By Nathan Peck | MiBiz
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KALAMAZOO — A $30 million venture capital firm sees opportunities in Southwest Michigan among the wealth of life sciences expertise in the region.

Open Prairie Ventures recently opened an office in Kalamazoo, seeking to build relationships with startups and strengthen its partnership with Southwest Michigan First. Open Prairie Ventures is an early-stage venture capital firm investing in agriculture, tech and life science technology companies, with offices in Illinois and Kansas City.

Jim Schultz, founder and managing partner of Open Prairie Ventures, recently spoke with MiBiz about the decision to move to Kalamazoo, the opportunities as foreign firms look to gain access to U.S. markets, and how to help commercialize the innovations coming out of the region. Open Prairie was an early investor in Vestaron Corp., a startup firm developing natural pesticides derived from spider venom in Kalamazoo.

“We have made an investment in the region, and because of that, we’ve worked fairly closely with the Southwest Michigan First Life Sciences Fund. I believe (the move) enhances our funds and offers opportunities to co-invest to make one and one more than two.”

Open Prairie looks to provide strategic capital to small companies, helping bring C-level talent to entrepreneurs looking to grow their companies from a handful of employees to one with 100 employees or more. Schultz sees inbound opportunities in the Midwest as European and Israeli firms look to open operations in the U.S. — with Kalamazoo centrally located between Detroit, Columbus and Chicago.

“We are not just investing capital, it is strategic capital. Our firm brings a lot to the owner in helping to build out the company,” Schultz said. “To do that, an entrepreneur can do a job with maybe six or eight employees, but they realize they will need more C-level talent. We look where we can bring talent to the table and provide the capital necessary for growth.”

The venture capital industry has taken its lumps over the last decade in the dot-com boom and bust. The results have been to the benefit of those venture capital firms that have remained.

“We are investing in early- and growth-stage companies. Too many firms decided they don’t want to be venture capital firms anymore — they wanted to be private equity firms.

“Too many financial engineers and financial bankers got into this industry. They didn’t have an appreciation of risk,” Schultz said. “Fortunately, (the industry) has weeded some of those out, and those of us who have survived have focused on the opportunities out there.”

Ron Kitchens, CEO of Southwest Michigan First and general partner of the Southwest Michigan First Life Science Fund, said the partnership with Open Prairie is part of the natural progression of Southwest Michigan First’s efforts to establish the necessary investment cycle for a sustainable innovation economy in Southwest Michigan.

“In developing and advancing sectors such as life science, capital is absolutely necessary. Capital is the driver of success. It attracts more opportunities, more expertise and more capital to the community creating a self-sustaining life cycle for the sector,” Kitchens said. “By creating the pool of capital necessary to bring high potential investment opportunities, we can increase deal flow and create new companies which in turn generate tech transfer.”

Kitchens said that both funds are focused on early-stage life science technology companies and share other similarities. However, the Southwest Michigan First Life Science Fund currently focuses on therapeutic opportunities while Open Prairie has developed expertise in agriculture. The two firms came into contact when they invested in Vestaron.

“From that experience, we have found that our leadership teams work seamlessly together,” Kitchens said. “We see that as merely a formalization of our partnership that had evolved over the past five years.”