Ann Arbor SPARK Receives $8 Million to Create Michigan Pre-Seed Capital Fund

Ann Arbor SPARK, the driving force in establishing the Ann Arbor region as a destination for business expansion, retention, and location, was recently awarded $8 million from the Michigan 21st Century Jobs Fund. The funding will be used to create the Michigan Pre-Seed Capital Fund, an equity fund that will invest in technology-based companies to support business formation and acceleration.

“Support for technology-based start-up companies through the Michigan Pre-Seed Capital Fund will provide a strong catalyst for jobs creation and growth throughout the state, contributing to Michigan’s emerging entrepreneurial-driven economy,” said Ann Arbor SPARK president and CEO Michael A. Finney. “By matching funding from third party sources, such as venture capitalists and angels, the Michigan Pre-Seed Capital Fund will serve as a signal to investors that Michigan is committed to supporting entrepreneurs and developing a robust 21st century economy. The Fund is great news for entrepreneurs, investors and high-tech communities throughout the state.”

The Michigan Pre-Seed Capital Fund is a collaborative effort of Michigan’s 11 SmartZones. Each SmartZone is responsible for recommending an investor to the Michigan Pre-Seed Capital Fund review board. Ann Arbor SPARK will serve as the Fund’s administrator, with Skip Simms as its director.

To qualify for the Michigan Pre-Seed Capital Fund, start-up companies must be representative of one of state’s identified competitive technologies and have the sponsorship of its local SmartZones. In addition to SmartZone sponsorship, companies must have received grant, angel or venture capital funding greater or equal to funding requested of the Michigan Pre-Seed Capital Fund.

The Michigan Pre-Seed Capital Fund’s terms will match the terms of a recipient’s agreement with the third party investor. The Michigan Pre-Seed Capital Fund is an equity investment fund and, as such, will receive the same returns as the third party investor.

“The Michigan Pre-Seed Capital Fund is focused on providing funding to companies with a market-ready product that need financial assistance to support myriad needs, such as employment of marketing, sales, and leadership professionals, or initial customer acquisition,” said Skip Simms, the director of the Michigan Pre-Seed Capital Fund. “The collaboration of SmartZones, Ann Arbor SPARK and universities is indicative of wide-spread recognition for this type of assistance for early stage companies.”

Investments from the Michigan Pre-Seed Capital Fund will be determined by the Fund’s review board, comprised of 11 professional investors. Each SmartZone will recommend and provide investors for the Fund’s review board.

“The Michigan Pre-Seed Capital Fund is a terrific initiative that will demonstrate to investors that entrepreneurs in the state have the support of their local communities and business accelerators,” added Tom Kinnear, chair and president of the Venture Michigan Fund. “The resources made available to support emerging business is a key consideration of any investor; the Michigan Pre-Seed Capital Fund is sure to attract attention and interest in Michigan’s emerging companies from venture capitalists, angel and other investors.”

Ann Arbor SPARK will begin accepting applications for funding through the Michigan Pre-Seed Capital Fund in late 2006.