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Mon September 16, 2013
One investment fund bets big on Michigan
Can a Michigan investment fund make big money by investing only in mid-size Michigan companies?
That’s the idea behind the Michigan Prosperity Fund.
It’s the brainchild of Michigan native Martin Stein, founder and CEO of private equity firm Blackford Capital.
Stein previously based Blackford out of LA, but says he started noticing a trend: about 70% of the companies he invested in were in the Midwest and on the East Coast.
“So, on the business side, it made a lot of sense for us to be closer to where we were investing in companies,” says Stein.
So he packed up his family and Blackford’s HQ and moved them all to Grand Rapids.
“On the personal side, I just really like Michigan. We have three children, and we’ve added a fourth since we’ve been here. So we think it’s a wonderful place to raise a family and wanted to come back for that reason.”
Now, he’s getting the Michigan Prosperity Fund off the ground.
Here’s the general idea: over the next 10 years, the fund will buy majority shares in 10 midsize Michigan companies.
So far, Stein says they’ve bought two companies, including Custom Profile, which makes specialized components used in furniture making.
And they’re already adding jobs.
"We started off [at Custom Profile] with 165 employees and we have added another 25 positions to that business in the last year,” Stein says.
“So that's good growth, but I don't know if we'll be able to add 25 new employees every year."
Big picture, though, Stein says the fund could boost hiring on a larger level over the next decade.
"Per year, we could be creating somewhere around 250 jobs [in Michigan]. And over the course of a 10 year period, and over 10 companies, that could be substantially more: 2,000 or maybe 3,000 jobs.”
But this isn’t a charity, Stein says. The fund promises investors big returns for their money.
And so far they’re getting big names to put their reputations, and their money, behind the fund.
That includes former Michigan governor John Engler.
“Studies have shown that companies that receive private equity funding have a higher job creation rate, and higher revenue growth, than companies that don’t receive funding,” said Engler, according to a press release.
“Blackford’s Michigan Prosperity Fund is gaining momentum as a private sector solution to both job creation and preservation.”