strategic Initiatives 1 2 3 4 5 6 7 Entrepre-neurship Business Growth Access to Capital Vibrant Communities Talent Image Seamless Delivery 100+ Supporting Activities MEDC Operations

6. Objectives and Key Activities 1 • Promote a culture of entrepreneurship and the development of high-growth, technology ventures by: • Facilitating the commercialization of technology • Ensuring the availability of key entrepreneurial support • Strengthening the state’s entrepreneurial infrastructure Entrepre-neurship

7. For Venture Capitalists, Michigan presents the opportunity for extraordinary investment returns

8. Attractive Pre-Money Valuations Exist Michigan 70% lower than coastal markets Midwest 43% lower than coastal markets Average pre-money valuation by company location Midwest Market includes: IL, IN, MI, MN, MO, OH, WI Top Venture Markets include: California, New York, and Boston Refers to first-round, early-stage investments, 2002-2009 Source: VentureXpert

9. Better Premiums per VC Dollars Invested On average, Michigan and Midwest venture capital investments yield a premium over investments in the top venture markets.

10. At the heart of these extraordinary venture capital return opportunities are Michigan’s: Exceptionally high rate of innovation World-class innovative talent Growing rate of venture capital activity

11. Michigan Ranks High in Innovation Industrial R&D Spending: #4 Vehicle R&D Spending: #1 Overall R&D Spending: #5 NIH Grants: #11 (70% to University of Michigan) Government Research Funding: #9 Patents Issued: #8 University R&D: University of Michigan #1 University Cluster URC (UM, MSU, WSU): #5 in R&D#3 in Patents#5 in Start-ups Number of Engineering Degrees: #3

12. Michigan Has the Superior Opportunity to Convert Research Funding into Startup Companies Michigan universities have, on average, created one start-up company for every $78 million of funded research expenditures. The national average is one in $84 million. Funded Research Dollars Successful University spinouts turned into great venture opportunities 135 321 Licenses/ Options Executed 509 Patent Applications Filed $1.6 Billion Invention Disclosures Research Expenditures Source: 2008 AUTM survey data

13. Non-Michigan Venture Firms Investing in Michigan Since 2008, 20 additional non-Michigan venture capital funds have invested in Michigan’s start-up companies. Although ~90% of Michigan’s venture capital-backed companies were originated by local venture firms, 66% of the capital raised came from non-Michigan venture firms.

14. The Growth of Professional Venture Capital in Michigan - Data represents all venture capital firms headquartered in Michigan or with a presence in Michigan.

15. Venture Capital Support • 21st Century Investment and Venture Michigan Funds - $200 Million to VC, mezzanine, and private equity funds • Invest Michigan - $300 Million pension fund investments • Michigan Venture Capital Association (MVCA) programs: • Venture Fellows • CEO Placement • Entrepreneur-in-Residence • Angel Network Development • New Venture Capital Programs in Development: • Venture Matching Fund • Venture Development Fund

16. Michigan has a long history of entrepreneurship, and is investing in programs to continue that tradition

17. Expanded Toolkit for Companies • Replacing complex tax incentive-based way of doing economic development with a restructured, tactical toolkit • $100 million annually for business attraction and economic gardening • $25 million annually for film, video game production • $25 million annually for innovation and entrepreneurship programs • $80 million for State Small Business Credit Initiative (SSBCI) • $3 billion+ Pure Michigan Business Connect program

18. Early Stage Company Support • Business Commercialization Assistance • Small Business Technology Development Center (SBTDC):  Strategic business assistance provided at no cost by professional technology business consultants • Biotech Business Consultants (BBC):  Training and hands-on review for companies seeking federal SBIR or STTR grants • Michigan Manufacturing Technology Center (MMTC):  Connects manufacturers to companies needing manufacturing components • Michigan’s Universities:  Research, Engineering and Technology Transfer offices, talent connections, corporate connections • Michigan’s 15 SmartZones: Technology business accelerators and incubators that provide the entrepreneurial and commercialization support services to start-up ventures.

19. Michigan SmartZones Michigan is home to 15 SmartZones , each anchored by an academic institution and supported by the local communities.   1 MTEC SmartZone 2 Sault Ste. Marie 3 Michigan Alternative and Renewable Energy Center 4 West Michigan Science and Technology Initiative 5 CMU Research Corporation 5a Mount Pleasant SmartZone Satellite 6 Lansing Regional SmartZone 7 Southwest Michigan Innovation Center 8 Battle Creek Unlimited 9 Jackson Technology Park 10 Ann Arbor SPARK 11 Pinnacle Aeropark 12 TechTown 13 OU INCubator 14 Macomb INCubator 15 Automation Alley  

20. Expanded Infrastructure for Entrepreneurs

21. Early Stage Company Financial Support • Business Plan Competitions • Great Lakes Entrepreneur’s Quest:  Top prize is $100,000, in addition to mentoring assistance • Accelerate Michigan Innovation Competition:  Top prize is $500,000 • Funding Assistance • Michigan Universities Commercialization Initiative:  Up to $100,000 match grant • Pre-Seed Fund:  Up to $250,000 convertible note • Pre-Seed Micro-Loan:  Up to $50,000 at 12% interest • Emerging Technologies Fund: Up to $25,000 match grant on SBIR/STTR Phase I, Up to $125,000 match grant on Phase II • Business Accelerator Fund:  Up to $50,000 for consulting, research, or manufacturing assistance • Venture Matching Program (Proposed): Up to $500,000 equity investment

22. Recent Headlines • Michigan ranks 2nd in study of states’ economic health • Michigan’s economic health ranks No. 2 in the nation, according to Bloomberg. The Bloomberg analysis considered important indicators such as personal income, tax revenue, employment and housing prices. • Michigan no. 1 in nation for small business loans • Michigan’s banks and credit unions led the country in providing government-backed small-business loans, according to new data from the U.S. Small Business Administration • Michigan No. 1 for tech job growth • Michigan leads the nation in tech job growth, according to the latest 2010 TechAmerica report. • Michigan No. 1 for job creation potential • Newsweek and its affiliate web site The Daily Beast named Michigan as No. 1 on the list for booming states for business. • Michigan home to ‘most beautiful place in America.’ • ABC News’ Good Morning America has named Michigan’s Sleeping Bear Dunes the Most Beautiful Place in America.

23. Why Michigan?

24. Questionsmartin@michigan.org