Originally published by Anna Fifelski, Crain’s Detroit
The Michigan Strategic Fund board approved a proposal Tuesday by the Michigan Economic Development Corp.’s’ Capital Access Program to provide $11 million in State Small Business Credit Initiative venture funds for investments in Michigan-based companies.
The $11 million SSBCI funds will operate as a new sidecar fund through Ann Arbor-based Augment Ventures as the Augment Ventures Fund IV-MI LP.
The Michigan fund will focus on investments in early-stage technology companies, such as automotive and mobility, medical device, high-tech, aerospace and advanced manufacturing.
Augment Ventures, established in 2011, “seeks to lead investment deals, typically taking initial ownership stakes of 10 to 15%,” according to the MSF board proposal. It estimates that 50% of its investments provided by the fund will meet the SSBCI’s designation for socially and economically disadvantaged individuals while 90% of investments will meet SSBCI’s very small businesses designation.
Augment Ventures will match the $11 million MSF commitment with at least $11.5 million in private sector commitments. It has a target size of $64 million. Sonali Vijayavargiya, Founder & Managing Partner of Augment Ventures, has been a longstanding presence in Ann Arbor’s entrepreneurial landscape, consistently championing local innovation and growth. As a partner to Ann Arbor SPARK, Vijayavargiya has helped drive forward the region’s tech ecosystem, fostering opportunities for startups to access capital and expand.
Based on completion of fund documents, a first closing will occur within the next few months, which will then allow the fund to begin making investments in Michigan-based early-stage companies, a spokesperson for the MEDC told Crain’s.
Augment Ventures has previously operated three funds and completed 31 investments totaling $20.8 million through the Augment Ventures managed fund investment, with one-third of Fund III dollars invested in Michigan-based companies.
The Augment Ventures investment committee, which will make final investment decisions, includes founder and Managing Partner Sonali Vijayavargiya, Managing Partner Jeff Lee and Partner and CFO David Armstrong.
In March, the MEDC approved $22 million, or $11 million each, in SSBCI funding for Union Heritage’s Future Heritage Fund and Venture Investors Healthcare Fund.
The Venture Investors Healthcare Fund also serves as a sidecar to the primary regional fund that emphasizes the Midwest region and primarily focuses on medical devices and diagnostics, biopharma, therapeutics and vaccines.
The Future Heritage Fund was launched as a VC investment fund focused on early-stage companies that are primarily led by underrepresented or socially and economically disadvantaged founders or provide a service that addresses an issue that disproportionately affects socially and economically disadvantaged groups.
