The Great Lakes region can be reborn as a region of powerful entrepreneurial companies working in concert with the region's top-notch universities and research institutions.
But the region must develop a comprehensive, unified plan to grab its fair share of the nation's -- and the world's -- venture capital dollar.
That was the conclusion of a panel at the Natioinal Association of Seed and Venture Funds' annual convention as it wrapped up Friday.
Titled "Re-Engineering the Great Lakes Entrepreneurial Economy," the panel featured Frank E. Samuel, a consultant to The Brookings Institution and former science and technology advisor to the governor of Ohio. Samuel pointed out that the Great Lakes region is home to 33 percent of the nation's research and development spending and 30 percent of its patents, and produces 36 percetn of its science and engineering graduates. Yet a mere 3 to 4 percent of the nation's venture capital is invested in the Great Lakes.
Samuel said that's even more remarkable considering the public pension funds of the Great Lakes states, "supposedly the most risk averse region in the country," pump far more money into venture capital than the funds on the supposedly more forward-looking coasts.
Samuel said he's preparing a study of early stage venture capital in the Great Lakes area that calls for "a major fund of funds focused on this region," and "new catalytic enterprises -- incubators, intermediaries, helper organizations."
John Marshall of the Ontario Ministry of Research and Innovation said his province's government ponied up $90 million Canadian to seed a new fund with a goal of $270 million.
Former Michigan Gov. James Blanchard, now a partner in the Washington, D.C. office of the law firm DLA Piper, recalled how he said in 1990 when governor that the East and West coasts are "overpopulated, overpolluted and overpriced," and the '90s would be the Decade of teh Gret Lakes. "Well, maybe we got postponed some, but I think our state sleepwalked for 12 years" when it comes to entrepreneurship, he said -- likely a slap at his successor, John Engler. Blanchard went through a laundry list of the region's assets, from research universities to water to fertile soils, and added: "The last thing we want is to get into a race to the bottom. We will never lower wages enoguh to compete with Third World countries."
Instead, he said, the Great Lakes states need more investment in education and public infrastructure, not less, recognizing that "every single person now needs some serious training beyond high school. We've known that for 25 years," he said, but the problem is the lack of a serious organized effort to achieve it.
Another panel at NASVF covered creating startups out of huge institutions like government labs and big business.
Jayson Pankin, new venture creation specialist at Troy's Delphi Corp., told the crowd how the giant auto supplier has spun out four new companies based on technologies that its R&D develops, from medical devices to lithium-ion batteries.
"We put ourselves in a minority position" in the spinoffs, Pankin said, "so we're out of the way but we can act as a big brother" if needed.
Michael Bauer of Foundation Capital, a Silicon Valley-based venture capital firm, said he's now wokring on spinouts based on energy technologies at national laboratories. He said his firm looks for products that are at least a 10-fold improvement over existing technology, can serve more than one market and are close to prototype stage.
Stephen Socolof of New Venture Partners LLC said his fund focuses on corporate spinouts. He said companies do spinouts for three reasons -- they find the company will perform better independently, or to improve the vibrancy and morale in their laboratories (scientists are happier if they know the projects they're working on will see the market even if the core company isn't the entity doing it) or simply to monetize their investment in R&D.
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