This is the first newsletter to the Michigan Venture Capital ...

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This is the first newsletter to the Michigan Venture Capital ...

  1. 1. Membership Newsletter – June 2003 Letter from the President Thanks to the good work and effort of members of the Michigan Venture Capital Association we have started to accomplish some of our goals for the year Did You Know? which are to increase membership, improve membership benefits, promote venture Early stage Venture capital capital in the state and educate on its benefits. generated annual returns of 34.9% Congratulations to Arboretum for having the first close of their new fund. over the last 10 years, easily Arboretum will be investing in early-stage life sciences companies and details of their surpassing the Nasdaq and S&P close are in the Member News section of the newsletter. 500 Indices, which returned 7.0% We would like to welcome new members Merrill Lynch’s Locniskar and 7.3% respectively Group, Bill Orabone - an angel investor focusing on energy-related companies, - VENTURE ECONOMICS / Jaffe Raitt Heuer & Weiss, and Wayne State University. SLOAN VENTURES Our next membership event will be in Grand Rapids on June 5. Hosted by the Van Andel Institute, the days events will include keynote speakers, panels on venture investing and a reception that will provide us all with an opportunity to meet those from each side of the state. Dave Brophy’s Growth Capital Symposium to be held on June 11-12, 2003 is shaping up to be the best ever. This has been Michigan’s most prestigious venture capital event for over 20 years and will bring venture capitalists and entrepreneurs together to discuss opportunities in the region. The MVCA has also agreed to host a roundtable discussion at the Leadership Policy Conference to be held May 28-31 on Mackinaw Island. It will be hosted by Jeff Sloan and will include Dick Eidswick (Arbor Partners), John McIlwraith (Blue Chip Venture Company), Ananth Ananthasubramaniam (DTE Energy), Mitch Mondry (The M Group). The legislative effort headed by Mitch Mondry has been focused on making sure we speak with a common voice to our state government. The role of venture capital in the state is being clarified, as are the benefits that affect the state when we invest successfully. We think it is important to work with the state on new initiatives that will promote entrepreneurial activity and strengthen venture capital in Michigan. One of these is to get the support of the legislature for a fund of funds that is focused venture capital firms that will invest in Michigan’s seed and early stage companies. Thank you again for your confidence in the MVCA. Sincerely, Richard Eidswick Chartology Perhaps the oft-repeated concern of too much venture capital chasing too few deals is misguided. This chart suggests that on a percentage basis, the “overhang” remains within historical ranges. Michigan Venture Capital Association www.michiganvca.org 734.668-9000 phone 734.669.4195 fax -1-
  2. 2. Events Committee Update MVCA Committee Updates March’s networking event was well attended and gave us Legislative Committee Update an opportunity to see a little of the University of The legislative committee is excited to report that Senator Michigan’s Business School. Thanks to Tom Kinnear and Mike Bishop, State Senator for the 12th District and the ZLI for being such gracious hosts. The next event is Assistant Senate Majority Leader, has agreed to sponsor planned for June 5 at the Van Andel Institute in Grand legislation which would create the an early-stage venture Rapids. capital fund of funds. The Michigan Early-Stage Also, mark your calendar for a special event for the Investment Act of 2003 would authorize the creation of a evening of June 10. All MVCA members who have also $150 million fund by raising capital from area businesses registered to attend the Michigan Growth Capital with the return of principal and interest guaranteed by Symposium are invited to a reception for the area’s contingency tax credits. investment professionals. In addition, several state Dick Eidswick and Mitchell Mondry have met with eight legislators along with Governor Granholm are scheduled to Senators and several other individuals with political attend. The topic for discussion will be legislative influence to enlist support for the bill. Dick and Mitch initiatives to promote venture investing in the State of appeared on WJR with Senator Bishop to discuss the need Michigan. Come here what they have to say and what for the legislation and how it will assist the venture capital we’ve been working on. community in fostering the growth of businesses in Lastly, we are starting to zero in on a set date for the Michigan. The committee is hosting a roundtable MVCA’s Annual Event. The general plan is for a series of discussion at the Leadership Policy Conference on discussions/panels/seminars