The Michigan Deal the Money and the Companies Getting It

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WINTER 2014 The Michigan Deal The money and the companies getting it

One idea ... and a $200 million exit Vic Strecher’s path from prof to entrepreneur – and more than 50 other university spinoffs

Update on Michigan’s VC scene | Deals executed across the state | Startup contest winners CDB Living In The D_New CD Magazine sized 11/11/2014 1:55 PM Page 1 20141208-SUPP--0001-NAT-CCI-CD_-- 12/2/2014 2:41 PM Page 1 About this issue

here are things that many of us have in common with Vic Strecher. T In particular, he saw an entrepreneurial idea that went beyond the scope of his job. I think that’s something most of us have in common with him, at least in having a business idea cross our minds. Here’s where we (at least most of us) are different. His idea turned into a business with $20 million in annual revenue and was sold for a sum near $200 million. We can all hope to get there someday. Inside the pages of this supplement, though, you’ll find lots of businesses on the same track Strecher and his HealthMe- dia followed. It started in a university research department, it was fostered by the university itself, and then spun off as a business. That process, spinning off a business from a university program, is the focus of this issue of the Michigan Deal. Starting on Page 10, you’ll find five stories of university spinoffs, followed by a compilation of companies that have come out of Michigan universities in the last three or four years. For some background, the Michigan Deal is a twice-a-year project that Crain’s has been fostering since 2012. The goal is to highlight the investment in companies across the state. Universities, as Tom Henderson reports on Page 3, are a fer- tile ground for startups. And it’s been attracting investment. Investment. Other than the business idea — perhaps more so than the idea — that’s the key to turning an idea into a business. Well, the money is here. Daniel Duggan In an update on Michigan’s venture capital outlook, Gary Managing Editor/ Anglebrandt reports on Page 20 that while the number of Custom and Special Projects deals in Michigan is down, the actual dollars invested in 2014 Crain’s Detroit Business will stand out as a positive story. So, whether your idea is the next $200 million exit — or just something that can support itself — hopefully there’s an in- spiration among the business stories in this special edition.

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FOCUS ON: University spinoffs Tech transfer Change Get The spinoffs 3 goes to school 5 makers 8 connected 16 of Michigan Michigan universities capitalize Key players in the Professors looking to be startup Businesses that have been on growth of state VC industry. development of university CEOs have pitfalls and traps to created out of university spinoffs in Michigan navigate, but there are also research departments plenty of returns. Read how to turn an idea into a business. From idea to innovation to business Five stories of startups that started off as university research projects

10 11 12 13 15 HealthMedia EndresMachining Lumigen IntraLase TempoRun A digital solution to help Cutting tools for the A chemical agent to Lasers created for App to match music people focus on wellness industrial sector detect diseases in a the medical industry to running pace person’s blood

FOCUS ON: Deals and investments Highs and lows Deal briefs Startups 20 Venture capital situation for 22 An overview of venture capital 28 Michigan: fewer deals, more and M&A coverage from past and pitches money Crain’s and MiBiz issues A look back at pitch competitions across Michigan and the startups that prevailed

About the writers: ■ Gary Anglebrandt is a Detroit- ■ Anna Clark is a freelance jour- ■ Tom Henderson has been a re- ■ Doug Henze is a metro Detroit based writer and editor with more nalist living in Detroit. Her writing porter at Crain’s Detroit Business journalist who has covered busi- than 10 years of experience in jour- has appeared in The New York since 2005 and covers banking, pri- ness, the environment and public nalism and corporate communica- Times, The New Republic, The vate equity, venture capital, account- policy issues for more than two tions. A native of Michigan, he lived American Prospect, Grantland, ing, technology transfer and early- decades. in South Korea for five years, edit- NBCNews.com, the Columbia stage tech companies. A political He has served as a beat reporter ing English-language news for Ko- Journalism Review and other publi- science major from Michigan State for five Michigan newspapers, in- rean media outlets and covering cations. University, he previously was a cluding The Oakland Press, The the automotive industry for Auto- She edited A Detroit Anthology sports writer at the Detroit Free Bay City Times and The Midland motive News. He currently works (2014), and she is the founder of Press, where he covered the Detroit Daily News, winning awards for as an editor and freelancer and as Literary Detroit. Red Wings and University of Michi- coverage of urban sprawl, the sili- a public relations consultant. gan football. cone-gel breast implant controver- sy and other topics.

Design Copyediting Production Lisa Sawyer, Bob Allen Gary Piatek, Heidi Bitsoli, Bob Allen Wendy Kobylarz

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Tech transfer goes to school Michigan universities capitalize on growth of state VC industry By Tom Henderson east or west is anything but. According to the annual report in May by the Ann Ar- hen EDF Ventures launched in bor-based Michigan Venture Capital Ann Arbor in 1987 to invest in Association, there are 33 VC firms with W university-based technologies, offices in the state, 11 of them headquar- the University of Michigan had one per- tered out of state. And 94 out-of-state son working part time on technology firms currently have investments here. transfer. The most recent out-of-state firm to open an office in Michigan, in the Kerry- And at the time, the only other local ven- town district of Ann Arbor, is the Houston- ture capitalist in Southeast Michigan was based Mercury Fund, which announced Ian Bund. the opening in November and recruited “We were considered an oddity,” said Adrian Fortino, formerly a vice president EDF co-founder Mary Campbell. “‘You’re at Invest Detroit, to run it. going to fund a professor? Why would you Blair Garrou, a partner and co-founder of do that?’” the firm, said that Mercury is about to close Today, the tech transfer office at UM on a new fund of more than $100 million employs 28 and has a variety of entrepre- and plans to invest a fourth of it — or more neurial support services, including incu- — in Michigan, and plans to move other bator space at the school’s north campus Midwest companies it invests in here. for some of its licensed startups. “Ten years ago, something like that ab- Growth of UM’s tech transfer is mir- solutely never would have happened,” rored by growth of Michigan’s venture said Ken Nisbet, associate vice president capital industry. Funds that Campbell and for research and director of technology Bund were associated with, less than $10 transfer at UM. Another new arrival in the state, Chicago- million, are quaint by today’s standards. LON HORWEDEL A key development for university spinoffs based Baird Capital, opened an Ann Arbor Being an early adopter has been good to was the hiring of Ken Nisbet at the office in March, run by David Gregorka, a EDF. It has made a lot of money for its lim- University of Michigan’s tech transfer office co-founder in 1998, along with now-Gov. ited partners over the years through the in 1996. He remains at the university, as Rick Snyder and UM professor Vic Strecher, sale or public offerings of such university- associate vice president for research and of HealthMedia Inc., which was sold to director of technology transfer. licensed portfolio companies as In- Johnson & Johnson in 2008. traLase, HandyLab Inc. and HealthMe- ment’s senior director of licensing. Ken- In November, Baird finished raising its dia Inc. — deals that sold for $808 million, neth Massey, who had 28 years combined fourth and largest fund of $185 million. In $275 million and $200 million respectively. of biomedical research and business expe- April, that fund, Pfizer Venture Invest- Since its first investment in BioQuant rience in academic, pharmaceutical and ments of New York and Ann Arbor-based Inc., a UM spin-off, in 1988, EDF has in- biotech, was named senior director of ven- Arboretum Ventures LLC raised a $21 vested in companies spun off from Michi- ture development. million round of capital for NeuMoDx gan State University, Wayne State In June, Stephen Lanier, who had been Molecular Inc., a medical device company based in Ann Arbor. University, Purdue University and the associate provost for research and a pro- Both Gregorka and NeuMoDx are exam- University of Wisconsin. fessor of cell and molecular pharmacology ples of the serial entrepreneurship the area and experimental therapeutics at the Universities have taken notice. can now claim. The company was founded Medical University of South Carolina Universities around the state, even by Sundaresh Brahmasandra, one of the those not generally considered research in Charleston, S.C., joined WSU as vice founders of HandyLab Inc., and by Jeff universities, now employ vice presidents president of research. Williams, HandyLab’s CEO when the med- of research, most of them scientists with a The growth of tech transfer at institu- ical device company was sold in 2009 to history of creating companies and jobs, tions from Ann Arbor in Southeast Michi- New Jersey-based Becton, Dickinson and tech transfer is considered an integral gan to Michigan Tech University in the and Co. for $275 million. university function. far reaches of the Upper Peninsula has Based on that successful exit, the two Wayne State University is a prime exam- been intertwined with the growth of the had no trouble raising money for their new ple. state’s venture capital industry. company. When M. Roy Wilson, an ophthalmolo- “It’s been a spectacular change,” said gist and researcher who had been an exec- Bund. “There’s a much greater acceptance utive at the National Institutes of that building young technology-based UM was an accelerant Health, became president of Wayne State companies fits well with our economy in Campbell and other local venture capital- in August 2013, he immediately began fo- Michigan.” ists credit the arrival of Nisbet at UM’s tech cusing on improving the school’s tech- transfer office in 1996 and the naming of transfer operations. Mary Sue Coleman, a biochemist by train- In May, John Shallman, who had more VC helps fuel growth ing, as school president in 2002 for changing than 24 years of experience in technology VCs have become more commonplace the entrepreneurial culture at UM, tradition- commercialization, the last six as director than in the late ’80s, as have funds of $100 ally one of the highest funded public re- of commercialization at Beaumont million or more. And what was once a fly- search universities in the world. Health System, was named the depart- over state for venture capitalists heading See Page 4 WINTER 2014 Page 3 FALL 2006 20141208-SUPP--0003,0004,0005-NAT-CCI-CD_-- 12/2/2014 2:44 PM Page 2

From Page 3 “Tangent is a good example of that,” Snyder was an early investor in numer- said Petersen, referring to Ann Arbor- ous UM spin-offs and is credited with writ- Arboretum was founded with a fund of based Tangent Medical Technologies ing personal checks to keep the lights on at $24 million in 2002. Its third and largest Inc., a maker of intravenous catheters and HealthMedia during its toughest times. fund, of $140 million, was raised in 2011, a related products. “It came out of UM, and fund that was oversubscribed in part be- Flag- cause of the successful sale of such portfo- we set up an investment round with ship Ventures Federal, state lio companies as HandyLab, HealthMedia out of Boston. When Harry and Accuri Cytometers Inc. Wilcox of Flagship joined the round, there was never any talk about moving the com- changes helped Arboretum co-founder Tim Petersen re- pany to Boston.” The path to translating university re- calls an article in the late 1990s in the search to off-campus profits and jobs was Chronicle of Higher Education that asked Nisbet credited Snyder with jumpstart- laid out by the federal Bayh-Dole Act of why the second-best funded public re- ing the state’s VC community in 1997, 1980, which allowed universities and their search university in the U.S. was so bad at when he returned to Michigan from Gate- researchers to profit from inventions tech transfer. way, the California-based computer company where he had been president and funded by federal grants. “After that, the university made some COO and launched a $100 million VC fund Until then, inventions using federal policy changes that incentivized faculty to with his firm, Avalon Investments. funding had to be assigned to the U.S. gov- participate in tech transfer, and the school “It was a crazy amount of money at the ernment. built up its tech-transfer office,” he said. While this would eventually create a sea “They brought in Ken, who recruited a lot time,” said Chris Rizik, Snyder’s former partner and currently CEO and fund man- change, universities were reluctant to of good people.” change. It’s now easier to retain spin-off compa- ager at Ann Arbor-based Renaissance Ven- ture Capital Fund, a fund-of-funds. “Bayh-Dole got everything rolling, but it nies in Michigan as well. took probably 15 years for Midwest univer- “When we first started, there was a In the past, it was common practice for sities to really start thinking about spin-offs. strong feeling at universities that commer- out-of-state VC firms to invest in Michigan People at universities were afraid to spin companies and then insist they move to cializing technology compromised the things off. It was better to not do anything,” the east or west coasts. IntraLase, a maker university instead of enhancing it. said Jim Adox, the chairman of the Michi- of laser surgery devices that was spun out Snyder was an early investor trying to gan Venture Capital Association who runs from UM, moved to California by its in- pry technologies loose from universities. the Ann Arbor office of Madison, Wis.- vestors and then bought for $808 million “At the time, 1997, there was only EDF based Venture Investors LLC. in 2007. and Ian Bund, and when Rick came to Slowly, though, eyeing fortunes being Now, the subject of moving a portfolio town, it had a big impact. He had a lot of made by founders of companies in Silicon company often isn’t even discussed, now, money and was very aggressive in getting Valley, academics who once looked down said Petersen. things going,” said Nisbet. their noses at profit-driven research began

