Jeff Bocan is Not Crazy: Beringea’s Ex-Californian Seeks Gold Rush in Michigan

Xconomy Detroit/Ann Arbor — 

More than a few people thought Jeff Bocan was crazy when he left the sunny beaches of San Monica, CA two years ago for the snow-clogged driveways of Ann Arbor, MI.

Beringea, the Detroit-based private equity and venture capital firm, wanted Bocan to move to Michigan to help find and finance promising local startups.

Bocan says he needed a little time to sell his wife on the idea.

“I’m still selling,” Bocan says.

Though it’s still early in his tenure here, Bocan says he is sold on at least one idea: that Michigan has plenty of innovative startups that can deliver financial returns and diversified economic development to a state still largely dependent on the auto industry.

“There’s something real to this,” Bocan, a Beringea managing director, says. “It’s not just hype.”

Over the past two years, Beringea has invested in a dozen local companies in information technology, medical devices, and industrial equipment, a rate much faster than most venture capital firms. The firm also boosted its fund to $107 million from the initial pool of $75 million.

In some ways, Bocan is simply confirming what Michiganders have been saying for years: that coastal investors ignore the state at their own peril.

“Michigan has a real chip on its shoulder,” Bocan says. People feel that investors on the coasts “think Michigan is a flyover state, that it’s not worth the effort to invest here.”

It’s worth noting that Bocan is a finance guy, a professional who lives and dies by the quality of investments he recommends. He’s not a ringside promoter.

So it means something when Bocan says Beringea’s local portfolio has been successful—and by successful, he means that the companies Beringea has picked show solid revenue growth, have developed strong intellectual property, and have recruited strong leaders.

Here are few examples:

  • ReCellular, based in Dexter, MI, is the world’s largest recycler and reseller of cell phones, generating annual revenue of $100 million. The company received an undisclosed investment from Beringea late last year.
  • Relume Technologies, based in Oxford, MI, makes advanced, highly efficient LED lights that can remove heat more quickly thanks to patented thermal management technology. The company provides products for covert military communications, mobile hospital and command shelters, commercial and traffic signs, street and area lighting, and outdoor advertising.
  • Pioneer Surgical Technologies, a spine and orthopedics firm based in Marquette, MI, last year received a patent for its nanocrystalline calcium phosphate technology, which it uses to make highly durable, synthetic bones.
  • GloStream, based in Troy, MI, developed software to manage electronic medical records. Aided by voice recognition technology, the software gives doctors a single onscreen dashboard where they can view patients’ contact and insurance information, track patients’ location from admission to discharge, and order lab tests and refill prescriptions. Beringea invested $6.8 million in GloStream in the fourth quarter 2010.

Michigan is by no means Silicon Valley. The state lacks venture capital dollars and managerial talent, Bocan says.

In 2010, Michigan startups raised $151.6 million, a 13.8 percent jump from 2009, even though the number of local deals remained steady at 33, according to the MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association based on data collected by Thomson Reuters.

However, aside from angel and early stage seed funds clustered in Ann Arbor, Beringea is the only large, later stage firm in town that can throw $4 million to $6 million into a single deal.

The exclusivity cuts both ways, Bocan says. Michigan’s inefficient venture market presents attractive opportunities for Beringea. However, the absence of other venture firms means Beringea lacks partners to help fund startups to the next level, he says.

“I hate to see a technology die because we couldn’t cut the company a big enough check,” Bocan says.

But Michigan’s biggest problem is the dearth of talent, experienced executives who can nurture a fragile startup to maturity, Bocan says.

As a result, Beringea has had to import talent from across the country to help run its portfolio of Michigan companies.

Inventing a new technology is great and fine. But without the right management team, that technology will never see the light of day, Bocan says.

“What I’m doing is the modern day version of gold prospecting,” he says.

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One response to “Jeff Bocan is Not Crazy: Beringea’s Ex-Californian Seeks Gold Rush in Michigan”

  1. vern rutherford says:

    i dont have a web sitejust yet.i have great ideals for differnt kinds of bussiness. my only problem is finance and some one to have faith in me to send me in the right dirrection. i know that i have to spend money to make money. with i truely need help with.i rather have some good advice to help point me in the right dirrection. i have tried to do goverment grants. what a joke? loans i cannt get. there has to be some way out there. i can not and will not give up. so do you have any suggestions that may help me.. thank you either way,vern p.s. my # 269-487-2159