MoneyTree Report: VC Investment in MI Down From Last Year, Up From Last Quarter

Xconomy Detroit/Ann Arbor — 

The third-quarter 2011 data is in from the MoneyTree Report by Pricewaterhouse Coopers, and it shows that while Michigan’s VC investment decreased by about 20 percent compared to the third quarter of 2010 ($43.2 million invested in 2010, compared to $34.8 million in 2011),  it more than doubled compared to the second quarter of 2011, when only $13.2 million in VC capital was invested. So what does that mean?

Donald Jones, senior consultant to the New Economy Initative for Southeast Michigan, cautions that first of all, today’s data should be compared to data from 10 years ago to get a better picture of Michigan’s growth.

“So many factors go into it that I think we need to quit comparing data quarter to quarter,” Jones says.

Jones says that he feels “optimistic” about the VC climate in Michigan because there are an ever growing number of businesses entering the investment space.

“Start-up dollars are moving to second-stage companies, the [Michigan Economic Development Corporation] is interested in leveraging private dollars, and even philanthropy is looking at what it can do to catalyze private investment,” Jones says. “I know conversation isn’t the same as outcome, but there is a lot of discussion about Southeast Michigan’s investment space right now.”

Nationally, data from both MoneyTree and Dow Jones VentureSource shows that investment in medical devices outpaced investment in biosciences for the first time since 1998, a reaction to the difficulties in the regulatory environment.

Other big winners in national VC investment were software and consumer Internet companies (which includes online search, entertainment and social media companies), while cleantech lagged. In total, venture capital firms invested $6.95 billion in 876 deals throughout the United States during the three months that ended Sept. 30, according to the MoneyTree Report