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to listen to investors wanting to license $150,000 awarded though a phase-one their work. Small Business Innovative Research grant Change makers Venture Investors was one of them. It from the National Science Foundation, Michigan’s community of investors was a pioneer in translating university re- to do small-scale prototyping and valida- and startups credit some key players search into jobs and profits, having been tion testing at Michigan Tech Universi- and policy changes with the founded in 1982 with a $7 million fund. It ty. The SBIR grant came with a matching development of the state’s tech now has more than $200 million under grant of $25,000 from the state’s Emerging transfer industry. management. Technology Fund. Since 1993, the firm has invested in 31 With that ease of deal flow, Fortino is Here are some of standouts: university spin-outs from nine institu- currently looking at a list of 75 different ■ Jan Garfinkle and Tim Pe- tions, and currently has 14 spin-offs in its technologies from UM right now for po- tersen: Co-founders of Arboretum portfolio, including three from UM — His- tential investment. Ventures LLC in 2002, they have toSonics Inc., a medical device compa- “It’s a fantastic time to be a VC,” said been a driving force in tech transfer ny; NanoBio Corp., a maker of topical Fortino. since. Their first fund was just $24 mil- anti-infective products and vaccines; Neu- lion, but their third and biggest fund MoDx; and Tissue Regeneration Sys- was oversubscribed at $140 million in tems, which makes devices to aid bone Worries starting 2011, largely on the basis of huge ex- and soft-tissue regeneration. its for its investors from such portfolio Nisbet said that the Michigan Eco- to fade companies spun out from UM as nomic Development Corp. deserves a The epicenter of VC investment remains HandyLab Inc., Health Media lot of credit for the healthier entrepreneur at the coasts, but key players are being Inc. and Accuri Cytometers Inc. ecosystem because of investment pro- courted. ■ grams it put in place to fund venture capi- Mary Campbell: Co-founded Charlie Moret, for example, was recruit- EDF Ventures, the state’s oldest tal firms willing to do business here, in- ed to TechTown in 2012 after spending 13 st VC firm, in Ann Arbor in 1987 with a cluding the $120 million 21 Century years in Connecticut, where he ran a $20 Investment Fund, the $95 million Venture million seed fund for startups and found- $6.5 million fund to invest in universi- Michigan Fund I and the $120 Venture ed CTech, an incubator affiliated with ty-based technologies. Michigan Fund II. Yale University and the University of ■ Ken Nisbet: His arrival at the “That provided incentives to get out-of- Connecticut. University of Michigan’s tech- state venture capitalists to look at deals “Everyone talks about Silicon Valley or transfer office in 1996 is seen as a here. It got good people here to help pull Route 128 in Boston, but for a Midwest key appointment. Under the universi- technologies out of the university. We state, this is the place to be,” said Moret, ty’s then-president, Mary Sue Cole- ended up with more venture capital com- who is president and CEO of Invest Michi- man, he was able to recruit key tech- panies, a bigger supply of portfolio com- gan, a Detroit organization affiliated with nology players. panies and a better supply of talent to run the MEDC that launched in May to run the ■ Rick Snyder: Long before poli- companies.” Michigan Pre-Seed Capital Fund 2.0. “What has set Michigan up for continued tics, he’s credited with jumpstarting “Wait 10 years and people will be flock- the state’s VC community in 1997. growth has been the culture change at the ing to Michigan.” He launched a $100 million VC fund universities, the investment participation There is also criticism by some local en- with his firm, Avalon Investments. by the state (retirement funds) and by foun- trepreneurs that venture capitalists have dations and, through Renaissance, the par- grown too cautious, are now leery of in- He was an early investor in many UM ticipation of the corporate community, vesting in pre-revenue companies, and spin-offs. both as investors and as strategic partners want to see quick exits from their invest- ■ Jim Adox: The chairman of the in portfolio companies,” said Rizik. ments. Michigan Venture Capital Asso- “I disagree with all of that,” said Lindsay ciation, he runs the Ann Arbor office Aspegren, a founding partner of North of Madison, Wis.-based Venture In- Night and day Coast Technology Investors LP, which vestors LLC, a pioneer of tech Adox was with EDF in 1997 when it spun is based in Ann Arbor and has an office in transfer that was founded in 1982. off some UM technology as a company Midland. North Coast launched in 1999 Since 1993, the firm has invested in called XTera Communications. and finished raising its first fund of $100 31 university spin-outs from nine uni- “It was such a challenging process to million in 2000. versities and currently has 14 in its spin it out. It took us over a year, and then Aspegren shared an anecdote that he portfolio, three of which are from UM. said sums up how far the state has come in it was hard to hire a management team be- ■ The Bayh-Dole Act of 1980: Al- cause there weren’t many local veteran recent years from its former status as a fly- lowed universities and their re- entrepreneurs,” he said. “Now, you can do over state. a spin off in three months and put a team “I had someone from the tech transfer searchers to profit from inventions together quickly.” office at MIT out to visit us three weeks funded by federal grants. It took 15 Contrast that with the current approach ago. We met at Café Zola. He wanted us years to get traction in the state but by Mercury Fund’s Fortino. to look at some of their companies,” he made a business case for universities. In May, while still with Invest Detroit, said. ■ Michigan Economic Develop- after meetings with researchers at WSU’s Someone from the hotbed of Boston in ment Corp.: Investment programs College of Engineering, Fortino invested Ann Arbor looking to get deals done? “Who helped fund venture capital firms will- $250,000 from the Detroit Innovate Fund would ever have thought?” asked Aspe- ing to do business here, including the to launch a new company, Detroit Ma- gren. $120 million 21st Century Investment terials Inc., to make cast-steel parts for “Venture activity is more sophisticated, Fund, the $95 million Venture Michi- the military, mining and off-road mar- now, it’s better funded, it’s better under- gan Fund I and the $120 Venture kets. stood than it’s ever been, and everyone Michigan Fund II. The company will use that money, and benefits.” WINTER 2014 Page 5 FALL 2006 DB magazine spread_CDB magazine spread 11/25/2014 9:43 AM Page 1 Congratulation to the Winners of Accelerate Michigan Innovation Competition the 5th Annual $1 Million Business Competition

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PROUD SPONSORS: 20141208-SUPP--0008,0009-NAT-CCI-CD_-- 12/2/2014 3:04 PM Page 1 Get connected Tech transfer office can help a professor turn intellectual gifts into gold

By Doug Henze

oming up with a technological breakthrough is a feather in a uni- Cversity researcher’s cap. But taking that brilliant notion, and forming a profitable business, involves another degree of difficulty. So professors and other researchers who want to turn their intellectual gifts into gold will probably need a little help along the way. “It takes more than a great idea,” said Paul Riser Jr., managing director of technology-based entrepreneurship for De- troit business incubator TechTown. “Pro- fessors sometimes are great technologists or great engineers and sometimes they don’t have the know-how, from a business perspective.” The place to start may be the university’s technology transfer office. “The sooner they engage with the office, the better,” said Riser, whose nonprofit group works closely with technology transfer offices at Wayne State University and other schools. The offices teach professors how to identify funding sources to help turn a research project into a for-profit enterprise. Make the right connections “One of the biggest challenges for faculty spinning off companies … is making the right connections to find strategic partners, investors or potential customers,” said Amy But- ler, executive director of OU Inc., the business Amy Butler incubator at Oakland University. “They often have key networks well established — in the research and develop- JOHN SOBCZAK ment focus — but may not have a robust A good idea isn’t the only thing that is needed to create a business from a university network in the needs and partnerships research project, it’s know-how that’s needed as well, said Paul Riser Jr., managing that are necessary to build a business.” director of technology-based entrepreneurship for Detroit business incubator TechTown. Technology transfer offices, as well as incubators, also help determine whether the singles and doubles while searching an idea is viable. for the home run.” Who owns it? “There’s a great learning curve about Technology transfer offices sometimes Then, there’s the question of owner- defining the market potential,” Riser said. work as a conduit for university depart- ship. “Speed to market sometimes is vital. (And) ments that otherwise wouldn’t communi- If a research team develops a process or it’s not always about having huge, success- cate, Riser said. By working together, the a product it wants to market, using univer- ful output. We don’t want to lose sight of result is better for all. sity time and equipment, who owns the

