State VC fund to get at least $7.5 million
BYLINE: Tom Henderson
A dry spell in new investments by the state's 21st Century Investment Fund should end Wednesday, with the expected approval by the Michigan Strategic Fund Board of an investment of at least $7.5 million in one of the state's VC companies.
The $109 million fund, financed by tobacco-settlement money, is managed by New York City-based Credit Suisse First Boston, which makes recommendations to the Michigan Strategic Fund Board about who gets investments.
The fund made its first investments in January 2007, to Ann Arbor-based Arboretum Ventures and to San Francisco-based Nth Power, and made its sixth and most recent investment in August, in Ann Arbor-based Ardesta L.L.C.
Kelly Williams, managing director at Credit Suisse and co-leader of its investment group, said the fund is mandated by legislation to invest the fund within three years and is on track to do so, despite the six-month delay since the last investment.
``We have a bunch of stuff in the hopper, going through due diligence,'' said Williams, who said the fund hopes to announce its first investment in a mezzanine fund, a fund that provides subordinated debt to help companies grow as opposed to venture-capital and private-equity companies, which acquire equity in companies with their investments.
Of the first six fund investments, four were in VC companies - the other was to Wisconsin-based Venture Investors in March - and two were to private-equity companies, New York-based Quad Partners and New York-based Relativity Fund L.P., both in June.
``We've gotten a couple of responses from mezzanine providers, and we're working on that now,'' she said.
Williams said the 21st Century Investment Fund has committed $55 million. A companion fund that Credit Suisse manages, the $95 million Venture Michigan Fund, funded with a loan from German-based Deutsche Bank and available only to VC firms, has committed about $48.5 million, said Williams. It has made six investments, the last two in January, to Ann Arbor-based RPM Ventures L.L.C. and to Kentucky-based Chrysalis Ventures L.L.C.
Tom Henderson: (313) 446-0337, thenderson@crain.com