Money attracts money, and Michigan is attracting a lot more venture capital today than it has in a decade and at a faster pace than the rest of the nation.
A new report from the Michigan Venture Capital Association says the state jumped to the 15th spot in terms of business accelerator activity, up from 25th last year. And while national venture capital investment dropped 10 percent, in Michigan growth has been steady, with $232 million in investments made last year.
Give credit to a number of factors.
First, of course, is the recovering economy, led by the resurgence of the Big Three automakers. The strong rebound of Ford, General Motors and Chrysler have pumped fuel into Michigan's economy, improving the prospects of businesses across the spectrum, including start-ups.
In addition, Gov. Rick Snyder and the Republican legislature have transformed the state's policy making culture to place the emphasis on improving the business climate and attracting jobs and investment.
That has required some tough decisions about shifting the tax burden and making government a lot more efficient - and smaller. But it is paying off. People with money are starting to notice that Michigan is no longer shackled to rust-belt policies that favored unions and viewed business as a cash cow to support entitlement programs.
Also give considerable credit to local venture capitalists who are putting their money where their homes are.
Among them are folks like Josh Linkner and Dan Gilbert and their team at Detroit Venture Partners, who are funding entrepreneurs committed to helping them rebuild Detroit. Among the firm's investments are Chalkfly, an online office supply company, and iRule, an Internet start-up that connects mobile phones to home entertainment systems.
These are the types of fast-growing businesses that have unique appeal to the young, college educated talent that abandoned Michigan over the past decade.
Michigan still has a long way to go to reach the top tier of states, those with more than $1 billion in venture capital lending - California, New York and Massachusetts. But it's headed in the right direction.
Twenty-three venture firms are now operating in Michigan, with $1.5 billion under management. The average fund is managing $75 million.
So it's still small in scope. But the encouraging news is that it is growing, and Michigan is getting noticed. When out-of-state funds investing in Michigan are included, the total under management swells to $3.7 billion, with $456 million available for new investments.
Slightly more than half of the investment is in life sciences start-ups. Manufacturing is drawing just 4 percent. The other large categories are information technology, media and alternative energy, again, fields that tend to draw younger, more highly educated workers.
Michigan is a good investment again. The confidence of investors is a good argument that the steps taken make to the state more competitive are paying off.