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culture is shifting in favor of the business instead of wanting to publish at all costs.” Professors spinning off companies often underestimate the costs of protecting in- You have to go to the university tellectual property, Alberdi said. “ “They believe just because they have a and work something out with them. patentable technology they’re free to develop that technology,” he said. Instead, You want to get all your ducks in they must conduct a freedom to operate assessment to ensure that someone else a row up front. doesn’t hold a patent that, in a general ” way, covers whatever specific product or Mark Cantor, president of Southfield law firm Brooks Kushman P.C. process they’ve developed. “You need to make sure … you know who the players are,” Alberdi said, explain- ing that the attorneys sometimes charge idea? and Cohn LLP in Ann Arbor. The law firm up to $100,000 for assessments. Licensees, “When I started in 1980, either the uni- gives annual lectures to university stu- not universities, typically pay the freight. versity owned everything or the professor dents and faculty on how to protect own- To keep that and other costs down, it’s ership rights. owned everything,” said Mark Cantor, in the interests of licensees to narrow the Brooks “If there are federal research dollars president of Southfield law firm scope of whatever they’re licensing, Parsi- Kushman P.C., awarded, the university owns all the tech- an expert in intellectual gian said. That’s where negotiations be- nology from that research,” Parsigian said, property law. tween professors and universities come in. summing up Bayh-Dole. While that was the practice then, it’s “You want to license the technology for The law also set up mechanisms for re- common today for universities and profes- as little cost as possible,” he said. “It’s in- searchers themselves to profit. The act sors to have a shared stake in a spin-off cumbent on the startups to do their home- does not apply to intellectual property cre- company. work and present a real business plan to ated by students, he said. “You have to go to the university and the universities.” work something out with them,” Cantor said. “You want to get all your ducks in a Avoid the pitfalls row up front.” Need for flexibility That task shouldn’t be such a daunting Spin-off companies need to make sure Universities, meanwhile, try to maintain one, considering that the researchers’ in- students assign technology rights to those flexibility when licensing a technology, terests are aligned — at least somewhat — startups, he said. Parsigian said. with those of the university. Not doing so is a key pitfall spin-off “If the licensee doesn’t do something “Historically, the reason the universities companies need to avoid. with that license, it goes back to the uni- (wanted to help researchers commercial- Another one involves the internal strug- versity,” he said. ize) is because they didn’t feel they were gle between professors as “publish or per- While academics are negotiating with leveraging their intellectual capital as well ish” academics and professors as business universities, it’s common to line up fund- as they should,” Cantor said. “Universities people, said Fernando Alberdi, also a ing, so everyone is a party to the negotia- used to do a lot of work and a lot of research Honigman partner. tion, Cantor said. but didn’t know how to monetize it.” “It’s normal for an academic researcher Business incubators assist with finding Now, Cantor said, he is unaware of a to want to go ahead and divulge informa- funding — including crafting proposals to university without a technology transfer tion,” he said, pointing to the need to re- federal agencies that provide grants — and office. ceive grants or other funding. But once the in providing other resources. “Generally, universities are not in the information is public, there’s a one-year OU Inc. has a technology innovation business of running businesses,” Cantor clock, in the United States, to protect it center that leases space to spin-offs, said. Instead, they license their technolo- with a patent application without hin- while TechTown has two “entrepreneurs gies to the researchers who developed drance from outside parties. in residence” who work with universities them and help them set up businesses, by “They have to be educated about that to help them see ideas with the most po- steering them toward resources. and may have to hold the publication until tential. “The more money the spin-off makes, the university has the ability to file a pro- “Being aware of the resources and the the more money the university makes,” tective application,” Parsigian said. “The overall ecosystem is important,” Riser said. Cantor said, adding that the university also gets recognition for being the source of a given discovery. “You can have it set up so the university receives a royalty. The university can own part of the company.” If there are federal research dollars Many times, the deal is cut before a pro- “ fessor begins his or her research, Cantor awarded, the university owns all the said. “The one thing I have noticed over the technology from that research. last 30 years is the increase in the business ” sophistication of professors,” he said. David Parsigian, a partner with Honigman Miller Schwartz and Cohn LLP Benefiting universities during negotiations with professors is the Bayh-Dole statute of 1980, said David Parsigian, a partner with Honigman Miller Schwartz

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On the following pages, five university spinoffs are profiled, offering a view of the progression from idea to startup, and They Did It in some cases, exit. Lesson to be learned: It needs to start HOW with a good idea, but, execution is a key to the deal. Patience and persistence Mentor is crucial to bringing idea to next level HealthMedia (Now known as Wellness & Prevention, a Johnson & Johnson company) University tie: University of Michigan Spun off from university: 1998

ealthMedia was born because Vic Strecher was frustrated. As a researcher in the University of Michigan’s School Hof Public Health in the mid-1990s, he was discovering that computer-tailored software could act effectively as a digital health coach to help people manage, for example, their hypertension, or their exercise routine. “We were finding really significant results when we could use computer software to mimic what expert (counselors) could do,” Strecher said. Plus, this was an inexpensive intervention that could be widely accessible to millions of people. But when the software was offered to the Centers for Disease Control, “what I got back was that people won’t be using the internet, and certainly not for their health,” Strecher said. He realized that if he wanted the idea to get outside the scholar- ly journals and actually have an impact on the world, he needed the private market. In 1997, Rick Snyder — now the governor of Michigan — contacted him with an offer of venture capital through Avalon Investments. Strecher talked with other VCs and had not been impressed. But he found Snyder to have an in- telligent and enthusiastic approach. They shook hands. Strecher served as CEO for two years before Ted Dacko took over and Strecher shifted to chief science officer. The company stayed alive through the dot-com bust, though Strecher had to put a second mortgage on his house and Snyder wrote another large check. Dacko’s tenure began in 2000, when the company LON HORWEDEL had 85 people — many of whom would be laid off as the company Vic Strecher founded HealthMedia while he was a researcher in navigated the “nuclear winter” of the bust, as Dacko put it. But the University of Michigan’s School of Public Health. It’s since when Dacko left the company in 2009, it had more than 200 em- been one of the best-known spinoff deals, selling for sum of ployees, including contractors. roughly $200 million. “My role was to figure out how take our products and build them into something scalable that fit into community needs,” aren’t fortunate in finding the right situations and right business Dacko said. HealthMedia had “one or two” products when he mentors, which he said he had with Snyder. “It does place a lot of took on the chief role. By 2009, it had “15 or 16.” pressure on your whole family and even your career, if you don’t The company was bought by Johnson & Johnson in 2008 for handle it the right way,” Strecher said. Patience — the virtue that a sum that is believed to be in the neighborhood of $200 million. paid off with HealthMedia — is painful. At the time, HealthMedia reportedly had about $20 million in an- To help others in the position he once was in, Strecher is now nual revenue. The university’s technology transfer office, which the School of Public Health’s director of innovation and social en- had equity, made about $17 million in the sale. The company was trepreneurship. He helps guide people in developing research eventually renamed Wellness & Prevention, but retained its into licensable concepts. They also bring a Hollywood screen- Ann Arbor home. writer to train researchers into how to tell their story in 30-sec- In shifting from the public university to the private market, ond, five-minute and 20-minute elevator pitches. Strecher’s first point of advice is that “it’s very difficult and not for “Most faculty would love to transcend their own disciplines and everybody.” help solve real-world problems,” Strecher said. “They want to make Not everyone has the same fire in their belly to have real-world a good impact on the world; they just don’t know how to do it.” impacts with their research, and some very smart people, he said, — Anna Clark

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Classroom to boardroom Professor learns the ABCs of starting a business

Running a company is vastly different Endres Machining that being a professor, he discovered. “I’m signing the front of paychecks now, Innovations not the back,” Endres said. “Employees, University tie: Michigan even if there are not a lot of them, rely on Technological University this for their mortgage payments and to Spun off from university: 2005 support their families. It’s a big responsi- bility.” illiam Endres was a professor of To do things right, he discovered that advanced machining at Michi- the people doing sales needed to have W gan Technological University technical expertise — which is why he is when he realized that he wanted to go be- on the road himself to let the industry yond the incremental work of writing pa- know about his new product. This helps pers. Instead, he wanted to have a trans- PHOTO COURTESY OF ENDRES MACHINING One of the machines developed by Endres the new company build credibility with formational impact on the industry. Machining Innovations. potential customers, while also giving En- So he founded Endres Machining In- dres a chance to learn from them and novations in 2005, with the support of the on passion alone,” Endres said. “You have scout their other needs — which may in university, which encourages faculty to got to understand the market and really be turn lead to new machining innovations. pursue entrepreneurial ventures. The addressing a major need.” Altogether, the necessary work of turn- company develops new machines for the In launching the machining company, ing a profit isn’t the primary driver for En- cutting-tool industry and offers engineer- he did things differently: He first spent dres: It’s impacting the industry for the ing services to customers. about a year reading up on accounting, better with what he sees as a game-chang- It was a risk, though. The nature of the taxes and the other essentials of running a ing product. industry requires substantial upfront in- business. “If it was only about making money, I vestment in machinery — Endres has in- “I wasn’t expecting to become an expert, wouldn’t be doing it,” he said. “It’s too vested in more than $1 million worth of but I needed to have enough understand- hard for that.” equipment — which is why the company ing to communicate with the experts.” — Anna Clark is just now in the process of launching its first product on the market. It’s called Re- vocut, and it is promoted as a device that delivers better cutting performance and more productivity while lasting longer than similar tools. Endres is in the MTEC SmartZone businesses accelerator, created by Michi- gan Tech and the cities of Houghton and THE STRENGTH Hancock. This is a substantial boon for the company — it wouldn’t BEHIND OUR be easy to build up the ® technical space it needs CLIENTS from scratch. The plan is for prod- Business leaders turn to Plunkett Cooney uct sales to be reinvest- for determined, distinctive and fearless ed in the company legal advice to achieve the right result through research and design, which in turn William Endres from the boardroom to the courtroom. will lead to new product development. Current gross revenue is roughly $500,000. Q Banking & Finance QBusiness Law & Litigation William Endres is running the company QReal Estate Law QEstate Planning & Business Succession while still working half time at the univer- QHealthcare Law QLabor & Employment Law sity, focusing on Michigan Tech’s senior design program in mechanical engineering, an entrepreneurial program for stu- ATTORNEYS & COUNSELORS AT LAW dents. There are a total of four employees. Randall R. Hall This isn’t the first business Endres has launched — soon after he graduated in the Business Law Department Leader 1990s, he and his college roommate devel- 248.901.4000 | [email protected] oped software for the industry. “What I learned there is that you can’t go Michigan • Ohio • Indiana • www.plunkettcooney.com

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Spinoff success WSU showed foresight in backing Lumigen Lumigen University tie: Wayne State University Spun off from university: 1987

hanks to a chemical agent supplied by Southfield-based Lumigen, a Tperson’s blood test can be analyzed to detect certain diseases, including AIDS, cancer, hepatitis and other illnesses. While the company was built from its work with amino acid testing, it is looking into doing more with genetic and molecular testing in the future. As Mark Sanderson, Lumigen’s research and development manager, put it, genetic testing is “faster, more accurate, and you can find different organic sub-types…This is an area that typically required a couple days to get your results, but with some new technology we’re working on, you could get your results in a couple hours.” Sanderson was a graduate student working with chemistry professor Paul Schaap at the time that Lumigen spun off from Wayne State University in 1987. PHOTO COURTESY OF HARLEY ELLIS DEVEREAUX This was in the very early years of start- Paul Schaap speaks at the ribbon-cutting for the A. Paul Schaap Chemistry Building on ups transitioning from the campus to the Wayne State University’s campus in 2009. Without the support of the university, he said, market — Lumigen was Wayne State’s very Lumigen would never have happened. first spinoff, in fact — and in many ways, the support the university provided Lumi- Beckman Coulter, a California-based gen’s success, retired from the university gen showed a remarkable level of fore- company with whom Lumigen had previ- in 2000 to become full-time president of sight. Sanderson said the university “bent ously collaborated, bought the company for Lumigen. He later went back to donate a over backwards” to supply the nascent $185 million in cash in 2006. In the year prior total of $11 million to the university. company with licensed technology from to sale, Lumigen had $33 million in revenue “Without the support we received from its departments. Lumigen also rented (with 40 percent of its sales coming from former WSU President David Adamany space at the university. Beckman Coulter) and 45 employees, who and the university’s Board of Governors Being a forerunner also meant that the retained their Southfield jobs. Lumigen re- and without the collaboration of the grad- modern-day best practices for support tained its distribution network even as its uate students of my research group, Lumi- had yet to be learned. products shifted to Beckman Coulter’s mar- gen would not exist,” he said at the time of “My sense is that universities have got- ket. the initial donation in 2007. “Without Lu- ten better (at incubating and spinning off A sign of how far university incubation migen, we would not have the resources to companies), and it’s become a more inte- and Lumigen have come? The university make this commitment.” gral part of their mission, if you will, to do remodeled its chemistry building. It’s With facilities that foster faculty-student spinoffs and look for outlets for technolo- named the A. Paul Schaap Chemistry interaction, the hope is to create an envi- gy developments,” Sanderson said. Building after the company’s founder. The ronment like the one where Schaap and Much has transpired in the years since. building houses the Lumigen Instrumen- Sanderson flourished — and the next ma- Lumigen bought out Wayne State in tation Center. jor lifesaving startup can flourish. 2003 for more than $10 million. Schaap, who had done well with Lumi- — Anna Clark