followed by an evening Mackinac Island to educate legislators on the need for this reception. Tentative plans are for the event to be held in legislation. Ann Arbor some time in late September. If you know of The committee asks for your support in identifying and any potential conflicts that may pose, please let us know. speaking with legislators and members of organizations with political influence with whom you have relationships. Please contact Mitch at mitchm@mgroupinc.com if you Board of Directors have any advice or contacts that may help in this matter or if you’d just like to learn more about this effort. Richard P. Eidswick, Arbor Partners One event that should be noted by members is the Detroit President Regional Chamber Leadership Policy Conference. The David Brophy U of M Business School Michigan Venture Capital Association has been asked to Chair: Education present one of the roundtables at this very long-standing Raj Kothari Seneca Capital Partners Birgit Klohs The Right Place Program and influential conference. A number of the MVCA Chair: Economic Dev directors will participate and have an opportunity to Mark McCammon Strength Capital Partners present the organization’s views on the current state of John McIlwraith Blue Chip Venture Co. venture capital in Michigan and ways to have a further Mitch Mondry The M Group impact. The conference is attended by most of the state Chair: Legislative and national political figures from Michigan, and provides Peter Pintar DTE Energy a tremendous opportunity for us to present our case. A Jim Plonka Dow Chemical Corp strong show of force by members is encouraged. Skip Simms Ralph Wilson Equity Fund Chair: Membership Marketing & PR Committee Updates Jeff Sloan Sloan Ventures The Marketing and PR Committee has been actively Chair: Marketing and PR involved in the development, management and promotion Sam Valenti Valenti Capital of the MVCA sponsored panel at the Detroit Regional Marc Weiser Waypoint Ventures Chamber’s Leadership Policy Conference on Mackinac Officers Island and the MVCA Networking event in Grand Rapids. Mike Bernard, Secretary Dykema Gossett They are also working with other committees on the Scott Stangeland, Gov’t Dykema Gossett Growth Capital Symposium. Public Relations efforts will Affairs Chair: Events continue to formalize as the MVCA develops, and will be Jason Burr, Treasurer Arbor Partners actively involved in the efforts of the Legislative Committee related to the fund of funds proposal. Michigan Venture Capital Association www.michiganvca.org 734.668-9000 phone 734.669.4195 fax -2-
  3. 3. Member News & Notes TGap Venture Capital Fund and Palmero Group LLC, both of the Kalamazoo area, and Tara Ventures I LLC of the Detroit area. MVCA NETWORKING EVENT IN GRAND RAPIDS JUNE 5TH ARBORETUM VENTURES ANNOUNCES FIRST CLOSE The MVCA will be holding another networking event, this time Arboretum Ventures announced their first closing on March 31, in the inspiring Van Andel Institute located in Grand Rapids and 2003. Arboretum's investors include the Michigan Economic sponsored by The Right Place Program. The event is scheduled Development Corporation, Guidant Corporation, Stryker for Thursday, June 5th. The event starts at 2:00pm with Terry Corporation, The Herbert H. and Grace A. Dow Foundation, Cross and as opening speaker, followed by a local VC panel Lurie Investments and other institutions and individuals. facilitated by Mike Jandernoa, a panel with Don Parfet or Rick Headquartered in Ann Arbor, Arboretum is a seed and early-stage Snyder, and concluding with a reception. RSVPs are requested to investor focusing on the life sciences sector, particularly targeting Mary Ann Medencorp at medencorpm@rightplace.org. promising opportunities in the Midwest. Arboretum's managing partners are Jan Garfinkle and Tim Petersen. 1ST QUARTER VENTURE STATS FOR MICHIGAN According to the PricewaterhouseCoopers/Thomson Venture HANDYLAB FEATURED IN WALL STREET JOURNAL Economics/National Venture Capital Association MoneyTree EDF Ventures® portfolio company HandyLab, Inc. survey, 6 Michigan companies received venture equity financing (www.handylab.com) was featured in the March 17 Wall Street in the first quarter of 2003, totaling $20.5 million. That is down Journal Small Business section. The article chronicles how from $30.3 million in the first quarter of 2002. Companies HandyLab approached the identification of which of scores of receiving funding reported in the MoneyTree survey were potential applications for their DNA-based testing devices should ArborText (Ann Arbor), Data TV Networks (Ann Arbor), Optate be the focus of their development efforts – and their limited Inc (Ann Arbor), HealthMedia (Ann Arbor), QuatRx resources. Full text of the article can be viewed at Pharmaceutical (Ann Arbor), and Medical Inc. (Bloomfield http://www.handylab.com/news/wsj_03172003.html. HandyLab, Township). based in