The organizers behind the new cultivate(MD) Capital Fund GP LLC found backers by appealing to their own global professional networks and investors with whom they had previously done business. The approach led cultivate(MD) to close this month on the first $7.2 million toward a $10 million goal the fund aims to raise in what Managing Director Rob Ball calls a “pretty healthy” fundraising environment.
As cultivate(MD) scouts for deals, the health care arena offers plenty of opportunity for firms targeting early-stage medical device startups, said John Kerschen, managing director of Michigan Accelerator Fund I, a Grand Rapids-based venture capital fund that has fully deployed all of its capital. Venture capital funds targeting the medical device sector “have tended to drift a bit later in the device space,” he said. “I still believe there’s a significant amount of deal flow, particularly at the earlier stage,” Kerschen said. “There’s still a significant amount of innovation and entrepreneurship in that space relative to the dollars dedicated.”
Kerschen also sees a fundraising environment that remains positive, even with investors finding good returns from the stock market and with Michigan’s economy at a relatively strong position overall. Venture capital and private equity firms are still relatively young markets in Michigan. While both areas have posted solid growth for more than a decade — and the pool of prospective investors has expanded — early investors who put money into funds “are waiting for the return or proof of returns from some of those early investments before they commit substantially more capital,” Kerschen said. more