“ My sense is that universities have gotten better (at incubating and spinning off companies), and it’s become a more integral part of the mission, if you will, to do spinoffs and look for outlets for technology developments. ” Mark Sanderson, Lumigen’s research and development manager

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Laser focus Talent-nurturing environment key to IntraLase success

a registered trademark of Abbott, and its IntraLase Corp. technology is used to perform IntraLASIK University tie: University of Michigan eye surgery. Abbott is one of the world’s Spun off from university: 1997 largest consumer-facing health care organizations, drawing in about $22 billion in he idea behind IntraLase Corp. was a annual sales from 150 countries. The com- simple one: to produce safe and effec- pany employs 69,000 people worldwide, Ttive lasers for the medical industry, es- including 4,000 people in its medical op- pecially in eye surgery. With the use of a fem- tics division. tosecond laser that the company designed, “The Intralase laser technology platform developed and manufactured, IntraLase is an important part of Abbott’s current re- made it possible for surgeons to perform the fractive product portfolio,” said Krysta Pel- crucial first steps of LASIK eye correction. In- lagrino, Abbott’s director of public affairs. traLase also produced software and devices IntraLase, then, is considered one of the that support the technique. most successful startups incubated at the Ron Kurtz, then a second-year resident University of Michigan. with the University of Michigan’s Kel- The lesson it delivers is one that the logg Eye Center, formulated the In- PHOTO COURTESY OF ABBOTT LABORATORIES university leaders have told many times traLase concept after treating a patient The femtosecond laser that IntraLase over: Immense talent and ingenuity exist whose eye had been burned by a laser at designed, developed and manufactured on its campus. The gap isn’t in the ideas the Center for Ultrafast Optical Sci- makes it possible for surgeons to perform or even in the skill in translating great ence — but whose vision was unim- the crucial first steps of LASIK eye correction. ideas into marketable products: it’s in paired. Kurtz partnered with a physicist at deepening the pool of talent to support the university, Tibor Juhasz, and filed for a the long-term growth of startups. That patent in 1994. Patent expenses were paid 2007 by Advanced Medical Optics, or will take some longtime investment to by the university, and reimbursed years about $25 per share. AMO was in turn was build. later. In 1997, they prepared to spin off bought by Abbott in 2009. IntraLase is now — Anna Clark (though the university initially held a 25- percent stake in the new company). As an incubator, the university made it possible for Kurtz to prepare the technology and turn to colleagues — especially his department chair — for insight on the early stages of development. Kellogg also became one of the early adopters of the IntraLase LASIK technology. In 1998, the university entered into a licensing agreement with IntraLase that de- tailed how patent royalties would be distributed among the company’s founders and the university. Ultimately, the university earned more than $5 million from its investment in In- traLase and its creators. Two in-state investors — EDF Ventures and the Wolverine Venture Fund — made it possible for IntraLase to make the leap from idea to business. Their bets paid off. The company went public in 2004 and quickly made $84 million. Michigan, however, had reason for regret: In 1998, the company moved to Irvine, Calif. As Mike DeVries, managing director of Ann Arbor- based EDF Ventures, previously told Crain’s, “It moved to where all ophthal- mology companies exist, which is Irvine, Calif.” IntraLase has since become part of Ab- bott Park, Ill.-based Abbott Laboratories. It was bought for $808 million in cash in

WINTER 2014 Page 13 CDB Living In The D_New CD Magazine sized 11/21/2014 1:58 PM Page 1

MICHIGAN’S FUTURE IS IN COLLEGE

RESEARCH, ENTREPRENEURSHIP AND TALENT FOR TOMORROW

Michigan’s public universities are among Michigan’s strongest economic assets, accounting for an increasing share of research and development that fuels the innovation and entrepreneurship vital for our future, and providing businesses with the talented graduates needed for prosperity. One of the best ways to develop new innovations and businesses, create more and better jobs and make Michigan a Top Ten state is to invest in higher education. Governor Snyder and the Legislature supported that goal by increasing state support for university students over recent years – and it’s important that trend continue.

FOR MORE INFORMATION VISIT PCSUM.ORG. 20141208-SUPP--0015-NAT-CCI-CD_-- 12/2/2014 4:01 PM Page 1

Ready, set, go MSU’s support got TempoRun off to a running start TempoRun University tie: Michigan State University Spun off: May 2013

empoRun is an app that makes it easy for individuals to match their Trunning music to their running pace. It’s a simple concept that makes exercise more fun — and therefore makes it easier for runners to stay motivated. Available for free for iPhones through the Apple iTunes store, TempoRun categorizes the user’s music library based on the beats per minute of each song. So when a user runs at a certain tempo level — from walk- ing to springing — every song they hear on a shuffled playlist will be at about the same number tempo. The app also allows users to track their running stats — distance, paces and calories burned. Josh Leider conceived the idea while jog- ging in May 2012. A marketing student at Michigan State University at the time, he partnered with a friend who is an avid marathon runner, as well as a team of student developers in the university’s computer science program. TempoRun effectively spun off from the university after they graduated a year later. Along the way, it picked up some awards: MSU’s Eli Broad Business Pitch Competi- tion in 2013; the Student Startup Madness tournament at South by Southwest in Austin, Texas; and the Michigan GreenLight college division competition. The SXSW win earned TempoRun $5,000 from Google Cloud Platform to get its product to the market. “The university set us up to build an in- credible company,” said Leider, who now serves as CEO. He turned down a job offer in Seattle to continue guiding TempoRun. “Not only did they give us continuous funding, but they really helped guide us through the process of creating a company.” PHOTO COURTESY OF TEMPORUN This included legal guidance, financial TempoRun was created by students at Michigan State University. Founders, pictured above, include Phil Getzen, Benny Ebert-Zavos, Adam Proschek and Josh Leider. modeling, logo design and market analysis from The Hatch, the East Lansing business incubator sponsored by MSU, and Spartan der said that the company is currently seek- The university that incubated the idea is Innovations, which provides practical sup- ing and raising capital support in metro De- likely to “promote the heck out of any arti- port and training for MSU-born startups. troit. With additional capital, TempoRun in- cles or media released by your company” “Every MSU entrepreneur should be part tends to develop an Android version of the and willing to help out in other tangible of the Hatch,” Leider said. app and open its headquarters in Detroit. ways. This level of support, even when the TempoRun has more than 50,000 users. It Leider’s advice for others interested in start-up moves off campus, doesn’t strike has five employees — all five of the spinning a business concept off from the Leider as surprising. “Why wouldn’t they? If founders, three of whom work on the tech- university campus is to “stay connected … you’re successful, they look good, too.” nical side and two on the business side. Lei- especially in an entrepreneurial sense.” — Anna Clark WINTER 2014 Page 15 FALL 2006 20141208-SUPP--0016,0017-NAT-CCI-CD_-- 12/2/2014 4:02 PM Page 1

Spinoffs from Michigan universities

rain’s worked with the technology transfer departments of universities across Michi- of health management research and con- gan to find companies that have come out of university research departments. sultative expertise with powerful web- C Companies are arranged by university, and then alphabetized. Many companies based software to help organizations de- have drawn grants and investments, rather than earned revenue. In those cases where rev- velop healthy and high-performing enue numbers are available, it’s included. workplaces. This list includes companies that were identified by universities and responded to re- quests by Crain’s for information. Note: Due to the large volume of companies from the University of Michigan, only companies spun off in the last three years are listed. e-Sens Inc.

ment of a novel treatment for adrenal can- Salt Lake City University of Michigan cer, a rare endocrine cancer. Year created: 2012 The company is pre-revenue and has re- CEO/founder: Richard Brown ceived $16 million in VC funding. Developer of multi-parameter liquid AlertWatch Inc. chemical sensing instruments. Ann Arbor A majority of the company was spun out Baker-Calling of the University of Utah; however, many Year created: 2012 of the company’s patent licenses are Top executive: Justin Adams (dba Vesper) through UM. Founder: Kevin Tremper Santa Monica Still pre-revenue, the company has won AlertWatch develops real-time patient $80,000 in grants and raised $3.63 million Year created: 2012 monitoring dashboards to help hospitals in VC funding. improve clinical quality, provider work- Top executive: Matt Crowley flow and billing accuracy. Founder: Karl Grosh Funded by $400,000 in investments Baker-Calling develops piezoelectric from state organizations. MEMS microphones for test equipment, H3D Inc. hearing aids and consumer electronics. Ann Arbor The company has received $2.5 million Year created: 2013 Animal Diversity Web in grant revenue. Founder: Zhong He Ann Arbor H3D offers the Year created: 2014 Court Innovations world’s highest-per- Top executive: Tanya Dewey formance imaging H3D’s powerful Animal Diversity Web is an online data- Ann Arbor spectrometers based crystal cube base of animal natural history, distribu- Year created: 2014 on more than a tion, classification and conservation biolo- Top executive: MaryJo Cartwright decade of groundbreaking research in the gy at the University of Michigan and Founder: JJ Prescott highly ranked Nuclear Engineering de- building products based on that database. Court Innovations is developing and im- partment at the University of Michigan. Funded by $12 million in grants. plementing online negotiation systems for The company has won more than $20 courts and constituents. million in federal grants, including one of It has generated $3 million in grants. more than $2.3 million announced in Oc- Arborlight LLC tober 2012 from the U.S. Department of Defense to develop ultrasensitive, hand- Ann Arbor Diamond Kinetics held radiation detectors. Year created: 2013 Top executive: Michael Forbis Pittsburgh Founders: PC Chu and Max Shtein Year created: 2014 Inmatech Arborlight’s Daylight Emulation Sys- Top executive: CJ Handron tems deliver daylight quality illumination, Founder: Noel Perkins (Supercapacitor) tuned to geography and time, matching Diamond Kinetics is focused on bring- color, intensity and directionality of out- ing motion data and analytics to baseball Ann Arbor door conditions real time. and softball players of all ages and skill lev- Year created: 2014 Last year the company posted $300,000 els, as well as their coaches. Founder: Levi Thompson in revenue. It has $225,000 in grant fund- The company is pre-revenue. Inmatech is an emerging company dedi- ing and $500,000 in venture capital. cated to next-generation supercapacitors that incorporate low-cost, high-perform- Edington ing materials to optimize energy storage Atterocor for several key industries. Ann Arbor Associates Funding has come from two small-busi- Year created: 2013 Ann Arbor ness innovation grants totaling $610,000 Top executive: Julia Owens Year created: 2012 from the National Science Foundation Founder: Gary Hammer and CEO/founder: and smaller grants and awards, including Tom Kerppola Dee Edington $25,000 from the Great Lakes Entrepre- Atterocor is a drug development compa- Edington Associ- neur’s Quest business plan competition ny focused on the accelerated develop- ates marries 30 years Dee Edington in Lansing.