Ann Arbor, Michigan, develops DNA-based point-of- care testing devices for human disease and pharmacogenomics. ARBOR PARTNERS INVESTS IN BLUESPRING SOFTWARE Venture co-investors with EDF include Ardesta, LLC, Wolverine New investor Arbor Partners joined original investors Blue Chip Venture Fund, P&E Ventures, XR Ventures, and SBV Ventures. Venture Company of Cincinnati and Primus Ventures of Cleveland to complete a $3.5 million round for Bluespring WOLVERINE VENTURE FUND INVESTS IN PANCEL Software. This round will enable the Cincinnati-based software The Wolverine Venture Fund has recently completed a Series A company to capitalize on the growing demand by Tier 1 investment in Pancel, a diabetes therapy company based on telecommunications service providers for solutions that are up to technology developed at the University of California-San Diego. the business and revenue assurance challenges presented by the Other investors in this round include Ann Arbor-based White complex demands of enterprise customers. Pines Ventures, and Arch Development Corporation, headquartered in Chicago, IL. NEW DIRECTOR FOR ZLI The Samuel Zell and Robert H. Lurie Institute for Entrepreneurial NATIONAL CITY ANNOUNCES LIFE SCIENCE FUND NETWORK Studies announced that Dr. Timothy L. Faley has accepted the National City Bank said it would rally eight of its national position of Managing Director of the Institute, effective July 1, network of venture capital funds to provide capital for ex- 2003. Tim currently serves as the Director of Technology Pharmacia executives and scientists to start their own bioscience Transfer and Commercialization within the University of companies. The "National City Life Science Fund Network" will Michigan's College of Engineering, where he has been be part of Southwest Michigan First's "Stick Around" talent responsible for coordinating technology transfer activities within retention campaign aimed to encourage self-employment among the College. Prior to joining the U of M, Tim spent seven years Kalamazoo pharmaceutical talent. The program gives at Dow Chemical Company, focusing on technology transfer and entrepreneurial-minded scientists immediate access to a group of new businesses development. Prior to Dow, Tim was on the venture funds looking for opportunities to provide capital to form faculty of North Carolina A&T University, where he was twice new bioscience-based companies. The funds have a total of $1.6 selected by students as the outstanding chemical engineering billion under management. professor. Tim holds M.S. and Ph.D. degrees in Chemical Engineering from the University of Notre Dame, an MBA from ASTERAND RACES AROUND THE WORLD FOR BREAST CANCER CURE Northwood University, and a B.S. in Chemical Engineering from Detroit based biotech, Asterand, announced that it lowering costs the University of Illinois, Urbana. of research materials for breast cancer to help draw attention to a charity event called "The Race for the Cure." Although the event AFMEDICA RECEIVES FINANCING is local the company is contacting researchers around the world Kalamazoo-based Apjohn Group L.L.C. announced a $1.3 with a series of special offers and has pledged to make a million financing for Afmedica Inc., a drug device company contribution to the charity for every research project initiated pioneering a new technology to apply drugs direct to veins. with Asterand materials before the start of the race. Afmedia is developing a "wrap" that will be impregnated with Asterand is based at the Karmanos Cancer Institute on the anti-clotting drugs and attached as a cover to veins and arteries to campus of Wayne State University. The company claims to be keep them clear. The first treatment being eyed is surgically the world leader in providing tissue and blood samples for created bloodstream access points for dialysis patients called genomic research. fistula, which tend to become inflamed and blocked. The wraps The Asterand world tissue bank contains material for research in involved are biodegradable. Also participating in the funding: a range of diseases including cardiovascular disease, rheumatoid Michigan Venture Capital Association www.michiganvca.org 734.668-9000 phone 734.669.4195 fax -3-
