Innovation & Job News
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Ann Arbor start-ups take $90M in VC funds year-to-date
Source: Concentrate, 9/1/2010
Venture capital spending is up in Michigan, and Ann Arbor start-ups are proving to be king of the hill.

Year-to-date, Michigan-based firms have attracted $123 million in venture capital investment, with Ann Arbor-based companies taking in about $90 million of the total. The biggest investment ($51.75 million) went to Cerenis Therapeutics, a bio-tech firm with twin headquarters in France and Ann Arbor that's composed mostly of ex-Pfizer employees.

"This is a testament to the quality of companies that Michigan is creating," says LeAnn Auer, executive director of the Michigan Venture Capital Association.

The total dollar amount invested is up 35 percent compared to 2009 year-to-date. However, the number of deals is lower, with 12 by August of last year and 10 so far this year. Life science firms took in the biggest chunks, with 57 percent of the total investment dollars last year and 75 percent so far this year. Cleantech firms were the only other ones to capture double-digit shares over each of the last two years. Other firms, including IT, received token amounts.

The jump in venture capital investment can be attributed to economic improvements over the last year. A double-digit recession could force a drop in those numbers, Auer says, but barring that she expects to see a steady increase in the near future.

"Over the last few years we have had a couple of investment firms that have capitalized," she says. "Now they're being active."

Source: LeAnn Auer, executive director of the Michigan Venture Capital Association
Writer: Jon Zemke
Hamztec wins $1M grant to research an end to hair pulling
Source: Concentrate, 9/1/2010
Ann Arbor-based Hamztec has received a $1 million grant from the National Institute of Health. The company plans to use the proceeds for development of a product that will help people stop compulsively pulling their hair.

The Ann Arbor SPARK client will use the grant to hire six people plus a handful of independent contractors. David Perlman, co-founder of Hamztec and its only employee, expects his start-up to commercialize its product within 2.5 years, a timeframe that could be as short as one year if the company attracts more investment.

Hamztec was co-founded in 2007 by David Perlman and Joseph Himle, a professor of psychiatry and social work at the University of Michigan. The firm's principal product tracks and helps correct Trichotillomania, a disorder in which people compulsively pull out their own hair.

"Ninety percent of this behavior happens out of consciousness," Perlman says. "They would study or read a book, get up and there is a pile of hair there and they don't know how it got there."

The product will track hand movement and set off an alarm when patients pull their hair. A specific code must then be entered to turn the alarm off. This technology also tracks and logs the behavior for analysis by mental health professionals.

'This is the first method so a therapist knows behavior outside of the office," Perlman says.

Source: David Perlman, co-founder of Hamztec
Writer: Jon Zemke
TCH Pharmaceuticals scores $200K in loans, retains ex-Pfizer talent
Source: Concentrate, 9/1/2010
Ann Arbor-based TCH Pharmaceuticals will use a $200,000 loan from the state of Michigan to hire four people, all ex-Pfizer employees.

"These four will be the first employees of the company," says Thomas A Collet, president and CEO of TCH Pharmaceuticals.

The 4-year-old company, currently staffed by its three co-founders, commercializes non-toxic proteasome inhibitors to be used in therapies that treat inflammatory diseases. It is using technology licensed from Michigan State University.

"We have a family of compounds we want to take into clinical development," Collet says. "They would help us do that."

TCH Pharmaceuticals (TCH is an acronym for the founders' last names) is one of five Michigan companies to share the most recent $530,000 in loans from the state's Company Formation and Growth Fund. That initiative began in 2007, shortly after Pfizer announced the closing of its Ann Arbor campus. It's aimed at keeping Pfizer's talent in-state by accelerating start-up formation and growth. The fund has made $8 million in loans to a total of 41 life-science companies in Ann Arbor, Chelsea, Jackson, Livonia, and Saline.

Source: Thomas A Collet, president and CEO of TCH Pharmaceuticals
Writer: Jon Zemke
Ann Arborites return to launch Resonant Venture Partners
Source: Concentrate, 9/1/2010
The University of Michigan's Wolverine Venture Fund is supposed to serve as a real-life proving ground for Ross School of Business students aiming for a career in venture capital. It's now serving as the launching pad for a local venture capital start-up - Resonant Venture Partners.

Two U-M MBA students, Michael Godwin and Jason Townsend, are using their experience with the $5.5 million student-run fund as a primary leg for their new Ann Arbor-based VC firm to stand on. The other leg is the two Michigan natives' entrepreneurial experience in Silicon Valley before they decided to return home and set up their own shop.

"We came back to get our MBAs and enter the venture capital world," says Jason Townsend, partner of Resonant Venture Partners. "There is opportunity to enter the venture capital industry here. On the coasts, the venture funds are being culled."

