New Ann Arbor Firm, Resonant Venture Partners, Hopes to Team Up with Coastal VCs on Michigan Investments
Michael Godwin and Jason Townsend know what they’re getting into, launching a new seed-stage venture capital fund, Resonant Venture Partners, in Michigan during a time when getting institutional investors to climb onboard is next to impossible.
“Yeah, it’s bleak in Michigan,” Godwin says, referring to the lack of institutional investor enthusiasm for venture funds in this state, “and quite honestly that’s been a problem for Michigan venture capital since day one. We’ve heard horror stories from our advisers and from other VCs in the area who today still haven’t been able to raise institutional money despite being into their third and fourth funds.”
But they hope that their newly minted VC firm, based in Ann Arbor, MI, will act as a kind of advance scout for larger venture capitalists on the coasts.
Godwin says that he and his partner, both of whom spent time as Silicon Valley tech entrepreneurs before heading back to Michigan to get their MBAs, hear VCs in Silicon Valley and Boston lament that it is so hard to get investment deals out of Michigan companies, yet they have no office on the ground here. Resonant, Godwin says, hopes to be the one to hunt out deals for them.
So far, so good. Last week, Resonant participated in its first VC deal, going into syndication with Palo Alto, CA-based True Ventures on a $1 million investment in Scio Security.
“We’re hoping to be a conduit for deals to some of those bigger funds,” Godwin says. “While we’re going to be a small fund, if we can have syndicate partners that have these big, deep pockets, we can do deals that are a little bit bigger in size and scale than what we could do on our own.”
That’s also how you build momentum, Godwin says. Build up the attention and level of deal flow, and then institutional money will come.
Resonant is currently raising what it hopes will be a $10 million to $20 million fund in a year. This is their first VC firm, but the partners, Godwin and Townsend, are far from newbies. They received real-world training at the University of Michigan’s Samuel Zell and Robert H. Lurie Institute for Entrepreneurial Studies, where last year they were both managing directors of the student-run Wolverine Venture Fund.
“During our time there we realized there’s a huge opportunity here in Michigan,” Godwin says. “We also met many of the venture capitalists in Michigan and were watching the industry sort of shift downstream in risk preferences.” Investors were taking fewer risks and moving toward more deals that would almost qualify as sure things, he says.
“And, yet,” Godwin says, “we have all this R&D spending in the region.” So, Godwin and Townsend told each other, “Hey, that’s an opportunity for us,” he says. “Let’s jump on it and give it a run.”
Godwin knows it won’t be easy to raise money for Resonant, which will focus on investments in IT software and hardware, but he knows from experience that Michigan has some worthwhile tech seeds just waiting to be nurtured.
“We’re definitely going to have some challenges,” Godwin says, “But we’ve actually had a lot of excitement from those we’ve approached.”
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