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Provider of energy storage solutions that chemical development. LectureTools Inc. deliver lower cost, longer life and im- Ann Arbor proved reliability by using patented tech- Year created: 2012 nology that adds dynamic controls and in- CourseWeaver Founder: Perry Sampson telligence to conventional energy East Lansing components. Developer of software products for Year created: Received $1 million in state incentives 2013 modern technologies, including cell- Top executive: phones, tablets and laptops that improve and a $5 million, low-interest loan from Huntington Bank. Robert Fulk the classroom learning experience for in- Integrates educa- structors and students. The company was tional content and acquired in 2012 by Echo360. student performance Ventris Learning so that you see how shared content is ef- Maize Analytics Sun Prarie, Wis. fective for students CourseWeaver CEO Nashville Year created: 2014 and others around the world. Robert Fulk Year created: 2014 CEO/founder: Robert Meyer Revenue was $700,000 in 2013, but the CEO/founder: Dan Fabbri Ventris Learning provides programs that company is also funded by $600,000 in Maize Analytics applies data analytics help teachers meet the unique instruc- grants. algorithms to health data to improve pa- tional needs of linguistically diverse and tient care and help preserve the privacy of other students who read at the below basic their health records. level on standardized tests. Diversified Natural Funded by $100,000 in grants. The company is pre-revenue and funded by angel investors. Products ONL Therapeutics Scottville Michigan State University Ann Arbor Michigan State University Year created: 2003 This industrial biotechnology company Year created: 2014 develops and commercializes products for Top executive: John Freshley AquaBiochip LLC chemical and healthcare industries. The Founder: David Zacks Lansing company operates two divisions: Natural A biopharmaceutical company commit- Health and Green Chemistry. Year created: 2007 ted to protecting and improving the vision Venture capital funding includes an Top executive: of patients with a range of retinal conditions Syed Hashsham unidentified amount from WestView by advancing technology to protect pho- The company commercializes novel in- Capital Partners and Tudor Ventures. toreceptors against programmed cell death. strumentation and services for rapidly and Funded by $2 million in grants. accurately conducting high-throughput diagnostics for pathogen identification in EduCog LLC air, food and water. PhasiQ Inc. The company is pre-revenue. Haslett Year created: 2005 Plymouth Top executive: Robert Fulk Year created: 2014 BioPlastic Polymers Integrates educational content and stu- CEO/founder: Shu Takayama dent performance so that you see how PhasiQ is focused on accelerating diag- and Composites LLC shared content is effective for students nostics and therapeutics development and Okemos and others around the world. The compa- addressing the growing need for high-qual- ny was acquired by CourseWeaver in ity, low-cost multiplex immunoassays. Year created: 2003 February. Funded by $180,000 in grants. Top executive: Dr. Ramani Narayan The company researches, develops and commercializes products based on annu- GEMA Diagnostics Inc. Sen Sigma ally renewable resources. Contract research comes from federal and other Ann Arbor Ann Arbor agency funds and various corporations. Year created: 2004 Year created: 2013 The company is funded by $500,000 in Top executive: David Repp CEO/founder: Jyoti Mazumder grant and contract funding. Improves fetal health and reduces phys- SenSigma produces sensors for real- ical and emotional burdens on women un- time defect and quality evaluation for weld dergoing infertility treatment by giving in various manufacturing processes using BoroPharm Inc. clinicians solutions to select the healthiest smart spectroscopic monitoring systems Novi oocytes and embryos. Revenue in 2013 was $250,000. The com- The company received an $800,000 pany is also funded by $900,000 in grants. Year created: 2005 grant from the Michigan Economic De- Top executive: Todd Zahn velopment Corp. as well as seed money Develops and manufactures chemical from Ann Arbor-based venture-capital Spider9 building blocks to organizations who uti- firm North Coast Technology Investors lize boron containing intermediates to LP and another unnamed investor. Northville produce marketable products with unique Year created: 2012 and functional characteristics. Founder: Kang Shin Grant funding includes $475,412 for See Page 18 WINTER 2014 Page 17 FALL 2006 20141208-SUPP--0018,0019-NAT-CCI-CD_-- 12/2/2014 4:53 PM Page 1

From Page 17 (lighter and stronger than traditional high Phenometrics Inc. strength steel) for applications in defense, Lansing off-highway, tooling and automotive in- Monarch Antenna Inc. Year created: 2011 dustries. The Detroit Innovate Fund has invest- Ann Arbor Top executive: Michael Chaparian Phenometrics Inc. is dedicated to accel- ed $250,000, and the company has also re- Year created: 2007 erating algal discoveries and enhancing ceived a number of grants. Top executive: John Carney the production capabilities of algae and al- Monarch Antenna’s patented Self-Struc- gal products. turing Antenna improves the reliability of the Funded by $300,000 from Automation Functional Fluidics wireless link by reconfiguring its electrical Alley’s seed fund, $127,000 from Virtual Grosse Pointe Park shape to maximize the signal-to-noise-ratio. EM Inc., $110,000 from Rajant Corp. Year created: 2014 Grant funding includes $200,000 from Revenue in 2013 was $1 million. the National Institute of Standards and Top executive: Technology, $127,000 from Virtual EM Patrick Hines Inc. and $110,000 from Rajant Corp. The Retia Medical LLC Developing novel company also received $300,000 from Au- processes and meth- tomation Alley’s seed fund. Revenue for East Lansing ods to measure 2013 was $40,000. Year created: 2012 whole blood adhe- Top executive: Marc Zemel sion and thrombus Retia is an early-stage medical device formation in a high NamesforLife LLC company that develops software and throughput, in vitro diagnostic assay Patrick Hines, Okemos hardware for patient monitoring. founder of Functional The company received $7 million in ear- based on a microflu- Fluidics Year created: 2007 ly-stage funding from the Pritzker/Vlock idics platform. The Top executive: George Garrity Family Office. assay will address the need for measuring NamesforLife was founded to resolve the thrombosis and adhesion formation in ambiguity between nomenclature and bio- whole blood. logical objects and concepts. NamesforLife XG Sciences Inc. The company projects 2014 revenue of technology, N4L, makes names actionable. $100,000. Funded by grants from the Department Lansing of Energy and the state of Michigan. Rev- Year created: 2007 enue is under $100,000. Top executive: Philip Rose Lumigen XG Sciences Inc., previously named 10View LLC, was formed to manufacture Southfield nanoRETE Inc. and sell commercial quantities of a mater- Year created: 1988 Grand Rapids ial called xGnP Graphene Nanoplatelets. Founder: Paul Schaap Revenue in 2013 was $4 million. It has re- Lumigen researches, develops, manu- Year created: 2012 ceived a $50,000 grant from the Michigan factures and markets novel chemilumi- Top executive: Linda Chamberlain Economic Development Corp. and $1.1 mil- nescent compounds for use in life science Developing a platform to provide rapid lion from the U.S. Department of Energy. research and medical diagnostics. detection of pathogens and markers using In 2006, Lumigen was sold to Beckman- customized lateral flow biosensors. Coulter for $185 million. (See story, Page 12) The company received $500,000 from WayneWayne State State University University the Pure Michigan Venture Match Fund. Meditrina Niowave Inc. Advaita Ann Arbor Plymouth Year created: Lansing 2006 Year created: 2010 Top executive: Thomas Collet Year created: 2006 Top executive: Sorin Draghici, Ph.D. Developing and commercializing innov- Top executive: Terry Grimm Software development for the analysis, ative therapies (aromatase inhibitors) that Builds superconducting electron accel- interpretation and prediction of genetic treat women’s reproductive system disor- erators to tackle America’s high-tech chal- data. Advaita has a unique approach that ders with an initial focus on endometriosis. lenges in fields as diverse as health care allows its software to quickly identify the Received grant funding in the amount of and national security. mechanisms that may be causing the con- $3.8 million in 2006 and $200,000 in 2008 The company has received $3 million in dition being studied by researchers. from the 21st Century Job Fund Award. state funding Funded by numerous grants, including a $2.2 million award in 2011 from the Na- tional Institute of Health, followed by a NanoScience Opti O2 LLC $1.76 million Phase award in March. Pinckney Engineering Corp. Year created: 2012 Detroit Materials West Bloomfield Township Top executive: Ruby Ghosh Year created: 2005 Opti O2 was established to provide the No Permanent Space Yet Top executive: David Burnett world’s most robust dissolved oxygen sen- Year created: 2014 Manufacturing advanced nano-scale ma- sors for use in challenging environments. Top executive: Pedro Guillen terials to enhance the physical properties Funded by grants, including a 2013 De- The commercialization of novel high- of polymers in the automotive and pack- partment of Energy grant for $225,000. strength, low-alloy steels and cast irons aging industries.