Resonant Venture Partners recently made its first investment, teaming up with Silicon Valley-based True Ventures to invest $1 million in Ann Arbor-based Scio Security. The VC firm has attracted two top names to its board in EDF Ventures' Mary Campbell and Tom Kinnear, managing director of the Wolverine Venture Fund and head of U-M's Zell Lurie Institute.

Godwin and Townsend have a $10 million fundraising target over the next 18 months. They hope to stay planted in Ann Arbor and have $100 million under management within the next decade. They see a steady pipeline of high-quality start-ups coming from the University of Michigan and its office of Tech Transfer.

"We're hitting the investment trail hard right now," Townsend says.

Source: Jason Townsend, partner, Resonant Venture Partners
Writer: Jon Zemke
Research Essential Services receives $100K loan, plans hires
Source: Concentrate, 9/1/2010
Research Essential Services is beginning to collect ex-Pfizer workers at its home in the Michigan Life Science and Innovation Center, a Plymouth-based wetlab incubator run by Ann Arbor SPARK.

The start-up plans to hire two ex-Pfizer employees with a recent $100,000 grant it received from the state of Michigan's Company Formation and Growth Fund. It has already hired two other former Pfizer workers and two more life science employees with a $200,000 loan previously received from the fund.

The company was founded by ex-Pfizer workers and now specializes in providing preclinical research services tailored to start-up and biotech firms. It offers professional veterinary care and design and execution of high quality research protocols in a state of the art facility.

Research Essential Services is one of five Michigan companies to split the most recent $530,000 in loans from the state's Company Formation and Growth Fund. That initiative began in 2007, shortly after Pfizer announced the closing of its Ann Arbor campus. It's aimed at keeping Pfizer's talent in-state by accelerating start-up formation and growth. It has made $8 million in loans to a total of 41 life-science companies in Ann Arbor, Chelsea, Jackson, Livonia, and Saline.

Source: Michigan Economic Development Corp
Writer: Jon Zemke
U-M, St. Joseph Mercy Hospital team up for statewide blood clot prevention initiative
Source: Concentrate, 9/1/2010
The University of Michigan Medical Center is taking a leading role in a new state-wide initiative to prevent blood clots as a way of elevating patient care and cutting health-care costs.

"The main reason to target this is because it's a communal problem," says Dr. Scott Flanders, a professor of medicine at U-M and the director for this project. "Almost every patient who is hospitalized is at risk for blood clots."

U-M, Blue Cross Blue Shield of Michigan, St. Joseph Mercy Hospital, and 15 other hospitals throughout the state are working together to take down the blood clot problem as part of the Value Partnerships, a long-term collaboration among health-care organizations aimed at improving quality in medical care. This specific initiative will focus on ensuring the state's major hospitals reduce the risk of blood clots by studying, benchmarking, and implementing the best practices to eliminate preventable blood clots.

"Our initiative is to prevent these things in the first place," Flanders says.

The first one to two years will be spent on an assessment of the problem and its various solutions. Picking low-hanging fruit could reduce the blood clot rate by as much as 50 percent in that time.

Source: Dr. Scott Flanders, a professor of medicine at the University of Michigan
Writer: Jon Zemke
Ann Arbor's MetaSpring plans to add interns, contractors
Source: Concentrate, 9/1/2010
Safety is in numbers, but the people at MetaSpring are seeing profits in numbers, too.

The Ann Arbor-based web-development and marketing firm is partnering with more local companies for its marketing, design, search engine optimization, and social media work.

"We have all sort of come to the conclusion that we have all gone through ups and downs so we are sharing more work," says Julie Cameron, marketing director for MetaSpring.

The 6-year-old company employs five people, a couple of independent contractors, and the occasional intern. The firm expects to bring on a marketing intern or two this fall, along with a couple of independent contractors to take on the extra work created through more partnerships.

Source: Julie Cameron, marketing director for MetaSpring
Writer: Jon Zemke
Ann Arbor SPARK gets $750K for Accelerate Mich Innovation Competition
Source: Concentrate, 8/25/2010
Ann Arbor SPARK is getting ready to break a lot of ice - between entrepreneurs and investors. During the Big Chill hockey game later this year they'll be hosting the Accelerate Michigan Innovation Competition.

The business plan competition will highlight local resources available to small businesses and spotlight southeast Michigan's entrepreneurial ecosystem. It will also expose local entrepreneurs and start-ups to venture capitalists, angel investors and executive talent from around the world who will be in Ann Arbor for the hockey game between the University of Michigan and Michigan State University at Michigan Stadium on Dec. 11.

