When University of Michigan Ross School of Business professor David Brophy launched the Michigan Growth Capital Symposium 29 years ago, most people didn’t understand why he would want to encourage the development of startup companies in Michigan.

“I was the crazy guy who kept preaching this gospel of diversifying the economy and getting more knowledge-based, fast-growing industries,” said Brophy, director of U-M’s Center for Venture Capital and Private Equity Finance.

He’s not the crazy guy anymore. The symposium, which helps startup companies connect with prospective investors and encourages discussion about various issues confronting the state’s entrepreneurs, annually attracts several hundred attendees. The MGCS takes place May 11-12 at the Marriott hotel in Ypsilanti.

“We used to have to beat people over the head to get them to come,” Brophy said. “This community totally embraced the symposium. They’ve now made it their own.”

The momentum of Michigan Growth Capital Symposium is a microcosm of Michigan’s evolving entrepreneurial economy. That is, interest is high - but diversifying the economy is a long process.

Brophy believes that successes like Johnson & Johnson’s 2008 acquisition of U-M spinoff HealthMedia and Becton, Dickinson and Co.’s 2009 acquisition of U-M spinoff HandyLab illustrate the power of Michigan-based tech companies.

“But unlike companies that were sold here in the past, they’re not leaving,” Brophy said. “They were bought to be part of J&J and BD because the management is here, the science is here and so on. The guy who ran HandyLab is now CEO of Accuri Cytometers. And that’s what we need.”

It’s a refreshing turn of events for Brophy, who distinctly remembers several successful Ann Arbor tech companies that exited the region in the 1980s after growing up here.

“They were like cutting down six or seven oak threes, because what we missed were the acorns that dropped on the ground and turned into other companies,” Brophy said. “I see these things that seem like spring time in Michigan, and things are going to grow and take root.”

Brophy recently discussed his enthusiasm for Michigan’s economic diversification with AnnArbor.com’s Nathan Bomey.

AnnArbor.com: How will Michigan emerge from the economic crisis?

David Brophy: The good thing Michigan has going for it, compared to other states, is that we had the problem first and we moved to do something about it pretty much before everybody else recognized it.

That puts us a little ahead, but it still doesn’t, of course, totally solve our problem. You get around town and you see the spirit that’s emerged here. Somebody told me there are 50 organizations in town, all of them focused on some aspect of entrepreneurship and business building and generating stuff.

I think there’s a good spirit in the air. We still need to import a different kind of person. We need young mangers, young people who’ve got managerial experience in running knowledge-based or technology-based companies and perhaps fast-growth companies.

Most of our people have come out of middle management for gigantic companies. And they don’t make good managers of little companies. You just can’t go from that to managing a tech startup with 10 employees. All of our universities in this state - they all get it. They all are focused on training people to fit into the workforce. (And) they’re mobilizing their research. The appetite for commercialization is definitely there.

AnnArbor.com: One of the panel topics is titled “U-M Passes $1 Billion in Research: What This Means for Start-ups?” What do think it mean for startups?

Brophy: What it will mean, believe me, is that the second billion will come a hell of a lot faster than the first billion because it all builds on itself.

AnnArbor.com: How successful have the state government’s venture capital efforts been in establishing an industry?

Brophy: I try to see the whole picture, and I give the state credit, because if our private sector had been anything but a huge manufacturing oligarchy that had no interest in small tech companies, you wouldn’t have had to do it.

But because private sector didn’t do it, the state had to do it. And I think it’s rolling forward.

AnnArbor.com: How much of the residual shadow of the state’s manufacturing image is still holding us back with the tech startup industry?

Brophy: Take medical devices. It’s got to be made with great precision out of, in some cases, exotic materials.

We’ve got, in this state, an array of tacit engineering and manufacturing first-hand knowledge. These guys used to design and manufacture very complex automobiles. If you took a blueprint of a medical device and shoved it under their nose and gave them two to three weeks to build this thing, my bet is they could build it.

We need to get some sort of managerial genius who can dream up something we need them to do. That’s what missing. I think it’s quite refreshing to see (Ann Arbor venture capitalist) Rick Snyder run for governor. Whether he’ll make it or not, I don’t know. I wish he would.
But whether or not, I think he’s delivered the body blow. As you go forward, you cannot ignore Rick Snyder’s candidacy.

AnnArbor.com: How seriously do you take this movement of student-led startup companies at the university?

Brophy: I think they’re very good. I run a course called “Financing Research Commercialization,” and I had 91 students in it this past fall term. They’re from all over the university.

I take projects out of the labs and from companies big and small and from other countries. I’ll take (for example) a fourth-year med student, third-year law student, a PhD in biomechanical engineering, a master’s student in engineering and a couple of undergrads.

They mimic startup teams and they drive forward with the principal investigator and mentors from around town. We transfer that technology into a startup company and off it goes.

It is less important in a course like that that the project they work on is a success than it is that they’re now infected with the idea of starting a company.

Contact AnnArbor.com’s Nathan Bomey at (734) 623-2587 or nathanbomey@annarbor.com or follow him on Twitter. You can also subscribe to AnnArbor.com Business Review's weekly e-newsletter or the upcoming breaking business news e-newsletter.