MEDC forming two new investment funds

The Michigan Economic Development Corporation (http://www.michiganadvantage.org/) is forming two $6 million funds that plan to invest in 12 to 24 Michigan companies in four industries as part of the group's overall 21st Century Jobs Fund

True to the MEDC's mission of promoting economic diversification for Michigan, the investments will flow to businesses in the high growth potential sectors of life sciences, alternative energy, advanced manufacturing and homeland security and defense.

Each fund will be run by experienced professional investors on the verge of creating their own venture capital firms. These investors will partner with established venture capital firms in the state, who will be able to provide additional capital to the new companies as they mature, Ned Staebler, an MEDC vice president, explained to the Detroit Free Press. A panel of investment experts will select the managers for the two funds from among the 13 applications received by the MEDC.

Not everyone agrees that the new funds are the best way to spur economic growth. Ken Rogers, executive director of Troy-based Automation Alley, Michigan's largest technology business association, advocates putting the money to use at existing funds that have already produced good results, such as the one his group runs. "Why not fund what works?" he told the Free Press.

But Staebler argues that existing funds lack professional portfolio managers and strong links with venture capital firms. "It's a different piece of the puzzle," he said.