"When you start to look at the information and resources that have been cultivated over the last few years, we expect to have a lot of high-quality start-ups here," says Michael Finney, president and CEO of Ann Arbor SPARK.

The Business Accelerator Network for Southeast Michigan (Ann Arbor SPARK, TechTown, Automation Alley and Macomb-OU INCubator) is working to put together what it calls the world's largest business plan competition. It will feature $1 million in cash awards, services, staffing and software up for grabs. It is open to start-ups and entrepreneurs from both inside and outside of the state that are willing to set up shop in Michigan.

"The future of Michigan is based on its entrepreneurs and innovators," says David Egner, executive director of the New Economy Initiative, which supplied a $750,000 grant to Ann Arbor SPARK for the event. "They are the people that will drive growth in Michigan for the next few decades."

The competition will focus on second-stage businesses and student concepts with long-term viability. It will be divided into nine categories, including advanced materials, advanced transportation, alternative energy, homeland security and defense, information technology, life science, medical devices, next generation manufacturing and products and services. Students attending any Michigan university or college can submit their business concepts in a separate category. For more information about the Accelerate Michigan Innovation competition, click here.

Source: David Egner, executive director of the New Economy Initiative and Michael Finney, president and CEO of Ann Arbor SPARK
Writer: Jon Zemke
Scio Security lands $1 Million in VC
Source: Concentrate, 8/25/2010
Ann Arbor's Scio Security has pulled down a big number in venture capital and plans to continue hiring as a result of this. The 8-month-old start-up co-founded by Dug Song and Jon Oberheide (both of Arbor Networks fame) recently landed $1 million from Silicon Valley-based True Ventures, which lead the initial round of fundraising, and a new venture capital firm in Ann Arbor called Resonant Venture Partners.

"The biggest criteria for us are people, by far, because we invest so early," says Puneet Agarwal, partner with True Ventures. "We jumped at the chance to partner with Dug and Jon. … We are betting on Dug and Jon building a great company in Ann Arbor."

Scio Security, which calls the Tech Brewery home, has doubled its staff to four people and an intern so far and expects to hire at least two people in engineering and marketing.

Scio Security focuses on providing new
Internet security solutions for sensitive data, such as health-care information and financial transactions. Hackers have recently focused efforts on shadowing users or stealing their passwords and other security information to access financial data. Scio Security has created a variety of solutions, some patent pending, such as an immediate call back to confirm the correct person is trying to access information.

"The weakest password of your most gullible employee is the new firewall," says Song, CEO and co-founder of Scio Security. "That's where you have to focus your security."

Source: Dug Song, CEO and co-founder of Scio Security and
Puneet Agarwal, partner with True Ventures
Writer: Jon Zemke
IT  
Merit Network scores $69.6M grant to expand broadband in UP
Source: Concentrate, 8/25/2010
When Merit Network counts the money from the grants it receives, it takes six zeros off the end to make the math easier. The Ann Arbor-based non-profit recently received a $69.6 million federal grant on top of the $33 million federal stimulus grant it received earlier this year.

The latest federal grant (thanks, federal stimulus) will pay for spreading high-speed Internet across Michigan's Upper Peninsula and much of its northern Lower Peninsula. That should add up to 1,000 miles of fiber-optic infrastructure across 29 counties. The idea is to help create more economic opportunity in these rural areas by increasing access to the Internet.

"We're trying to push this economic development into rural areas," says Elwood Downing, vice president of member relations & communications for Merit Network. "We're trying to create that economic benefit across the whole state."

The Ann Arbor-based non-profit manages high-bandwidth communication lines between the major universities in the Midwest, in cities like Ann Arbor, Chicago and Detroit. It has a staff of about 77 people and five interns from the likes of the University of Michigan and Eastern Michigan University. It has hired at least 10 people in the last year and has four positions that are either being filled or are about to be filled.

"We're looking at a minimum of at least six new staff," Downing says. "At least one of them will be a remote commuter from the northern part of the state."

Source: Elwood Downing, vice president of member relations & communications for Merit Network
Writer: Jon Zemke
Ann Arbor's Algal Scientific doubles staff, wins award
Source: Concentrate, 8/25/2010
A little over a year ago Algal Scientific was a project for four students at the University of Michigan and Michigan State University. With it they won the U-M/DTE Energy Clean Energy Prize. Today that project is now a company that employs the four student founders... and then some.

The start-up, based in the Michigan Life Science and Innovation Center, took the $65,000 from the Clean Energy Price and another $180,000 from the Michigan Pre-Seed Capital Program to create a staff of nine people.

"In general we have staffed up in a number of areas," says Paul Hurst, CEO of Algal Scientific.