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Received a Small Business Innovation Re- AquaGen services provide accurate ge- search Grant of nearly $100,000 from the Endres Machining netic identification of the biotype of fresh- National Science Foundation in 2005. water invasive species Eurasian Watermil- Innovations foil, enabling appropriate and effective Houghton treatment. It is still part of GVSU, not an NextCat Year created: 2006 independent business. Detroit Top executive: William Endres Revenue for 2013 was roughly $75,000. Year created: 2010 EMI develops and commercializes new Top executive: Steven Salley technologies in the cutting-tool industry, Chemical catalysts for use in biodiesel offering engineering and testing services to Fluition production that enable producers to use a support a customer’s efforts to reduce cost, Allendale wide variety of inexpensive feedstocks improve quality and reduce time to market. Year created: 2014 (waste vegetable oil, animal fats, residual Revenue for 2013 was $500,000. (See sto- Top executive: Kathryn Christopher corn oil) and convert them into biodiesel. ry, Page 11) Fluition, a student- launched business, is In 2010 the company received $250,000 in development of a variable “sit-stand-sit” in seed funding from the Michigan Pre- assist device that aids and provides quanti- Seed Capital Fund. It also was awarded Green Sand Inc. fied feedback during patient rehabilitation. $250,000 from Automation Alley in 2011 Honolulu Funding includes $30,000 won through and $500,000 from the National Science Year created: 2008 business plan competitions. Foundation in 2011. Chief environmental officer: Rhonda Goyke RetroSense Green Sand possesses a technology to OrthoForge Ann Arbor recycle copper-laden mining stamp sand Grand Rapids to produce roofing shingles. Copper is a Year created: 2013 Year created: 2011 desirable construction additive for its pre- Top executive: Top executive: Brent Nowak, Ph.D. vention of algae and mold growth. OrthoForge’s initial product will, in real Sean Ainsworth Ann Ar- Received a $50,000 loan from time, monitor and stimulate bone growth Gene therapy treat- bor Spark. ment to restore vision from injuries suffered in trauma. This in patients suffering dual-functionality is a first-in-class. from blindness due to Nano Innovations LLC The company is funded through $2.3 mil- retinitis pigmentosa lion in grants and $150,000 in investments. and advanced dry Houghton Sean Ainsworth, Year created: age-related macular founder and CEO of 2011 degeneration. RetroSense Top executive: Yoke Khin Yap Western Michigan The company was The company is developing technology University invested in through a venture capital related to synthesis and production of Western Michigan University round of $2.4 million, led by a San Diego boron nitride nanomaterials, a thermally firm, Nerveda LLC. conductive and electrically insulative mate- rial used in electronics and heat sink mate- CompTherapeutics Inc. Michigan Technological rials. Kalamazoo Funded by the NSF in the amount of Year created: 2013 $245,000 and Michigan Emerging Tech- UniversityMichigan Technical University Top executive: C. Richard Spates nology Funds in the amount of $25,000. Develops behavioral health software for Aerophysics Inc. use by health agencies, health profession- Upland Nanotech als, and consumer end users to address Allouez, Mich. psychological problems. Year created: 2009 Hancock The company is pre-revenue, funded by Top executive: Brad King Year created: 2012 $80,000 in grants. Aerophysics researches and develops Top executive: Thomas Daunais novel technologies for homeland defense Upland Nanotech developed a rapid- and space military applications. sensing technology used for food Micro Laser Assisted Revenue for 2013 was $500,000. pathogen detection and drug-level con- centration that has the ability to yield re- Machining Technologies sults within 20 minutes. Aursos Inc. The company was a 2013 finalist in the Ac- LLC Kalamazoo celerate Michigan Innovation Competition. Kalamazoo Year created: 2007 Year created: 2014 Top executive: Kris Aalto Grand Valley Top executive: Deepak Ravindra Aursos is developing a superior im- Grand Valley State University Micro-LAM’s precise technology im- plantable orthobiologic to address the State University proves productivity and quality, mini- rapidly growing multibillion-dollar bone mizes waste and reduces tooling costs for graft substitute market for bone voids, such industries as optics, semiconductors, non-union fractures and spinal fusions. AquaGen glass and metals, enabling companies to Received federal grants through the Allendale be more profitable. Small Business Technology Transfer Year created: 2010 It is pre-revenue, funded by $1.1 million program in the amount of $1.4 million. Project leader: Ryan Thum in grants. WINTER 2014 Page 19 FALL 2006 20141208-SUPP--0020,0021-NAT-CCI-CD_-- 12/2/2014 4:36 PM Page 1 VC highs and lows

By Gary Anglebrandt

Investment ationally, the year in venture capital is wrapping up as a strong one. NFor Michigan — yes and no. in Michigan The most recent MoneyTree compilation of U.S. venture capital investing data, released by PricewaterhouseCoopers sees fewer LLP and the National Venture Capital Association, shows Michigan deal volume at its lowest point in three years. deals in 2014, Dollars invested, however, show one of the best periods in recent history. The numbers, drawn from national sur- but more dollars veys of venture capital firms, show Michi- gan with seven deals in the third quarter this year, the slowest since the fourth quarter of 2011 when the same number was reported. Total deal volume in Michigan came to 32 by the end of the third quarter 2014, compared to 74 for all of last year and on par with 2011’s total of 34. Michigan’s total dollars invested, however, showed $167 million invested through the third quarter, trouncing last year’s total of $111 million with an increase of 50 percent. ® In Your Corner. The bulk of that, almost $115 million, came M&A Experience from the second quarter, Michigan’s best quarter by dollars invested since the first of We routinely represent and advise clients on transactions 2000, when $143 million was invested. with values exceeding $100 million, such as: Venture capital at the national level also had its biggest quarter since 2000, pump- ■ Offi ce furniture, home furnishings and equipment ing 13.5 billion into companies in the second quarter. That was the highest since manufacturer’s acquisition of a New York-based supplier the end of 2000, when the fourth quarter’s of performance-driven textiles ($156 million). $22 billion was actually the lowest of any quarter that year. Those were very differ- ■ ent times: 2000’s total was $105.1 billion, Sale of medical device products manufacturer to a leading compared to $29.8 billion last year. global surgical implant company ($135 million). This year is proving stronger, having already beaten last year’s total. Investors ■ Joint venture of manufacturer of high tech solutions for spent $33.1 billion through the third quarter. Deal volume, reaching 3,154 by the the automotive, furniture and appliance markets and a end of the third quarter, is on pace with billion-dollar global manufacturer. recent years. A flurry of mega-deals north of $100 million have driven the national increase, and software continues to be the hot sector attracting deals, along with biotechnology and media and entertainment. Legal Experience In Your Corner.® The big national deal that pushed the First Tier Ranking in second quarter so high was the $1.2 billion Pete Roth Corporate Law Contact at [email protected] that investors poured into Uber Tech- ■ Metro Detroit ■ Grand Rapids ■ Kalamazoo ■ Grand Haven ■ Lansing nologies Inc., the company behind the

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app-driven alternative to taxi cabs. That outside investors to the state’s VC deal- was the largest single deal since Pricewa- ings. terhouseCoopers began tracking in 1995. 32 The fund of funds is managed by “The second quarter was just off the Grosvenor Capital Management LP, a The number of venture capital deals charts. We don’t have quarters like that Chicago-based firm with $46 billion under by end of the third quarter 2014 very often,” said Mark McCaffrey, global management, previously owned by Credit software industry leader for Pricewater- Suisse. Those well-known names made it houseCoopers. “A lot of cash is coming easier for Michigan venture capitalists to into play, and valuations are reflecting the 74 get outside investors to participate here. competitiveness of deals.” Number of deals for all of 2013 “It primes the pump. I can go out to in- Private equity, corporate venture funds, vestors and say, ‘I have $10 million of my mutual funds and hedge funds have $100 million goal already. Do you want to jumped into venture investing to heat $ come in? I’ve been vetted by Grosvenor, things up this year. Active IPO and M&A they’ve checked me out,’ ”Adox said. markets are encouraging investors as well, 167million “Now, there’s no new fund. If that goes McCaffrey said. The third quarter contin- Total invested through the on, we’re going to see a noticeable drop in ued the trend, recording 11 mega-deals. third quarter of 2014 activity.” In that light, the Michigan situation looks a little troubling because Michigan’s $ The MVCA surveyed state venture- strong second quarter was because of one backed companies last year, and they re- large deal. 111million ported a total need of $260 million in the coming years. The association asked state This year’s 50-percent increase in dol- 2013 total VC firms how much they had reserved for lars invested mostly came from the $59.5 low high ones, as companies put the mon- these companies, and the number came to million second-quarter investment in Ply- ey they received to work, and firms’ re- $109 million. mouth Township-based biotechnology serves are down. Plus, for states like Michi- company ProNAi Therapeutics Inc., “Some (companies) might not deserve gan, whose VC industry has grown it, but I can easily say the gap is $75 mil- likely the largest investment round in state significantly but still remains a small play- history. (See story on Page 22.) Vivo Capi- lion. That’s a real need for real companies er, there are only so many companies to that should get the money,” Adox said. tal of Palo Alto, Calif., led the expansion invest in. stage investment and was joined by 11 According to the two most recent annu- “You could have $500 million that you’re other firms, most of them based outside al reports from the Michigan Venture Cap- willing to invest in Michigan and you’re Michigan. ital Association, Michigan’s fund of funds still not going to invest it all in 2104,” he The subsequent low number of deals in provided 13 to 14 percent of the capital in said. “The number of companies that are the third quarter matched its number of Michigan’s latest venture funds. (Those ideal candidates for venture capital money dollars invested, at just $14.5 million. figures include money from one privately- is just not there,” Van Winkle said. “I’m a little surprised at how low the sourced fund, the Renaissance Venture A longer timeframe is necessary when quarter came in,” McCaffrey said, reserv- Capital Fund.) judging VC activity, investors say. ing any speculation as to why it was low There is talk at the state level about Michigan Ven- until the year wraps up. “If it’s still down, Jim Adox, chairman of the launching some type of new fund of funds. ture Capital Association and head of the it’ll be interesting for the region going into The plan is to “put something in front of” Ann Arbor office for Madison, Wis.-based 2015” and an indicator that cash is going the Michigan Strategic Fund’s board, Venture Investors LLC, said the increase somewhere else. preferably next year, and then issue a re- in VC firms has led to two-thirds more ven- But “one quarter doesn’t tell the tale,” quest for proposals, said Paula Sorrell, vice ture-backed companies in the state. he said. president of entrepreneurship, innovation Michigan had 16 VC firms based in the Jack Ahrens, general partner at TGap and venture capital at Michigan Econom- state in 2009; that number increased to 23 Ventures in Kalamazoo, said his firm ic Development Corp. But nothing is last year. Out-of-state firms have steadily made one new deal this year and was dis- ready and there is no set timeline. appointed that it couldn’t find more com- been coming to Michigan; 10 had opened offices in the state as of the end of last year. “I wish I had an answer for that,” Sorrell panies to invest in, including ones they said. checked out in Michigan. New, smaller funds from firms like Huron River Ventures and Michigan Ac- Coming up with new sources isn’t going “This year, especially on the west side of to be easy. Michigan, has been a disappointment, celerator Fund are putting early invest- frankly,” he said, but noted his firm spe- ments into younger companies that set the The 21st Century fund had tobacco set- cializes in medical device companies that stage for another cycle of larger invest- tlement money as its source. The Venture faced new regulatory difficulties. ments, Adox said. That sets the stage for an- Michigan funds used bank debt. “I’m pes- simistic that we’re going to see a replen- Jeffrey Van Winkle, a Clark Hill PLC at- other healthy cycle in the coming years. ishment before we see some of the money torney who represents Michigan venture- One thing that could stifle that is a lack come back to the existing funds,” Van backed companies, said it’s never easy for of new state-backed fund of funds, which Winkle said. them to raise money, but this year has were a “key catalyst” in the cycle that’s been a notch more difficult. “There’s a now at its end, he said. There are pros and cons to having a big sense more money needed to be spent last The $109 million Michigan 21st Centu- fund of funds, said Ahrens. year than this year,” Van Winkle said. ry Investment Fund and $95 million Ven- “I’m on the fence. I’d rather see some A year like 2013, which had a high num- ture Michigan Fund I are fully commit- non-government entity get involved. ber of deals at a total of 74, “sucks up cated, as is the $120 million Venture Whether it’s a bunch of corporations get- pacity,” he said. The previous year also Michigan Fund II. ting together like with Renaissance, venture was an active one, with almost $246 mil- Michigan’s venture capitalists point to capital should be separated from the state.” lion invested through 52 deals in 2012. these funds as accelerants that grew the “But,” he added. “If no one steps up, it It’s not surprising for low periods to fol- industry by injecting capital and attracting should be the state.” WINTER 2014 Page 21 FALL 2006 20141208-SUPP--0022,0023,0025,0027-NAT-CCI-CD_-- 12/2/2014 5:01 PM Page 1

