Growth of an Innovation Economy in Michigan

1. Growth of an Innovation Economy in Michigan Leadership Detroit – November 18, 2010 Chris Rizik (CEO, Renaissance Venture Capital Fund)

2. Origins of Renaissance Fund 2 • Observations: • Michigan high in innovation but lagging in entrepreneurial companies. • 5:1 “gap” between demand for capital and available capital in MI. • Cuts in R&D by major MI companies could result in “innovation gap” • Conclusion: A venture capital “fund of funds” started by Michigan’s business community to • achieve strong financial results and sustainability, • increase overall venture capital availability in Michigan, and • increase collaboration between Michigan’s strong industrial/commercial base and its University and entrepreneurial start-up community

3. The Five Elements of an Innovation Economy Technology Capital Infrastructure Talent Culture

4. 1,159 Technology in Michigan • Michigan ranks #2 in the US in R&D spending and #7 in patents granted. • Michigan university corridor ranks #4 in the US in R&D spending 2,023 1,952 UC-Berkeley USC 1,374 1,369 1,337 1,181 1,159 Wayne St. CMU NC St. Tufts UC-San Diego U. of Chicago Stanford Michigan St. UNC U. of Pitt Harvard Northwestern U. of IL-Urbana/Champaign UC-San Fran UCLA Duke U.of Michigan Penn St. MIT Northern California Southern California North Carolina Research Triangle Michigan’s URC Pennsylvania Illinois/Chicago Boston Total R&D expenditures FY2005 (Millions) Courtesy: Business Leaders for Michigan 4

5. Capital Venture Capital is principal method of financing fast growth, innovation companies. Companies with Venture Capital legacies now account for 11% of US jobs, 21% of GDP.* A job (average pay: $70,000) is created for every $38,000 of venture capital investment. ** VC-backed companies grow 50% faster and add jobs at 8x the rate of other companies.* Sources: * NVCA and ** Global Insights 5

6. Venture Capital in Michigan Growth in Michigan has been strong, but Michigan is still small. Michigan has moved from 35th state to top 20. Still a third tier state that is underachieving. Generally around $150 million per year invested in Michigan. But is still well under 1% of total in nation (and less than 2% of California alone). Based on historical trends, $1 billion venture capital invested in Michigan would directly yield over 25,000 jobs plus much more indirectly PLUS investment would financially outperform S&P 500.

7. Infrastructure in Michigan Innovation chain  Education  ↓ Supply chain  Demand chain (customer base)  Physical infrastructure → Service providers and professionals → Government policies ↓ Long term planning Cooperation

8. Talent in Michigan Strengths Researchers Engineers Manufacturing Professionals Challenges Senior leadership Mentors with past entrepreneurial success “Changing Gears” to smaller, more nimble companies

9. Culture Attitude and outlook How do we react to change? How do we look at risk? How do we interact? How positive are we?

10. My Grading on Michigan’s Five Elements

11. Keys to a new Michigan and Detroit Continued technological innovation Increase the amount of available capital. Collaboration Better utilizing existing infrastructure. Connecting disparate communities. Development of Leadership Talent Mentorship Training Transform “safe” and “win-lose” culture

12. Planning Your Personal Career in Innovation Economy Educational preparation Change will occur – How do you react? Risk perceived vs. real risk comfort zones The “Alarm Clock Rule” Each Decision Point: Are you opening doors or closing them?