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Wolverine Venture Fund achieves USD2m return on HandyLab acquisition

The Wolverine Venture Fund, part of the University of Michigan’s Samuel Zell & Robert H. Lurie Institute for Entrepreneurial Studies at the Ross School of Business, made a USD2m return on its strategic venture capital investments in HandyLab.

An Ann Arbor-based developer and manufacturer of molecular diagnostic products, HandyLab entered into an agreement earlier this autumn to be acquired by BD (Becton, Dickinson and Company).

The transaction closed on 19 November, handing Michigan business students their third successful portfolio-company exit since the fund’s inception in 1998.

HandyLab was added to the WVF portfolio in 2000 when the fund participated in the company’s series A round. Between 2000 and 2005, WVF invested USD350,000 over six rounds and, upon exit, earned a six-fold cash-on-cash return. Approximately 100 Ross students participated in the fund’s investment activities over that time span.

Overall, HandyLab raised a total of USD47m in seed and early-stage equity financing from a pool of investors, including Ann Arbor, Michigan-based EDF Ventures, which helped found the company and provided the seed capital, as well as Ardesta and Arboretum Ventures.

Tom Porter, director of the Ross School’s Frankel Commercial Fund and former general partner at EDF Ventures, and Mike Partsch, who served his Kauffman fellowship at EDF under Porter’s mentorship from 1998 to 2000, were key players in the formation of HandyLab nine years ago. They negotiated an exclusive licensing deal with the University, and partnered with two U-M chemical-engineering doctoral students, Kalyan "Handy" Handique and Sundaresh Brahmasandra, to co-found the company in June 2000.

Porter saw the start-up venture as a prime investment candidate for the WVF and contacted Tim Petersen (pictured) who was then the Zell Lurie Institute’s managing director.

"In many ways, this was a ‘normal’ WVF investment," says Petersen. "It involved exciting new technology from the University, two friendly venture-capital funds, EDF Ventures and Ardesta, and two University doctoral students with the right amount of interest and commitment to the company and to being entrepreneurs. It was a tremendous experience for students, who had an opportunity to watch the company’s evolution, track its progress and make investment decisions over time that yielded great results."

Petersen is now managing director of Arboretum Ventures, which became an investor in HandyLab in 2004.

Mary Campbell, a founding WVF advisory board member and founding member and managing director of EDF Ventures, says: "It was an opportunity to reap financial rewards that would continue to fund the WVF. It also enabled students to deepen their knowledge and advance their understanding of venture capital and entrepreneurship."

Campbell has served on HandyLab’s board of directors since 2004.

The Zell Lurie Institute oversees WVF, which teaches first and second year MBA candidates the fundamentals of the venture capital business by allowing them to make actual investments in early-stage companies under faculty and advisor supervision and to earn venture rates of return. Emerging high-potential companies, such as HandyLab, receive investment dollars from the WVF at critical times during their seed and early-stage phases. In addition, students provide input by developing and revising business plans, conducting market and product research and writing case studies.

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