On Labor Day, the Renaissance Venture Capital Fund announced the final close of its fund, bringing the total raised to just under $50 million. The Ann Arbor-based Renaissance is a fund of funds: instead of investing money directly into startups, it invests in other venture funds, thereby hedging its bets in one sense, but also widening its influence in another. Renaissance only invests in venture funds that invest in Michigan startups.
Since its formation and first close in late 2008, Renaissance has invested about nearly $6 million in six venture firms, three in Michigan and three outside it (a seventh investment, in Florida-based Arsenal Ventures, has been announced but not yet made). These firms, in turn, have invested in 12 Michigan startups, most in life sciences and healthcare, but others in digital media and software. A list of the venture firms and the startups that have been publicly announced can be found here.
Renaissance is run by Chris Rizik, who serves as CEO and fund manager. Rizik, who’s also an Xconomist, was once an attorney at Dickinson Wright, running the law firm’s small business practice. After 13 years there he was recruited by former Gateway Computer president (later chairman and interim CEO) and now Michigan gubernatorial candidate Rick Snyder to be his partner in Snyder’s first venture fund, Avalon Investments. Venture capital was a pretty nascent field in Michigan when Avalon got started in late 1997; three years later Snyder, Rizik, and colleagues raised a second fund, Ardesta.
Beginning in late 2007, with Ardesta fully committed other than follow-on rounds in existing portfolio companies, they began to investigate raising a third fund. Rizik says they received a number of notable commitments from investors. But for a variety of reasons, including the overall investment climate, the difficulty raising as much as they wanted to, and Snyder’s gubernatorial ambitions, they decided to give up the idea. What Snyder did next is history, as they say. Meanwhile, Rizik joined the developing Renaissance effort, forming the fund as its inaugural CEO in late 2008. The firm held its first close that December, on its way to what it hoped would be a $100 million fund. After the final close last week, albeit at half the initial target, we spoke with Rizik to learn more about the fund, its goals, and what they say about the future of Michigan startups and innovation.
Here are edited highlights from our conversation:
Chris Rizik: The philosophy was that we’re believers that venture capital can help drive a more entrepreneurial economy here. There’s always been great technology base in the state—Michigan is regularly a top 5 state for R&D—but other than in automotive we haven’t always capitalized on it.
With an increase in venture capital, the feeling was we could increase the number of startup and emerging companies with potential to achieve clusters of excellence and real size in several areas. It would help us to diversify into less of an automotive-centric economy, into a more balanced one.
By doing this through a fund of funds you can spread capital into several areas [by investing in] the best venture capital funds—both resident venture funds in the state and venture funds outside the state who could play an important role in the state.
The newest element here is our connection with Business Leaders for Michigan. Having 75 of Michigan’s largest companies behind us is incredibly important and can increase the likelihood of success of our fund and the state. By connecting venture capital funds and startup companies with Michigan’s major corporations, we can create customer, strategic partner, and even beta test site relationships that can mean the difference between failure and success for many young companies. It also creates a “win-win” scenario, because these connections will also help our corporate investors to have visibility into important new R&D and technology developments that could help their businesses.
X: You raised $50 million, which is a real accomplishment in this economy. But the original target was $100 million. How will that affect what you hope to achieve, and the impact you hope to have?
CR: In retrospect, it is amazing that we were able to raise $50 million at a time when there were almost no new venture funds being formed. The result will be that we will make fewer … Next Page »
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