Tom Walsh: Michigan gains entrepreneurial ground, still could stumble

Michigan continues to gain ground in its entrepreneurial climate and the availability of venture capital, two studies released today show.

But that momentum could be stunted because of poor infrastructure, both physical and intellectual.

“The numbers are all good,” Gov. Rick Snyder said in an interview, referring to Michigan ranking sixth among the 50 states in entrepreneurial climate based on the latest data from 2012, compared with a lowly ranking of 41st in 2007 and 2008 in studies by MiQuest, a Lansing-based nonprofit.

Last year, venture capital firms located in Michigan managed 50 funds with more than 422 active portfolio companies, a 41% increase from 2010, according to the Michigan Venture Capital Association. Michigan had a record $1.6 billion under management last year. And a record 40 VC investments were made in Michigan companies last year, although the total dollar volume of $120 million was lower than in the three prior sign

Charlie Rothstein, managing director of Beringea, an investment firm with with offices in Farmington Hills and London, said Michigan’s reputation as a place to start and grow a business has improved greatly.

“Ten years ago, when I would tell people around the world that we were located in Michigan, they’d say, ‘What are you doing there?’ Today they completely understand. Our cost of living is lower, our work ethic and research and development assets are stronger than other places, and the Detroit entrepreneurial story is getting out there,” he said.

For the past decade, MiQuest has compiled an annual entrepreneurial score card benchmarking Michigan against the other 49 states. Michigan has shown rapid improvement on the policy-related economic climate category, rising to sixth place. It scored well in growth and momentum, rising from 39th to 21st in MiQuest’s entrepreneurial change category, but gained ground more slowly in entrepreneurial vitality — from 35th to 30th — on that index, which is more influenced by long-term economic data.

Despite the decade-long improvement on all three indices, the MiQuest report also stated that “dismal infrastructure performance threatens the competitiveness of Michigan’s entrepreneurs.”

When I mentioned that to Snyder, he replied, “There’s a message out there that we need to invest more in roads,” an issue where the state Legislature has been slow to approve as much money as Snyder has requested to to fix Michigan’s crumbling roads.

Snyder also cited talent as a key ingredient for future progress. The education of Michigan residents, particularly in math and the sciences, must improve. “And the whole issue of immigration becomes more relevant,” he added, noting that many of those earning PhD and master’s degrees — and starting companies — are immigrants.

“Work remains to be done if Michigan is to be counted among the nation’s top entrepreneurial states,” the MiQuest report stated. “In our fast-changing economy, Michigan’s recovery has to include an increasing diversity of successful entrepreneurs innovating in substantial ways.”

In other words, fix the infrastructure. That means focusing on the intellectual infrastructure (talent) as much, or more than just the physical infrastructure (roads).

By Tom Walsh, Detroit Free Press

Contact Tom Walsh: 313-223-4430 or, also follow him on Twitter @TomWalsh_freep.


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