You can't have a successful entrepreneurial community without money. And that's exactly why venture capitalists play such a critical role in helping Michigan start-ups get up and running.
A new report from the Michigan Venture Capital Association tells us that 54 startups in Michigan got more than $222 million from Michigan venture capitalist firms last year. That's up 42% from the previous five years.
We hear that term "venture capitalist" a lot. Many people understand that they can help the economy and create opportunities, but how many really know what they do and how they do it?
To help get a crash course in Venture Capitalism 101, Stateside was joined by two guests who operate at different stages of the venture capitalism process.
"Our core job is to find really interesting opportunities," Ohmer said. "Different companies that are doing really interesting things broadly and decide whether or not we want to invest in them and help them grow so that they can hopefully, one day, make a lot of product or services and eventually create money.
Ohmer's company starts at the infant stages of the creative process where they are taking ideas and guiding them to the next level. Ufer's company operates in the "growth stage," where they take a business that's already established, and helps that experienced team take the next step.
"Most of our capital is going into product and services businesses," Ufer said. "You hear his term about capital efficiency. We care tremendously about where a company has gotten versus how much capital they've raised. So a lot of the teams that are the most impressive to us have bootstrapped for a long time. They have self-funded. They have found grant dollars or other cheaper capital ways of growing.
"If you've gotten to a meaningful-sized businesses where we're going to invest by taking on very little capital, it's a great sign of a good business model, a good entrepreneur and something that we want to be involved with," Ufer added.
Listen to the full interview below to hear about how important venture capitalists are to entrepreneurial businesses, and some of the success stories they both have had here in Michigan.
The Next Idea is Michigan Radio's project devoted to new innovations and ideas that will change our state.