LANSING — Michigan has improved its entrepreneurial climate and venture capital funding the last several years, according to the Michigan Entrepreneurship Score Card.
The state ranks sixth nationwide for the best entrepreneurial climate, up from 41st in 2007 and 2008, according to the report released Monday by MiQuest, a Lansing-based nonprofit formed after the merger of the Small Business Foundation of Michigan and Great Lakes Entrepreneur’s Quest.
But it still has a ways to go in other economic areas, such as overall business climate and entrepreneurial vitality, the report said.
“The Score Card rankings mirror what many of us have been seeing in the entrepreneurial sector in recent years – ventures achieving key milestones quicker, a high demand for technical talent, and new levels of enthusiasm about the quality of life and opportunities in urban areas,” MiQuest President Diane Durance said in a statement.
The score card uses data from various metrics ranging from business survival and state tax structure to university research spending and quality of life measures.
Despite high marks for its entrepreneurial climate, the state’s general business climate “is mediocre but improving,” according to the report.
Michigan ranks 21st in entrepreneurial change, a measure of the state’s direction and momentum relative to other states, and 30th in entrepreneurial vitality, which tracks the relative level of activity in each state.
“Entrepreneurial vitality is a difficult index to impact,” report author Graham Toft said in a statement. “The state’s high level of large industrial and corporate activity overwhelms the activity in the entrepreneurial sector. Although improving, it will take many years for Michigan to build its structural entrepreneurial vitality to match its standing 100 years ago.”
Michigan is also gaining ground in the venture capital world. There was $120 million in venture capital invested in 40 companies in Michigan last year, the most deals since the Michigan Venture Capital Association began tracking the data.
The state had 103 active venture-backed firms in 2014, up 66 percent in the last five years.
Gov. Rick Snyder touted the state’s growth in entrepreneurship and venture capital.
“This (has) been the accumulation of work that started probably back in the late ’90s of people trying to build the venture capital industry in our state, and we’ve seen significant improvement over the last five years, particularly if you compare it to the national results,” Snyder said. “Venture capital has really slowed down a lot or declined in some cases nationally, and we’ve gone stronger and stronger each of the last few years.”
Michigan ranked 23rd nationwide for venture capital deals in 2013, down from 15th in 2012. The national rankings are a “bumpy process” and can change drastically based on deals that close each year, said Carrie Jones, executive director of the Michigan Venture Capital Association.
For example, Michigan’s ranking will likely rise for 2014 because Plymouth Township-based ProNAi Therapeutics Inc. recently closed a $59.5 million deal, the largest single deal in the state’s history.
“All of the right pieces are in place for Michigan to continue this growth we’ve seen over the last five years,” Jones said.