  4. 4. arthritis, diabetes and neurological diseases like Alzheimer's, bank financing provided by the Fifth Third Bank middle-market schizophrenia and manic depression. The breast cancer special lending group (Ann Arbor branch), (b) sub-subordinated debt offers will last through June 21 when all Asterand staff will take from Dearborn Capital Corporation (Ford Credit) and (c) seller part in a Karmanos Cancer Institute sponsored walk called the financing. The transaction was completed on April 30, 2003. "The Race for the Cure." MICHBIO ANNOUNCES NEW EXECUTIVE DIRECTOR FORBES PUBLISHER PREDICTS GROWTH FOR MI TECH COS MichBio, Michigan's biosciences industry association announced Rich Karlgaard, Publisher of Forbes Magazine and Forbes.com, the appointment of Michael Witt, as executive director. Dr. Witt spoke recently at the IT Summit on Michigan's potential as a is a seasoned professional with over 21 years of experience in leading region for technology company growth. His prediction in early-stage biomedical technology, university medical part is based on what he described as three key trends. This first technologies and the life sciences industry. Prior to joining is his belief that the Internet Boom will resurface again but in a MichBio, Dr. Witt was CEO of Technology Enterprise more intelligent and revolutionary way, following a similar path Development Corp, a medical technology development company, as the personal computer. The second is the continued price in Sacramento, Calif. and Flint, Mich. and CEO of vCure.com, a pressures on equipment that allow for productivity gains. The healthcare information and software company in Troy, Mich. third, and most interesting from the Michigan perspective, is the Dr. Witt holds a PharmD from University of California, San dispersion of technology entrepreneurship to other regions than Francisco School of Pharmacy and a JD from Case Western Silicon Valley, Austin and Boston. In this regard, he gave 9 Reserve University School of Law. He currently resides in Flint, points of measurement to judge a region’s potential, which are: Mich. with his wife and three children. 1. Top Universities 2. Total R&D Spending 3. Strong K-12 Education MVCA Administrative News & Notes 4. Immigration Tolerance MVCA DIRECTORY IS NOW COMPLETE. The MVCA Directory was mailed to all members in April. If 5. Competitive Tax & Regulation environment you didn’t receive your copy, please contact us at 6. Entrepreneurial Acceptance info@michiganvca.org . Thanks to everyone for providing this 7. Successful Local Entrepreneurial Role Models information so members can build better lines of communication. 8. Portability of technology to lower cost areas and last, but absolutely not least, 9. Local Venture Capital CALENDAR OF EVENTS Every quarterly newsletter will include a list of the upcoming events that may be of interest to our members. Due to space GREAT LAKES ANGELS ANNOUNCE 2002 SCORECARD considerations, we are not able to include all events in the state. Great Lakes Angels announced the results of their first year of A more comprehensive list of events can be found at operations. The group, led by David Weaver, President, held 4 www.theglance.com. If you are aware of any other events that monthly meetings in the year, and in that time, investors in their may be of interest to our members, please forward that group made investments totaling $225,000. information to us at info@michiganvca.org. The Mission of the Great Lakes Angels (www.glangels.org) As described in earlier sections, please be aware of three organization is to organize and mentor angels and provide a important events coming up soon that are sponsored in part by forum for them to grow in knowledge and wealth and foster more the Michigan Venture Capital Association. First is the Detroit of the same - to help invest in entrepreneurial companies in the Regional Chamber Leadership Policy Conference on Mackinac region. Current “Angels” and high net worth “potential Angels” Island. The second is the MVCA Networking event at the Van can meet in a confidential and educational environment to Andel Institute in Grand Rapids. The third is the Growth Capital discover opportunities for mutual areas of investment. Symposium in Ann Arbor, which promises to be the best Symposium yet. Keep these in mind as you plan your schedules. MIKE DEVRIES JOINS EDF AS ENTREPRENEUR IN RESIDENCE Mike DeVries joined EDF Ventures® in February as Entrepreneur in Residence, and will focus his efforts in the health care practice. Prior to returning to Michigan, DeVries was the President and CEO of A-Med Systems, a California-based cardiac device company funded by Morgenthaler Ventures, U.S. Venture Partners, Venrock, and Vertical Group. As Entrepreneur in Residence, DeVries will utilize his extensive contacts in the health care field to assist EDF with due diligence on investment opportunities; to add value to selected portfolio companies by working with their management teams to accomplish key milestones; and to further develop EDF’s network of contacts. SHANE GROUP ADVISES ON ACQUISITION Shane Group Capital Corporation served as the exclusive Financial Advisors and Capital Market Representative for the Gonzalez Group, LLC, in their acquisition of S&A Products, a Tier 2 & 3 screw machining business in Litchfield, MI. S&A has a 14 year operating history primarily serving the automotive market space. The capital structure consisted of (a) traditional Michigan Venture Capital Association www.michiganvca.org 734.668-9000 phone 734.669.4195 fax -4-

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