Michigan reps the Midwest at SXSW with Innovation Beyond the Coasts event

Michigan Economic Support Organization (ESO) Ann Arbor SPARK is teaming up with the University of Michigan at SXSW in Austin to pitch the Midwest as an hub for innovation on March 18th. The “Innovation Beyond the Coasts” event will take place in the Topaz Ballroom at the LINE Hotel, with two panel sessions from 1:00 to 3:30 p.m., followed by a Michigan Innovation Mixer.

Panelists include Jim Adox (Venture Investors & Histosonics), Charlie Childs (Intero Biosystems), and Ramses Alcaide (Neurable). 

We spoke to Mike Psarouthakis, Executive Director at the University of Michigan’s Accelerate Blue and Innovation Capital Funds, who told us that “people aren’t aware” of the scale of University of Michigan’s research and commercialization efforts. He framed the event as akin to an awareness campaign — not aimed at students or alumni, but at investors who may not necessarily be aware of the deal flow coming out of Ann Arbor.

StartMidwest: What are you trying to accomplish by showing up at SXSW with SPARK and the University of Michigan?

Mike Psarouthakis: “We have become very proactive in outreach. We send people to … the events … which are startup themed. I can't tell you how many times I've been down to SXSW. Part of it is to make people aware of all the fantastic things that are happening at the university because people aren't aware. They’re not aware that we have over two billion dollars in research every year. … They're not aware that we spin out 25 to 30 companies last year, 31 in fact, out of our research enterprise.” 

SMW: When you say “people aren’t aware,” what do you mean — investors, operators, the general public?

MP: “They're not aware that the glass on your phone came from Michigan: OLED glass, or that Intralase Lasik eye surgery came from U of M or that Histosonics - which people are starting to understand - and the impact of that came from U of M … we do research that has impact for the very long-term. Histosonics is, by the way, the second largest venture-backed medical device in history …” 

SMW: For people who may not be aware: what’s structurally different about U-M’s early-stage funding setup?

MP: “Our office has been around for a long time, but the funds are relatively new. We have two funds: Accelerate Blue which I oversee which we started through philanthropy in 2019. We are exclusively focused on startups that have licensed IP out of the research enterprise at U of M, all three campuses and all 19 schools. So, you know, we started Accelerate Blue to bridge the very early-stage funding gap that Michigan suffers from providing very risk tolerant, patient capital because it's through philanthropy … we don't have the pressure of providing returns to our LPs …” 

SMW: What does the track record of the fund look like so far?

MP: “We hit $2 million (in investable funds) in March of 21 and made our first investment in a company called Movellus in April of 21. Now we're deploying three to four million dollars a year. We have 44 portfolio companies, [and have] invested a little over $12 million. Over $470million has been invested in the same companies.” 

SMW: Where does the state fit into this picture?

MP: “A year ago, January, the Governor signed something called the Michigan Innovation Fund. The $60 million that was signed into law … Ann Arbor Spark, Invest Detroit, Michigan Rise out of Michigan State, BRCC [Western Michigan University] and Accelerate Blue were recipients of very large awards — $10.6 million to Accelerate Blue. If we have a return that's more than $8 million from any single company, we give 10% back to the state. But otherwise we have no obligation, it's evergreen … the returns go back into the fund” 

SMW: You also mentioned a broader, statewide model — not just U-M. What is that?

MP: “We have something that's currently known as the Michigan University Innovation Capital Fund or MUICF. That fund was stood up from the support of the state. They liked what Accelerate Blue has done … they wanted us to deploy the same methodology for startups that are in Michigan that have spun out from any of the public universities … any of the 15 public universities. That fund is quasi evergreen. There are some payback components through the grant, but the rest go back into the fund.” 

SMW: The event at SXSW was publicized with the phrase “Midwest Innovation Playbook.” What does that mean to you?

MP: “I think um we have some unique advantages. We are a collaborative ecosystem. We have some challenges: we don't have the entrepreneurial density that the coasts have. We obviously don't have the venture capital the coasts have. But, you know … because we don't have that density, a win's a win. Because of that, the universities … are incredibly collaborative with each other … all of these programs … are essentially statewide … we work very closely with the investors in the state.” 

SMW: What should someone expect from your SXSW session specifically?

MP: “I know everybody on the stage really well, which also makes us very comfortable, so it'll be  more interesting hopefully … we only have an hour with three people. [But] they could all speak just for an hour and everyone’s jaws would drop.”

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Editor's Note: SXSW passes are required to attend these events, which are available here. However if you’re interested in attending and are connected to the region, we encourage you to contact the organizers.

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