New $75 million VC fund aimed at health care to be run from Ann Arbor – Crain’s Detroit Business

Venture Investors LLC, a Madison, Wis.-based venture capital firm with an Ann Arbor office and a strong local presence, plans to announce Monday that it has closed on its latest fund, the $75 million Venture Investors Health Fund VI LP.

"In our prior funds, we invested in a mix of health care and technology. For this fund, we made the decision to go 100 percent to health care," said Jim Adox. Adox is based in Ann Arbor, and he will be the executive managing director of the fund.

The new fund builds on Southeast Michigan's strength in health care venture investing. The state's largest venture capital firm, Arboretum Ventures, specializes in health care investments, and some of the state's biggest rounds of VC investment have gone to health care companies.

And the region has had a track record of startups going on to reward their VC investors by having initial public offerings, including Ann Arbor-based Esperion Therapeutics Inc., Livonia-based Gemphire Therapeutics Inc. and Plymouth Township-based ProNAi Therapeutics Inc.

Venture Investors is one of the oldest VC firms in the country, raising its first fund in 1982. It opened its Ann Arbor office after the state of Michigan launched the $95 million Michigan Venture Fund in 2006 to invest in VC firms willing to open offices in the state. In January 2007, Venture Investors and Nth Power of San Francisco were the first two out-of-state firms to get funding from MVF.

Venture Investors now has $275 million under management and has invested $54 million in state companies, Adox said.

"Michigan is having its biggest year for venture capital investment ever, and it is a great sign that top-tier venture-capital funds around the country are investing here for the first time. But it is extremely important that we continue to also have strong venture funds locally," said Chris Rizik, CEO and fund manager for Ann Arbor-based Renaissance Venture Capital Fund, a fund of funds that invests in VC firms that invest in Michigan companies.

Renaissance is not an investor in Venture Investors.

"For years, Venture Investors had been a key firm investing in Michigan, even as they were based in Wisconsin. But they became even more essential here when Jim joined them and opened their Ann Arbor office. VI has become a go-to firm for local entrepreneurs, and Jim is a key person for founders to get to know," said Rizik.

"Jim is a really smart investor who has invested in both tech and health care, and has done it through several cycles, so he has pretty much seen it all. He's a leader in the venture community here and has a strong national reputation."

Adox is a past chairman of the Ann Arbor-based Michigan Venture Capital Association.

"It's great to hear that Venture Investors has completed its fundraising. They have been an important player in the Midwest VC community for many years," said Tim Petersen, managing partner of Ann Arbor-based Arboretum Ventures LLC. In June, Arboretum closed on its fifth fund, which at $250 million set the record for the largest VC fund in state history, surpassing the $220 million the firm raised for its fourth fund in 2015.

"I've known Jim about 20 years (and) Arboretum and VI have had a very constructive relationship, having introduced deals to each other and co-invested on a number of occasions," said Petersen.

Current portfolio companies the two VC firms are invested in include Novi-based Delphinus Medical Technologies Inc., whose ultrasound technology to detect breast cancer is in human trials; Ann Arbor-based NeuMoDx Molecular Systems, which makes diagnostic tools to help health care providers to more quickly diagnose and treat diseases; and ViaLase Inc., a company based in Corona Del Mar, Calif., that uses femtosecond lasers to improve the treatment of glaucoma.

Venture Investors' other local portfolio companies are SkySpecs Inc., which provides inspection, diagnostics and data analytics for renewable energy industries; Ann Arbor-based HistoSonics Inc., which is testing the use of noninvasive sonic beams to destroy some tumors and which raised a Series C funding round of $54 million last April; and Ann Arbor-based BlueWillow Biologics Inc., which is developing intranasal vaccines.

Investors in the new fund include two past investors in the firm, the State of Wisconsin Investment Fund and the Wisconsin Alumni Research Foundation, and one new investor, Advocate Aurora Health, a not-for-profit healthcare system based in Milwaukee.

Adox was a co-founder and first CEO of Tissue Regeneration Systems Inc., a University of Michigan spinoff in 2006 that used 3D printing to help bone healing in patients for birth deformities and severe injuries.

In 2017, West Chester, Pa.-based DePuy Synthes Products Inc., a Johnson & Johnson company, bought half the company.

Two months ago, Dublin-based Medtronic plc bought the other half.

"It's cool that a local startup ended getting sold to two of the biggest health care companies in the world," said Adox.