Southwest Michigan First Life Science Fund Seeks Additional Firepower

3/24/11Follow @xconomy

The Southwest Michigan First Life Science Fund (SWMF) is close to completing an add-on round of financing to bolster its original $50 million fund.

Managing director Pat Morand said he expects to announce something in a month or two. Though Morand declined to disclose the size of the add-on, he said it would be at least $10 million. SWMF, a private limited partnership venture fund, requires a minimum $5 million per investment.

Moran said SWMF will use the money to make new investments and to provide additional support to its current portfolio of seven medical device and biotech startups.

Founded in 2005, the fund is meant to attract life science companies to southwest Michigan, especially Kalamazoo, MI, already home to medical device maker Stryker.

SWMF’s most notable investment to date is Metabolic Solutions Development, which is developing a drug to treat Type 2 diabetes. Since 2006, the Kalamazoo-based startup has raised $50 million, including $23.5 million last fall from SWMF and venture group Hopen Life Sciences in Grand Rapids, MI.

Other investments include Redmond, WA-based Micronics, a maker of tools for molecular diagnostics and monitoring that has operations in southwest Michigan, and Tolera Therapeutics in Kalamazoo, a spinoff from the Cleveland Clinic and the University of Kentucky. Tolera, which is developing a drug to fight organ rejection in transplant patients, has so far raised at least $12 million from Triathalon Medical Ventures in Cincinnati, SWMF, and Hopen.

Morand says the venture capital climate is still tight, especially for a new fund like SWMF.

“We certainly don’t have the track record of Arboretum,” says Morand, referring to the venture capital fund in Ann Arbor, MI, which recently reaped big gains from the sales of HandyLabs and Accuri Cytometers to Becton, Dickinson & Co.(Arboretum is also raising a new $125 million fund.)

Still, “there is a lot of money sitting on the sidelines,” Morand says.

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