Michigan Innovation Fund Gives $60 Million To Help State's Startups - MITechNews (2025)

LANSING – The Michigan Strategic Fund Board officially established the Michigan Innovation Fund on Tuesday, allocating $60 million toward evergreen venture capital funds.

The board’s vote was necessary to finalize the implementation of the fund after Gov. Gretchen Whitmersigned a package of billsspurring its creation in January.

The Michigan Innovation Fund is the largest funding proposal for the Michigan entrepreneurship ecosystem since the passage of the 21st Century Jobs Fund in 2005, Jennifer Hayes, senior vice president for operations and policy at Invest Detroit,previously told Crain’s. It’s also Michigan’s first-ever contribution to evergreen structured investment funds.

Michigan has long lagged other states in support for early entrepreneurship, spending $23.75 on innovation and entrepreneurship programs per $1 million in state gross domestic product, outpacing only Illinois ($16.09). It allots less than half what Ohio ($67.9) and Indiana ($65.89) allocate,according to a 2024 report.

The majority of the new fund’s money will be earmarked for disbursement to ID Ventures (Invest Detroit’s fund), Spark Capital (Ann Arbor Spark), the Accelerate Blue Fund at the University of Michigan, the Michigan State University Research Foundation (Red Cedar Ventures and Michigan Rise) and the Biotechnology Research Commercialization Corridor of Western Michigan University.

Those funds will then be invested into Michigan-based startups, and managed by the venture capital firms, with profits being reinvested into the program. As part of the new Michigan Innovation Fund, the state of Michigan will receive 10% of any return on investment that exceeds $8 million within 15 years after the initial investment. No less than 85% of the return on investment will be reinvested into the evergreen structured fund.

The Michigan Innovation Fund draws funding from the Venture Michigan Fund, a venture capital fund investment program that was formed under the Michigan Early Stage Venture Investment Act of 2003. Investment proceeds are slated to be returned to the state in 2030, but Whitmer proposed to return $100 million early, with $60 million going to the Michigan Innovation Fund and $40 million to the general fund.

Currently there are approximately $125 million of realized earned returns in the Michigan Early State Venture Investment Fund, meaning a deposit of approximately $65 million into the state of Michigan’s General Fund, according to MSF documents.

The MSF ruling allows for the realized investment returns in investment funds of the Michigan Early Stage Venture Investment program to be utilized before 2030.

According to the MSF documents, 80% of the fund, or $48 million, is dedicated to grants for evergreen venture funds; $4.8 million for emerging venture funds; $4.2 million for nonprofits providing startup support services; and $3 million sourced toward creating or retaining jobs or encourage the development of edge technologies.

An evergreen fund is an open-ended structure with no termination date, which receives regular injections of capital from the state, with returns recycled back into the fund to be further invested. A returns-focused venture fund focuses on high financial returns for investors that benefits from the exit of a successful company.

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