Deal Briefs enture capital and M&A activity has Kalamazoo, the Amherst Fund of Ann Ar- kept deal-makers busy across bor and the Grand Angels of Holland. Plymouth Ventures V Michigan. In January, ProNAi raised a VC round of tops goal, closes The following deals were reported previ- $12.5 million. At the time, the target of $30 ously in editions of Crain’s Detroit Business million was easily surpassed. fund at $61M and MiBiz. Ann Arbor-based Plymouth Ventures Grand River Aseptic finished raising its third and largest fund in July, surpassing its original target of $60 VC Investments Manufacturing million and closing the fund at $61 million. The venture capital firm, which targets raises $9.8M growth-stage companies in the Midwest, ProNAi closes on A $9.8 million investment that included has more than $100 million under man- money from a pension fund for Michigan agement. state’s largest VC public employees is allowing Grand River Since 2003, the firm has invested in 39 funding round Aseptic Manufacturing Inc. to fund its companies out of its first two funds. expansion. ProNAi Plymouth Township-based The capital infusion — led by the Mu- Therapeutics Inc., a maker of cancer nicipal Employees’ Retirement Sys- Grand Angels invest drugs, closed in April on what is believed tem — enables the Grand Rapids-based to be the largest single round of venture company to prepare for future growth with capital funding in state history, a Series D in trio of companies expanded facilities, new equipment and round of $59.5 million. additional staff, said President Tom Ross. in West Michigan The previous record is believed to have Grand River Aseptic could double rev- been set by Ann Arbor-based QuatRx In September, Holland-based Grand An- enues in 2014 and would likely do it again Pharmaceuticals Co., which raised a gels said it invested in three West Michigan round of $44 million in 2007. No official in 2015, Ross said. The investment was an- companies: Ablative Solutions in Kalama- database of venture capital funding exists. nounced in June. zoo, Tetra Discovery Partners in Grand ProNAi is expected to be gearing up for Grand River Aseptic produces sterilized Rapids, and Altus Brands in Grawn, near an initial public offering later this year. injectable drugs under contract for phar- Traverse City. The round was led by Vivo Capital of Palo maceutical companies and has primarily Ablative is working on a new treatment Alto, Calif., one of nine new investors in focused on producing small batches of for severe hypertension using catheters that the company. drugs used in clinical trials. With the new allow physicians to deactivate renal nerves. The oversubscribed round included pre- contracts, the company is moving into The Grand Angels investment enabled the vious investors Milwaukee-based Capital commercial production as a contract company to reach its Series B goal of $12.5 Midwest Fund, Apjohn Ventures of manufacturer. million. Tetra is developing a treatment for Alzheimer’s disease. Altus Brands helps develop companies in the hunting, shooting and outdoors markets. Grand Angels did not disclose the amount of each investment, although combined, the group’s members have put $2 million into eight companies in 2014. The organization has a goal of investing $2.3 million in 10 companies during the year. Vestaron raises $10M in C round for venom biotech Vestaron Corp. in Kalamazoo, a developer of biopesticides based on spider venom, raised $10 million in Series C preferred stock financing in August. Chicago-based Cultivian Sandbox Ventures, which spe- cializes in funding food and agricultural companies, led the group of investors that also included the Southwest Michigan LON HORWEDEL First Life Science Venture Fund, Open Mina Sooch helped found Apjohn Ventures LLC and led its investment in ProNAi Prairie Ventures, Michigan Accelerator Therapeutics, where she is now CEO. Fund I, and Pangaea Ventures.

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The funding will help Vestaron commer- ley Executive Search; and Dr. Frank The new $3.8 billion Beaumont Health cialize its first product, which received U.S. Saltiel, medical director of cardiology and consists of eight hospitals with 3,337 beds, Food and Drug Administration approval in an interventional cardiologist at Borgess 153 outpatient sites, more than 33,000 em- February. Health. ployees and about 3,500 volunteers. There are also more than 5,000 physicians that be- long to multiple physician organizations Startup LevelEleven Plex Systems closes and medical staffs. raises $2M in on $50M in financing VC funding for software production Detroit-based LevelEleven, a spinoff Plex Systems Inc. closed on $50 million from Pleasant Ridge-based Internet market- in new financing to accelerate sales and ing firm HelloWorld, announced in August marketing of its cloud-based manufactur- that it raised $2 million in new venture capi- ing software. tal funding, primarily from current in- The funding was led by institutional and vestors. hedge funds managed by T. Rowe Price Among the new investors in LevelEleven, Associates Inc., the company said in a July a sales motivation software company in the news release. Detroit Venture Partners portfolio, are Troy-based Plex previously received $36.5 the Dallas Angel Network and the Flori- million in funding from Palo Alto, Calif.-based da-based Tamiami Angel Fund. venture capital firm Accel Partners and San The funding is in the form of a convertible Francisco-based private equity firm Francis- note, which converts into equity once Series co Partners Management LLC. A funding is secured. Founder and CEO Bob Marsh said he expects LevelEleven to secure Series A funding within the next year. DVP was the lead on this latest round of Renaissance VC funding. invests $4M in Plymouth Venture III Kalamazoo VC The Renaissance Venture Capital Gene Michalski, CEO of the newly formed Fund, the Ann Arbor-based fund created by entity Beaumont Health fund raises $2M Business Leaders for Michigan, announced in April that it has invested $4 mil- toward goal lion in Plymouth Venture Partners III. Talmer Bancorp A new Kalamazoo-based venture capital PVP III is the latest and largest fund of fund closed on its first fundraising phase in Ann Arbor-based Plymouth Management to acquire two July, although organizers had hoped they Co., the venture capital firm founded by the would be closer to their $10 million goal. dean of Michigan’s VCs, Ian Bund. PVP III banks for $13.4M The Novus Biotechnology Fund I con- has a target of $60 million. Troy-based Talmer Bancorp Inc. (Nas- tinued to seek additional investors after That investment follows a recent com- daq: TLMR) announced in August that it has closing on $2 million committed from mitment in PVP III of $15 million from the agreed to acquire First of Huron Corp. of about 20 investors, an amount that’s less state’s $120 million Venture Michigan Fund Bad Axe and its wholly owned subsidiary, than co-managing partner Kevin McLeod II, managed by Southfield-based Signature Bank, in a deal valued at about expected to have nine months after starting Grosvenor Capital Management LP. $13.4 million. the process. PVP I was $23 million and PVP II $41 million. Under the terms of the agreement, each “The capital raise is a lot slower than we’d holder of outstanding shares of common like,” McLeod said. “We have to be much more stock of First of Huron Corp. will receive $25 aggressive and proactive in the approach.” per common share. The deal, which re- Novus Biotechnology Fund I invests in M&A deals quires approval from state and federal regu- startup companies that are commercializing new medical devices or technologies. lators, is expected to close in the fourth Formed last fall, the fund has primarily Three major health quarter this year or the first quarter next. targeted individual physicians who may First of Huron had about $228 million of want to invest in medical innovations in the systems merge in assets as of June 30. Talmer had assets of earliest stages of development and who can about $5.6 billion. participate in the due diligence to vet the Southeast Michigan ideas’ market viability. Three of Southeast Michigan’s major Michigan community General partners include McLeod, the health systems announced in September a managing director of the Michigan Med- merger of the systems. banks cash in on M&A ical Device Accelerator in Kalamazoo; The transaction was between Royal Oak- Greg Schultz, former executive director and based Beaumont Health System, Dear- Chemical Financial Corp.’s recently CEO of the Kalamazoo-based Borgess born-based Oakwood Healthcare Inc. proposed $26 million acquisition of Coldwa- Heart Center for Excellence and the pre- and Farmington Hills-based Botsford ter-based Monarch Community Bank is sent managing director at Schultz & Row- Health Care. See Page 25 WINTER 2014 Page 23 FALL 2006 CDB Living In The D_New CD Magazine sized 11/24/2014 3:40 PM Page 1

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From Page 23 registration statement for an initial public son City, Tenn., in September for $245.2 offering in November with the U.S. Securi- million in cash, $25 million in stock and the the latest community bank deal in a Michi- ties and Exchange Commission. assumption of $29.8 million in debt. gan market that has seen consolidation ac- A $250 million (annual revenues) supplier tivity pick up in 2014. Unique plans to raise between $14.93 million to $17.25 million in the IPO by sell- of components for fuel systems, engines, Midland-based Chemical Financial cut ing 1.9 million shares at a price range of $8 transmissions, power steering and electric the deal with Monarch, which has five of- per share to $10 per share. The pricing indi- motors, Autocam employs more than 2,100 fices in southern Michigan and assets of cates the supplier has a market cap of people at 15 plants in the U.S., Europe, $177 million, just days after closing on a roughly $81 million. South America and Asia. Autocam Founder $121 million acquisition of Northwestern and CEO John Kennedy became a “signifi- Bancorp Inc. in Traverse City. Northwest- Unique will be traded on the New York cant shareholder” of NN Inc. (Nasdaq: ern has 25 offices in 11 locations in north- Stock Exchange under the symbol UFAB. NNBR) and was named to the company’s western Michigan. No timeline has been set for the offering. board of directors in September. Chemical Financial has repeatedly sig- Autocam made headlines last year when naled an interest in using acquisitions to Plymouth-based it challenged the Affordable Care Act in grow, as has Grand Rapids-based Mercan- court. Kennedy has an ongoing lawsuit be- tile Bank Corp., which closed on a $151.5 Metaldyne files for IPO fore the Supreme Court over a section of the million merger with Alma-based Firstbank ACA that requires employers to provide Corp. this summer, making it one of the Metaldyne Performance Group Inc. birth control coverage, which he opposes largest banks based in Michigan. filed with U.S. regulators in August for an initial public offering. on religious grounds. Out-of-state banks are also signaling their He told MiBiz that he planned to drop interest in the Michigan market with acqui- Plymouth Township-based Metaldyne Performance expects to raise $150 million Autocam Corp. from the lawsuit after the sitions of homegrown community banks. sale of the company, but would proceed Old National Ban- in the IPO, according to documents filed Evansville, Ind.-based with the suit through his closely held Auto- corp United Ban- with the U.S. Securities and Exchange Com- bought Ann Arbor-based cam Medical business, which was not in- corp Inc. mission. Its stock will be listed under the for $173 million in January. In cluded in the NN transaction. July, Old National announced it would ac- symbol MPG, and all shares in the offering quire Grand Rapids-based Founders Fi- would be sold by the selling stockholders. nancial Corp., the holding company for The filing did not include a timeline for Founders Bank & Trust, for $88.2 million. when the company would go public. The Founders acquisition is expected to close by year end. Snowplow maker to be acquired by Perrigo expands Toro for $227M with purchase of Iron Mountain-based Northern Star In- dustries Inc. announced in late October OTC producer that it plans to sell off its BOSS snow and Perrigo Co. plc plans to significantly ex- ice management business to Bloomington, pand its presence in Europe with the $4.5 bil- Minn.-based The Toro Co. (NYSE: TTC), lion acquisition of Omega Pharma NV, a according to a statement. Belgian-based producer of over-the-counter Toro said it expects to pay $227 million for medications. Omega, the fifth-largest player the closely held Michigan business in a deal in Europe’s $30 billion OTC, makes about that’s expected to close in the first quarter of 2,000 products, ranging from cold and cough the company’s 2015 fiscal year, pending John Kennedy medicines, skin care and pain relievers. closing conditions and regulatory approvals. Omega generated sales of $1.6 billion for the BOSS designs, manufactures and sells fiscal year that ended Sept. 30. snowplows, salt and sand spreaders for Platinum Equity sells Perrigo (NYSE: PRGO) expects the deal to light- and medium-duty trucks, as well as boat business close in the first quarter of 2015, pending ATVs. The Michigan company anticipated regulatory approvals. 2014 sales would be around $125 million. Four years after it bought the assets of The Omega Pharma acquisition comes af- “As a privately-held business in a smaller bankrupt recreational and fishing boat ter the $8.6 billion deal that closed last De- community, it is essential to us that BOSS maker Genmar, private equity firm Plat- cember for Elan Corp. of Dublin, Ireland. The transition to a company that not only is inum Equity moved to exit the business. In deal resulted in the domiciling of a new cor- well-positioned to take us to the next level June, Platinum Equity sold Cadillac-based poration in Ireland and provided Perrigo with but also shares our commitment to innova- Rec Boat Holdings to Beneteau Group, a a base to grow into the European market. tion, customers, employees and the com- French maker of sailing and motorboats. munities in which we live and work,” BOSS Rec Boat Holdings manufactures Four President David Brule II said in a statement. Winns, Glastron, Wellcraft and Scarab Unique Fabricating boats. The deal with Beneteau did not include files for IPO, looks to Auto supplier Autocam Platinum Equity’s fishing boat business, Flippin, Ark.-based Fishing Boat Hold- raise $15M bought for $300M ings, maker of the Ranger, Triton and Unique Fabricating Inc. plans to go Grand Rapids-based automotive compo- Stratos boat brands. public. The Auburn Hills-based supplier of nents supplier Autocam Corp. was ac- die-cut plastic and foam components filed a quired by publicly traded NN Inc. of John- See Page 27 WINTER 2014 Page 25 FALL 2006 CDB Living In The D_New CD Magazine sized 11/24/2014 3:41 PM Page 1

