Grand Rapids venture fund launches $20M effort boosting Michigan startups

What’s happening: The  New Community Transformation Fund (NCTF), a statewide venture capital fund based in Grand Rapids, has announced the first close of its new $20 million Fund II. The public-private fund includes an investment of up to $9.8 million from the Michigan Economic Development Corporation’s Small Business Venture Program. The state investment requires NCTF to raise $10.2 million in private capital to secure the full commitment from the Michigan Strategic Fund.

What does it mean: This first close includes $2.55 million in private investment and a matching $2.5 million from the MEDC. Fund II aims to expand access to capital by investing in historically underserved startup entrepreneurs and business owners across Michigan, supporting more inclusive economic growth statewide.

What they are saying: “The establishment of Fund II is a strategic expansion of our mission and something we’re very excited about,” says Birgit Klohs, co-founder and executive chair of NCTF. “With the involvement of the MEDC, this new initiative will be able to reach more start-up entrepreneurs across Michigan.”

What’s the background: Founded in 2020, NCTF quickly attracted a mix of private, public, and philanthropic stakeholders. The organization has raised nearly $12 million for its first fund and has invested in 11 Michigan startup companies, including six in the past 12 months.

“Momentum continues to build for NCT, and that positive vibe has really taken off with the investment from the MEDC,” says Skot Welch, co-founder and managing partner of NCTF. “Our stakeholders are committed to supporting innovation in every county in Michigan in hopes of driving job creation and generational wealth. With Fund II, we can now assist even more entrepreneurs who historically have not been able to access capital.”

How it will work: NCTF leaders will identify startup and early-stage companies for potential investment while continuing to engage new investors. Michigan Capital Network, a strategic partner with NCTF, will support those efforts and help strengthen the pipeline of investable businesses.

“This new Fund II is a powerful tool that can really stimulate the entrepreneurial ecosystem in our state,” says Abid Ali, a principal at  Michigan Capital Network who also is managing director at NCTF. “When you combine the MEDC and private investors with the expertise and passion of the NCTF leadership, there’s really nothing that can’t be achieved. This is truly an exciting opportunity for investors and entrepreneurs in need of capital.”

What’s next: Fund II will focus on supporting Michigan-based startup entrepreneurs working to grow their businesses, create jobs, and attract additional workers and companies to the state.

“This first close is a testament to the commitment of the NCTF leadership and its stakeholders to support entrepreneurs and spur business growth,” says Chris Cook, managing director for capital access at the MEDC. “It’s exactly the type of investment and potential job growth we’re looking to encourage through this initiative.”

Photos by Tommy Allen and courtesy of NCTF