Most states bemoan the paucity of venture capital for their tech sectors. The Michigan business community has been doing something about it for nearly a decade, and the results are impressive. Business leaders have been pooling resources to fund early stage tech companies in their state. But rather than risk being in the venture business directly, they created what is called a “fund of funds,” a pool of money to be invested in venture capital firms who know how to make such investments and who have committed to funding tech companies in Michigan.

The Michigan business community created the first fund in the depths of the 2008 recession, worried that Michigan’s already struggling tech sector would be left further behind. Yet Michigan’s Renaissance Venture Capital Fund isn’t a charitable endeavor. Businesses have returned to invest in later funds based on the financial performance of the earlier ones. Michigan business leaders just finished raising over $80M for their third fund, with over $200M raised over the past decade.

The effect of the Renaissance Fund on Michigan’s tech sector has been dramatic. Not only are emerging growth companies getting funded, but the state has attracted over $1.3B in venture capital, with much of the credit going to how the Renaissance Fund was structured. As a Fund of Funds, their money is designed to drive other funding. To date, for every dollar the fund has indirectly invested, $17 has been invested beside it, an impressive leverage of out of state dollars. They’ve also helped to create over 1,300 well-paying jobs, involved themselves as mentors and advisors to these companies, and created connections between established and emerging businesses.

What the Michigan business community has demonstrated is that one can do well while doing good. Ten years ago, Michigan’s CEOs figured out that they had to be part of the solution. They also figured out that their money alone wasn’t enough. They also knew what they didn’t know – they’re not venture capitalists and weren’t going to set out to be such. Wealthy families, pensions and other organizations with capital have long understood the benefits of using a fund of funds approach to diversify risky venture capital investments byspreading their money across many venture firms. Michigan CEOs took a proven investment model and reimagined it for the benefit of their state, ensuring that their dollars leveraged out of state funds for their start up community. The results are telling, placing Michigan’s tech sector on the map with the nation’s venture industry and creating an interesting approach to impact investing.

With more than 30 years’ experience in law and business, Newt Fowler, a partner in Womble Bond Dickinson’s business practice, advises many investors, entrepreneurs and technology companies, guiding them through all aspects of business planning, financing transactions, technology commercialization and M&A. He’s the pastboard chair of TEDCO and serves on the Board of the Economic Alliance of Greater Baltimore. Newt can be reached at newt.fowler@wbd-us.com.