A group of University of Michigan alumni have formed the Michigan eLab, a new venture capital fund that aims to connect tech startups from the university community with Silicon Valley cash and resources.
The co-founders all have significant entrepreneurial chops: Rick Bolander launched Blue Sky Ventures and has been involved with Apex Venture Partners; Scott Chou, a longtime early-stage tech investor who got in on the seed round for NextG Networks, which went on to sell for $1 billion; Bob Stefanski, who was on the founding management team at TIBCO Software; and Doug Neal, a serial entrepreneur who directs the Michigan eLab, U-M’s Center for Entrepreneurship, and TechArb. Though Michigan eLab is not an official university entity, all of the founders are deeply involved members of the alumni community.
“The key ingredients to success are access to capital and customers,” Chou explains. “It’s also a (University of) Michigan-branded project. We have a really strong sense of affinity, and we’re primarily focused on ecosystem deals (in Ann Arbor) and with alums.” With more living alumni than any other school, the Michigan eLab has a goal of raising $40 million by the fall and leveraging their networks to launch companies.
“It’s all about making positive connections and recognizing that Silicon Valley is the center of the world for innovation,” Stefanski adds. “Making strong connections in the valley is important for any tech ecosystem.”
Bolander, Chou, and Stefanski are all based in Silicon Valley but visit Ann Arbor weekly on a rotating schedule. Neal will oversee the day-to-day operations as someone who is plugged into the university’s thriving entrepreneurial scene. Neal describes the current entrepreneurial ecosystem in Southeast Michigan as having undergone a “sea change” since he moved to Ann Arbor from California in 2007.
Neal says U-M faculty and researchers are becoming more entrepreneurial, but they still have a ways to go before they catch up with the students: Between 5,000 and 7,000 students are involved in entrepreneurship each year, leading to what Neal calls a “tipping point” in the market. “It’s the right time for this opportunity,” he notes. “There’s a bridge of talent and expertise directly from Silicon Valley to Michigan. People want to come back and help.”
Neal says the Michigan eLab is looking to fund startups that are disruptive and capital-efficient in areas of research that U-M excels in, such as mobile technology, health IT, and other innovations coming out of U-M hospitals, and, if they’re able to be accelerated quickly and affordably, life science companies. A talented group of affiliate coaches will work with the selected startups to get them venture-ready, then the eLab will launch the companies.
The motivation for all of this, Neal says, is the non-stop supply of tech talent that U-M produces and then often promptly loses. As Neal ticks off a list of founders that have connections to U-M, including the brains behind such game-changing companies as Google, Sun Microsystems, Groupon, Twitter, and Skype, he points out that all of these people made their fortunes outside of Michigan. “The capital has always been somewhere else,” he adds. “We want to keep these companies in the state by bringing Silicon Valley resources to Michigan.”