Michigan Investments Benefit East Coast’s Flagship Ventures

Cambridge, Massachusetts based Flagship Ventures manages over $900 million in capital. The firm is comprised of two units: VentureLabs creates innovative startups, and Venture Capital serves as the finance arm. Flagship invests in medical technologies, therapeutics and sustainability.

Mike Johnson, an associate of Flagship’s Ann Arbor location, focuses on healthcare and sustainability investments in the Midwest. He notes that Flagship came to Michigan for a number of reasons, one being its most successful advancement, Accuri Cytometers, which was acquired by BD in 2011. The firm was also attracted by Michigan’s academic and research base, university system, experienced entrepreneurs, investment community and state support programs. “Michigan offers capital efficiencies that are superior to the East Coast,” said Johnson. “We have received money from the Venture Michigan Fund II and Renaissance Venture Capital Fund in the past.”

In addition to Accuri Cytometers, Flagship’s main Michigan investment is Tangent Medical Technologies, Inc. Tangent, a company spun out from the University of Michigan Medical Innovation Center, “is another great example of great technologies that are coming out of the University systems,” said Johnson. “For me, to see the external validation I have from my colleagues in the Cambridge, Massachusetts office is great. People are excited about the relationships and business we can create in Michigan.”

Johnson has attended the Michigan Growth Capital Symposium multiple times. “It’s a great showcase for local companies and attracts a wide range of entrepreneurs and investors,” he said. Last year, Flagship’s CEO addressed the Symposium. “People still talk about his speech,” said Johnson.

State Funds Attracting Major Players to Michigan

Although fundraising is a constant challenge, things have been looking up in Michigan in the past five years, according to Credit Suisse Customized Fund Investment Group (CFIG) Vice-President Sean O’Donnell. Venture capital firms and assets under management have increased, resources such as the Venture Michigan Fund II (VMF II) are infusing more capital into Michigan companies, and the state is attracting some major players. A recent $15 million investment by VMF II has wooed Massachusetts-based Flagship Ventures to open an office in Michigan by the end of the year – a major win for the state. Flagship Ventures, a $900 million fund,  is known in Michigan for its success with University of Michigan spin-off company Accuri Cytometers.

CFIG manages or co-manages over $500 million in capital. VMF II falls under the group’s umbrella, along with other programs investing in VC, private equity funds, and growing companies in Michigan. As a founding member of the Michigan Venture Capital Association, CFIG has committed over $200 million to VC firms in the state since 2006, with another $80 million scheduled to be committed through 2013.

O’Donnell notes that innovation is what drive new technologies and industries, providing vital support to the state’s economy. “In the early stages, these new industries employ very highly skilled and educated workers,” he said. “In the long run, emerging companies in new industries assist in diversifying the Michigan economy and retaining and attracting human talent to Michigan.”

Credit Suisse has a longstanding relationship with the Michigan Growth Capital Symposium (MGCS), and is a sponsor of this year’s event. “CFIG is a strong supporter of the Michigan venture community, and has sponsored and attended hundreds of events in the state,” said O’Donnell. “I view the MGCS as the premier event in Michigan to bring together entrepreneurs, venture capitalists, limited partners and intermediaries. The event’s reach is by far the most comprehensive, attracting firms from the coasts who are not regular attendees at the numerous other Michigan events.”