Algal Scientific is working on a waste-water treatment system that uses algae to remove nutrients from contaminated water leaving the raw materials for biofuels. Earlier this summer the company set up a pilot system in a waste-water treatment plant and expects to set up a couple more within a few months.

"It's much larger," says Geoff Horst, CSO of Algal Scientific. "We're dealing with hundreds of gallons instead of dozens of gallons in the lab."

The company expects to establish a demonstration scale project within the year and start generating revenue. It plans to continue hiring during this time, too.

Algal Scientific also won the Clean Energy Investment Competition at the New Energy New York Symposium earlier this month.

Source: Paul Hurst, CEO of Algal Scientific and Geoff Horst, CSO of Algal Scientific
Writer: Jon Zemke
U-M lands $26M in biz education, software grants
Source: Concentrate, 8/25/2010
The University of Michigan has scored a couple of large grants, adding up to $26 million for nanotechnology research and business education.

Dennis Sylvester, an associate professor of electrical engineering and computer science at U-M, is part of a national team that is splitting a $10 million federal grant. The money will fund a study of how software can make nanoscale computer components (circuits and chips) more efficient.

"The idea of this project is to design the software so it takes some of the burden off of the hardware," says Sylvester. He will be working on the project with a small team of U-M students, including a post-doctorate student. He is also hoping to involve more university faculty into the study.

About $16 million from the U.S. Department of Education is going to seven centers in the University of Michigan International Institute. The grants will help develop the nation's capacities in international and area studies, foreign languages, and international business education. The grants will support language and area studies training, curriculum development, library acquisitions, outreach to K-16 students and educators, as well as public programs such as lectures, conferences and films.

Source: University of Michigan and Dennis Sylvester, associate professor of electrical enegineering and computer science at the University of Michigan
Writer: Jon Zemke
Ford invests $76M in U-M for automotive research
Source: Concentrate, 8/25/2010
When it comes to investing in higher education research at Ford Motor Company, no school gets quite as much love as the University of Michigan.

The Dearborn automaker recently released that it has invested $60 million in university research over the last 20 years, much of which went to schools in southeast Michigan, such as Wayne State University and the University of Detroit-Mercy. The University of Michigan received the lion's share of that funding, taking in three of the 20 grants funded by the carmaker.

"I certainly see a substantial expertise at the University of Michigan," says Ed Krause, an external alliances manager at Ford. "Our alliance with them has gone extraordinarily well. We're very happy with the quality of work from there."

U-M has collected $76 million in research grants from Ford over the length of its relationship. That has set U-M up as one of Ford's two strategic partners for higher education research. The other is MIT. As one might expect, the research projects typically revolve around engineering. One of the latest at U-M concerns controlling vehicle emissions.

Source: Ed Krause, an external alliances manager at Ford Motor Company
Writer: Jon Zemke
Dynamic Advisory Solutions opens Ann Arbor office, plans to hire
Source: Concentrate, 8/25/2010
The decision for Dynamic Advisory Solutions to open an office in Ann Arbor was an easy one. At least it was when the Troy-based financial firm took a quick look at Tree Town's entrepreneurial ecosystem.

"It's because of the local entrepreneurial community," says Ren Carlton, president and CEO of Dynamic Advisory Solutions. "We think it's a great place to be."

The 10-year-old company specializes in financial consulting and making growth financially viable for small- and medium-size firms. Dynamic Advisory Solutions essentially out sources the CFO and controller jobs for growing companies, so the founder can focus on the strategies that make their start-ups bigger and more profitable.

Dynamic Advisory Solutions has one person at its Ann Arbor office, but Carlton expects that number to grow soon. He expects the company to hire another person within the next six months and a few more within the next year.

Source: Ren Carlton, president and CEO of Dynamic Advisory Solutions
Writer: Jon Zemke
Swift Biosciences nails down $3M in VC
Source: Concentrate, 8/18/2010
Usually a few million dollars in venture capital doesn't go all that far with life sciences start-ups, but Swift Biosciences expects to stretch its $3 million in seed capital all the way to commercialization.

"We expect to have products ready for the market with this money," says David Olson, president and CEO of Swift Biosciences.

The Ann Arbor-based start-up is developing molecular biology reagents for research and diagnostic applications that provide new ways to examine disease-related genes. This technology is expected to help researchers analyze samples faster, at a higher volume, and at a lower price-per-sample.

The 1-year-old firm started with two people and now employs four. It is in the process of hiring a fifth. It expects to make two more hires within the next six months as it ramps up research, development, and commercialization of its product. Houston-based DFJ Mercury led the latest round of fundraising and helped form the company at its outset.

Source: David Olson, president and CEO of Swift Biosciences
Writer: Jon Zemke
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