Sec. 27. (1) The Michigan early stage venture investment corporation shall publish and make available on the Internet an annual report not more than 3 months after the close of the Michigan early stage venture investment corporation’s fiscal year that includes all of the following:

1. An enumeration of all investment and related activities for the fiscal year. In fiscal year 2018, ending on December 31, 2018, the Venture Michigan Fund, incorporating both the Venture Michigan Fund I and the Venture Michigan Fund II:

• There were no new commitment to underlying fund managers. The Venture Michigan Fund is fully committed.
• $11.9 million was drawn by underlying fund managers in the Venture Michigan Fund.
• $12.9 million was distributed by underlying fund managers in the Venture Michigan Fund.

2. Documentation and analysis of the implementation and status of the Michigan early stage venture investment corporation’s investment plan and the economic impact of the plan on this state, including, but not limited to, the following: In March 2018, the Venture Michigan Fund undertook a survey from the underlying fund managers in both Venture Michigan I and Venture Michigan II to ascertain impacts to Michigan associated with their investments for both the 2018 calendar year and for inception to December 31, 2018 Michigan investment and job activity. This survey specifically asked each fund manager in the Venture Michigan Fund:

• Number of Michigan-based investments made
• Total dollars invested in these companies to date
• Total amount invested by all other investors in these Michigan companies since the date of the fund manager’s first investment in said companies
• Investment reserves, if any, associated with these Michigan company transactions
• Number of full time equivalent Michigan employees in these companies at the time of investment – as well as number currently employed (or employed at the time of exit)
• Number of professionals (investment or otherwise) employed by the underlying fund managers in Michigan
• For the Michigan investments and relating to expenses in the State: salary, payroll and other taxes, operating expense, capital expenditures, and legal/audit expenses

The following responses are the aggregate summing of the responses provided directly by the fund managers in the programs.

1. The number of jobs represented by the investments made in qualified businesses in this state. As of December 31, 2018, 1,762 people are employed in Michigan associated with investments made by the Venture Michigan Fund underlying fund managers.

2. Return on investment generated by investment, the types of activities in which investment was made, and the impact of that investment on the economic base of this state.

• Fund Managers in Venture Michigan Fund I (“VMF I”) and Venture Michigan Fund II (“VMF II”) have invested $264.5 million to 56 unique portfolio companies. Note there are several Michigan companies that have received investments from fund managers in VMF I as well as VMF II. Any potential overlap in metrics has been accounted for in the aforementioned data and the data metrics below.
• The total amount invested in these portfolio companies from VMF managers and other investors in the syndicate was $1.71 billion, representing a 6.45x leveraging effect to Venture Michigan Fund Investments.
• Total jobs positively impacted across the 56 companies has been 1,762, up from 893 at entry, an increase of 97.3%
• The VMF fund managers directly employ 43.75 FTE employees in Michigan
• Approximately $175.4 million in cost of goods sold were appropriated in the State of Michigan in calendar year 2018
• The approximate payroll expense for the VMF I and VMF II underlying fund managers and the subsequent portfolio company employees was approximately $128.1 million for calendar year 2018.
• In total, the positive financial impact on the State of Michigan is approximately $303.5 million in 2018.

Venture Michigan Fund I

• Overall, $1.3 billion of equity has been invested into 34 Michigan-based portfolio companies.¹ This represents a 7.85x leveraging of the VMF I’s underlying fund manager investment of $169.6 million.
• These portfolio companies have exposure across the following sectors: life sciences, manufacturing, healthcare, IT, application software and cleantech.
• Life sciences accounts for 49.1% of the investments on a dollar basis as of December 2018. Healthcare IT is second in size at 35.69%, and Application Software is third at 5.5%.

Venture Michigan II

• Overall, $859.1 million of equity has been invested into 30 Michigan-based portfolio companies.¹ This represents a 4.86x leveraging of VMF II’s underlying fund manager investment of $176.9 million.
• These portfolio companies have exposure across the following sectors: life sciences, healthcare IT, application software, cleantech, advanced manufacturing and media.
• Healthcare IT being the largest sector on a dollar invested basis as of December 2018 at 33.2%. Application Software is second at 30.7%, and Life Sciences is third at 19.0%.
• Return through the fiscal year from investments made by each Michigan early stage venture investment fund in venture capital companies.²

As of December 31, 2018, the underlying investment net multiple and internal rate of return of the Venture Michigan I investments were 1.15x and 2.56% on invested capital, respectively.

As of December 31, 2018, the underlying investment net multiple and internal rate of return of the Venture Michigan II investments were 2.54x and 28.36% on invested capital, respectively.

• The number of seed or early stage businesses that have been funded by venture capital companies. Venture Michigan Fund I (“VMF I”) and Venture Michigan Fund II (“VMF II”) have invested $264.5 million to 56 unique portfolio companies.
• The aggregate net distributions made to each fund by the venture capital companies that have entered into agreements with each Michigan early stage venture investment fund through the end of the fiscal year and since the inception of each Michigan early stage venture investment fund. VMF I distributions during calendar year 2018: $5.4 million
  VMF I distributions since inception: $40.3 million

VMF II distributions during calendar year 2017: $7.5 million
VMF II distributions since inception: $27.3 million

• The total amount invested by each Michigan early stage venture investment fund in venture capital companies.³ VMF I: $169.6 million equity has been invested into 34 portfolio Michigan-based companies.

VMF II: $176.9 million of equity has been invested into 30 Michigan-based portfolio companies.

• Any upcoming use of tax vouchers that is certain and the timing of that use. Tax voucher usage is anticipated in the State’s 2020 fiscal year, no earlier than April and more likely to be July 2020.  Maximum voucher usage of $32.3 million.
• An estimate of the potential use of tax vouchers over the 5-year period following the end of the fiscal year. Venture Michigan Fund I: None. There is no longer any debt facility associated with VMF I and therefore, no more vouchers will be associated with VMF I.

Venture Michigan Fund II: Based on the latest forecasts, it is currently projected that the first year of tax voucher usage for VMF II will be the State’s 2020 fiscal year. Over the next five years (calendar year 2019 through calendar year 2023), total estimated tax voucher usage would be approximately $236 million (if vouchers are sold with no discount and no further distributions from the underlying fund managers).

¹ This number includes the equity commitment of the VMF fund manager as well as other investors in the syndicate.

² Past performance is not necessarily indicative of future results. Unless otherwise specifically indicated, returns do not take into account application of management fees, allocable expenses and carried interest, if applicable, at GCM Grosvenor Private Markets level. Returns would be lower if net-of-fee performance was presented.

³ VMF I and VMF II invest in some of the same portfolio companies.