The March 27, 2024 meeting opened on Zoom 28 members on zoom) and in person at the University of Michigan’s Anderson Room. Zoom etiquette was provided by Leo Shedden.
At 12:31, President Foster called the meeting. Tom Strode led us in “The Star-Spangled Banner”. Inspiration was provided by Ginny Leone who read Maya Angelou’s poem “I Learned”. Don Duquette led us in “Kansas City” by Rodgers & Hammerstein with some creative modified lyrics to fit today’s speaker.
President Foster welcomed members & guests and thanked today’s meeting volunteers. Guests were introduced. Birthdays and RCAA anniversaries for the week were recognized. President Foster shared some amusing anecdotes.
District Governor Collyer Smith was next up at the podium to promote the District Conference scheduled for May 17-19. There are many reasons to attend and Collyer highlighted the three main reasons – one being a focus on youth. He encouraged RCAA members to attend and especially thanked the efforts of Rob Shiff for his involvement and assistance with the conference. If you can host those coming from out of town, please contact Rosemarie Rowney. There’s an early bird discounted registration fee if you register by the end of the month.
Dennis Powers mentioned that the second pillar of Rotary is international service and he introduced Rotaractors Lian Do, Alexander Devine, and Leif Phillips who participated in a recent service project in El Provenir, Honduras.
The goal was to improve literacy rates in the area and to do this, they focused on repairing a classroom floor that was experiencing flooding due to the floor being too low and also accumulation of dust. Another focus on the project was to construct a make-shift library. The students started early each day to beat the heat and allow for free time during the afternoon to explore the area. The first two work days were spent digging holes to insert PVC pipes that were used to elevate the floor. The next two work days were spent cleaning up the classroom including power washing the room followed by painting the walls and floor with special paint that prevents accumulation of dust. The off-site excursions included visiting a waterfall, hiking up to a watchtower, going to the beach, a boat tour and kayaking. The main excursion on the Saturday after finishing the work and visiting islands that were close to Honduras and snorkeling.
President Foster reminded Committee Chairs that budgets for the next Rotary year are due so committee members please work with your Committee Chair to make any budget requests.
Dallas Dort introduced today’s speaker, Chris Rizik, founder and CEO of Renaissance Capital. Renaissance Capital was formed in 2008 by a consortium of major companies who are focused on start-ups to connect them with major corporations looking for innovation. Rizik is also the founder & CEO of Soul Tracks which is the leading on-line forum for soul music.
Rizik’s presentation focused on what is going on in SE Michigan and Ann Arbor in venture capital (VC). The reason for founding Renaissance was to bring funds for start-ups to Michigan rather than the usual VC funding focus which has been the west coast. It’s been successful in that almost $3B in capital for start-ups has been attracted. Renaissance has received national recognition and its “Michigan Model” has been replicated in Ohio, Texas & Wisconsin.
What is venture capital? VC is active private equity investing in early stage companies – not just financial investing; it is private – stock purchased is unlisted, unmarketable; focus on early stage companies – some are pre-product,many are pre-revenue, and nearly all are not yet profitable; high risk, high return investing. In the end, it is all about buying & selling stock.
Why do we care about VC? It is the driver of economic growth in the US over the last 40 years. VC legacy companies account for 11% of US jobs, 21% of GDP. VC-backed companies grow 50% faster & add jobs at 8x the rate of other companies. VCs provide solid investment returns and the jobs created with VC-backed funds average more than $70,000 in pay. Eight of the ten largest companies in the US have VC backgrounds. It increases wealth & opportunity in the region. What is happening now nationally? A decade of continuous BC growth ends. VC reached its peak heat in 2020-21. Late 2022 began a cooling that continues to this day due to high interest rates which changes the market dynamic, IPO’s, SPAC’s and acquisitions of startups slows, and “tourist” investors are moving on. VC exits are at their lowest levels in a decade. We are now at historical levels so it’s not all bad news.
What is happening in Michigan? Michigan is cited by “Crunchbase” as the fastest growing state for venture capital 2016-20. Increase in investment went up more moderately so investments are decreasing more slowly. Renaissance has an “UnDemo Day” virtual event to attract national VC funds to our region and identifies 50-100 best Michigan startups. Local companies are introduced to hundreds of venture capitalists from around the country. The UnDemo Day extends the platform to focus on attracting capital to diverse founders.
Where are the top startups in Michigan? Cities in which the most Michigan startups received VC investment last year include: Ann Arbor (34), Detroit (28), Grand Rapids (19), Birmingham (8), East Lansing (6). What is U-M’s role? Last year, 25 startups were launched which is one of the highest in the country.
Rizik then talked about U-M’s role with VCs. U-M has a developed mentor network and provides paid mentors to help startups coming out of U-M to allow them to be more successful. Accelerate Blue Fund is also another initiative which is investing in U-M spinouts which has invested $4.3mm in 20 companies so far. The results in the first two years include: $37 of VC investment for every $1 of Accelerate Blue Investment, 75% of companies have an underrepresented founder and/or CEO, 90% of companies have a presence in Michigan. Because of the success of Accelerate Blue Fund – the state has funded the Michigan University Innovation Capital Fund which is led by U-M. It provides $5mm focused on investing in university research based startups in Michigan and will enable other, less developed university startup ecosystems.
Where do we go from here?
Challenges and Opportunities include the following. It is a difficult macroeconomic environment for startups but Michigan is less volatile than nationally.. Other regions are not standing still. State support has decreased, but now more attention is being paid and more funds are coming. Where will game-changing technology come from? Our universities are playing a tremendous & increasing role. Ohio has had much higher growth than Ann Arbor but we are optimistic based on more investments coming. Can we keep companies here? This is still a challenge, but the increase in capital & talent puts us in better shape than ever.
Quote for the Day: “The Four Way Test”
Of the things we think, say or do: 1) is it the TRUTH? 2) Is it FAIR to all concerned? 3) Will it build GOODWILL and BETTER FRIENDSHIPS, 4) Will it be BENEFICIAL to all concerned?
President Foster adjourned the meeting at 1:30.
Respectfully submitted by,
Jennifer Fike
Note: This meeting was zoomed live but was not recorded for later viewing.