Attention Event Organizers THE source AVOID DATE CONFLICTS Check out Crain’s Executive Calendar before setting the date of your next black-tie or civic event. for events START PLANNING NOW FOR 2015 Let everyone know to save the date. More than 300 black-tie and VIP business events were listed in 2014; make SURE your event is on the calendar for 2015. in Southeast Enter your events at crainsdetroit.com/submit. Michigan!

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Interested in sponsoring the calendar? Conact Marla Wise at [email protected] or (313) 446-6032. 20141208-SUPP--0022,0023,0025,0027-NAT-CCI-CD_-- 12/2/2014 5:03 PM Page 4

From Page 25 calade Inc. of Evansville, Ind. based investors launched a new crowd- Martin Yale manufactures table-top trim- funding portal in June. Platinum Equity reportedly hired an in- mers and office machines, paper punches, Loquidity.com vestment banking firm to sell off the fishing — short for “local liquidi- catalog racks and reference systems, er- boat assets for up to $250 million, according ty” — plans to promote potential real estate gonomic computer management acces- to a September report in PEHub. Platinum deals in Michigan and around the Midwest, sories and folders and letter openers. Equity founder and Michigan native Tom said co-founder and CEO Jesse Clem, a real LV2 Equity Partners focuses on acquiring Gores has other holdings in the state includ- estate investor in West Michigan for the last niche manufacturers, value-added distribu- ing the Detroit Pistons, Palace Sports & seven years. tors, and specialty service companies in the Entertainment, Active Aero and Chassix. The portal’s first listing was for a multi- Midwest. family complex in Grand Rapids. Loquidity sought accredited investors to participate in a $3.4 million deal, with $1.4 million coming Herman Miller acquires directly from the backers of the portal. Other news Loquidity plans to feature primarily deals Designs Within Reach involving multi-family housing, Clem said. That will allow it to tap into what’s expected In a move that opens a broader consumer Texas VC firm opens to be an active sector for construction distribution network for the company, Her- branch in Ann Arbor through 2015, as forecasted by the Federal man Miller Inc. acquired a majority share Reserve Bank of Kansas City. of a Stamford, Conn.-based marketer and Houston-based venture capital firm Mer- The multi-family housing sector has been seller of furniture, lighting and accessories. cury Fund raised $100 million for its particularly active in the Grand Rapids area Zeeland-based Herman Miller (Nasdaq: newest fund and announced plans in No- in recent years, particularly for projects that MLHR) paid an estimated $154 million in vember to open an office in Ann Arbor. It involve low-income housing because of the cash for an 84 percent stake in for Design also recruited Adrian Fortino, formerly a availability of key incentives, including the Within Reach Inc., which sells modern vice president at Invest Detroit, to run the Low-Income Housing Tax Credit. Develop- furniture through 38 retail locations in the office. ers have poured hundreds of millions of U.S. and Canada, a print catalog and e- Mercury looked hard at opening an office dollars into projects in and around down- commerce. in Chicago but chose Ann Arbor because town Grand Rapids in the last three years, as The 16-year-old Design Within Reach had “there’s so much development talent in reported by MiBiz. revenues of $218 million in 2013 and is the Michigan.” largest and fastest-growing retailer of Her- man Miller’s furniture designs. Gift from entrepreneur to boost Wayne State West Michigan PE tech transfer firms active in A $25 million gift was announced in Octo- ber for a new institute to create startup acquisition market companies in Wayne State University’s Two private equity firms with operations College of Engineering. in Grand Rapids closed on acquisitions in The donation comes from James Ander- recent months. son, founder of Detroit-based Urban Sci- Grand Rapids-based private equity firm ence Applications Inc., and his wife, Patri- Blackford Capital Associates Inc. has cia. acquired its fourth Michigan company via The James and Patricia Anderson Engi- its Michigan Prosperity Fund: Fenton- neering Ventures Institute will be intended based Burgaflex North America Inc. The to encourage faculty and students to think company is a manufacturer of coolant and of commercial applications for new tech- hose systems for the heavy truck, agricultur- nologies and provide mentors to teach best al and off-road markets. Terms were not practices in research innovation, technolo- disclosed. Mercantile Bank Corp. and gy transfer and commercialization. Capitala Finance Corp. provided financ- Anderson got his undergraduate degree ing for the transaction. in civil engineering from WSU in 1966 and The Michigan Prosperity fund, created in his master’s degree in 1970. He was an in- 2012, invests specifically in Michigan man- structor in the College of Engineering in ufacturers, with its portfolio reaching from Adrian Fortino, formerly a vice president at 1967 as he began developing models and Grand Haven to the metropolitan Detroit Invest Detroit, will run the new Mercury computer mapping techniques that led him Fund office in Ann Arbor. area. Blackford Capital’s portfolio also in- to form Urban Science, a global automotive cludes Grand Rapids-based Custom Pro- retail consulting firm with more than 850 file Inc., Mopec Inc. in Southeast Michi- employees in 19 offices around the world. gan and Grand Haven-based Grand GR crowdfunding Employees at Urban Science will serve as Transformers Inc. mentors and coaches. LV2 Equity Partners LLC, a private eq- portal eyes “We started at Urban Science with $1,000 uity group with offices in Grand Rapids, and a $500 map, and we’ll be over $200 mil- Midland and Lansing, acquired the print multifamily housing lion (in revenue) next year,” he said. “We finishing business of Wabash, Ind.-based Frustrated with traditional real estate in- had to learn it the hard way. Maybe we can Martin Yale Industries Inc. from Es- vestment models, a pair of Grand Rapids- make it a little easier for them.” WINTER 2014 Page 27 FALL 2006 20141208-SUPP--0028-NAT-CCI-CD_-- 12/2/2014 5:04 PM Page 1 Startups & pitches Statewide competitions bring out the best in creative new companies

ichigan’s infrastructure for startups is alive and well as pitch competitions continue across the state. The for- Mmats vary, but the idea is clear: Pitch your idea to an audience or judging panel, and a winner is chosen. A few competitions and winners from this year are listed below: Accelerate Michigan Innovation Competition: A grand prize of $500,000 was given to SkySpecs LLC, an Ann Arbor-based maker of drone aircraft to inspect bridges, wind tur- bines, buildings and other infrastructure. The award was given in November, as part of the fifth annual Accelerate Michigan Innovation event. Ann Arbor-based Cribspot.com, a startup that helps college students find places to live while helping mom-and-pop owners manage their rental properties, won $100,000 as runner-up.

Other prize winners: Ⅲ The Next Energy Alternative Energy Prize: Solartonic LLC, Ann Arbor, a maker of off-grid lighting systems — $25,000 Ⅲ Information technology: Ornicept, Ann Arbor, with products to manage natural resource data — $25,000 Ⅲ Advanced materials: Akervall, Saline, maker of mouthguards and other protective products — $25,000 Ⅲ Products and services: SurClean, Wixom, which offers laser- based technology for removing paint and other coatings from multiple surfaces — $25,000 Ⅲ Life sciences: FreeStride, Ann Arbor, a veterinary pharmaceutical company — $25,000 Ⅲ Medical devices: Ann Arbor-based AlertWatch LLC, which makes real-time patient-monitoring tools for hospitals — $25,000 Ⅲ Inventev, ROBERT CHASE Advanced transportation: Detroit, which provides Looking for a way to inspect bridges, buildings or other mobile power generation for truck fleets to run tools and acces- infrastructure? SkySpecs LLC, an Ann Arbor-maker of drone sories at job sites — $25,000 aircraft, won the grand price of $100,000 at the fifth annual Ⅲ Advanced manufacturing: BEET Analytics Technology, Accelerate Michigan Innovation event in November. which makes software to reduce factory downtime and improve The event, hosted by Crain’s, included a pitch competition with maintenance scheduling — $25,000 four Detroit-based startups. The winner was picked after the au- Ⅲ People’s choice award, based on a vote of the audience for dience — prominent business executives with Detroit ties who the second straight year: TurtleCell — $10,000 came to Detroit to reconnect and invest in their hometown — picked Ginkgotree in a popular vote. The company allows educa- Rise of the rest tors to create online collections of course materials for students. Stik.com, a social media startup that moved from San Francis- co to Detroit, took home the top prize in June during the pitch Startup weekend competition as part of AOL founder Steve Case’s Rise of the Rest Out of 33 business pitches, the Startup Weekend event in Detroit tour stop in Detroit. crowned a winner after a weekend of pitches in November. Stik.com allows friends on Facebook to make recommenda- Top honors went to Magic Book, an augmented reality app for tions to one another on attorneys, doctors, dentists, real estate children’s books that makes characters and scenes come to life. agents and other professional services. Second place went to Gathrd, a mobile app that creates oppor- In awarding the $100,000 prize, Case said Stik was a company tunities for event and conference attendees to meet up in real life. that is unique to Detroit — but could be started almost anywhere. Third place went to MySwimPal, a mobile app that allows users to receive custom swim workouts from coaches. The three teams will represent Detroit in the 2014 Global Start- Detroit Homecoming up Battle, which was to begin Nov. 26. In the virtual event, they Detroit-based startup Ginkgotree was crowned the winner of will be up against teams from more than 250 cities around the a pitch contest at the Detroit Homecoming event in September. world.

Page 28 WINTER 2014 FALL 2006 CDB Living In The D_New CD Magazine sized 11/19/2014 10:17 AM Page 1

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