Artificial intelligence led to an increase in venture capital investment in Michigan in 2025, even as investors closed fewer deals, a shift that reflects technology’s dominance in startup funding nationwide.
The National Venture Capital Association and PitchBook counted 174 deals in the state last year, totaling nearly $1.44 billion. The year included a $250 million funding round last fall for Ann Arbor-based HistoSonics, a University of Michigan biomedical company that developed ultrasound medical devices aimed at destroying or shrinking tumors.
Statewide investment volume for 2025 compares to 209 deals for nearly $755.9 million in 2024, according to the fourth quarter Venture Monitor report from PitchBook and NVCA.
Stay up to date on all things West Michigan business. Sign up for our free newsletters today.
Transactions as well as the amount of capital invested decreased during the fourth quarter alone. Michigan made 31 venture capital investments totaling $249 million in the fourth quarter, compared to 65 deals during the same period in 2024 for $301.2 million.
Dale Grogan, managing partner of the Grand Rapids-based Michigan Capital Network, attributes the low deal volume in part to a lack of liquidity and exit activity for venture capital funds nationwide, leading to fewer fundings. Investors nationwide have also been directing their money toward startups involved in artificial intelligence, a sector largely based on the West Coast, he said.
The rise of AI
Nationally, AI accounted for more than 65% of the $339.4 billion invested last year and 39.4% of total transactions. Investments in AI have largely been mega-projects for West Coast-based startups, which “really skewed the numbers for everyone,” Grogan said. The Midwest, with its manufacturing savvy, tends to lag behind other parts of the country in software-based technological innovations, he said.
“Other sectors are where we do well here,” Grogan said. “Over the last couple of years, anything associated with AI, whether it was AI or not, was the absolute darling of the venture capital community.
Grogan called AI startups “the gold rush that investors are looking for right now.”
This perspective illustrates how AI is rapidly changing the economy and venture capital investing.
Grand Rapids-based Grand Ventures made six investments last year. All companies are using AI to manage their businesses and the services they provide to their customers, said Tim Streit, founder and general partner of Grand Ventures.
By 2025, “AI has become the main conversation around financing,” said Streit, who called it “the most disruptive technology I have ever seen.”
“In terms of both our venture business and our portfolio, (2025) became the year where everyone had an AI strategy. If you didn’t start with a strategy, you ended with one, and everyone was moving very quickly to AI,” he said. “It felt like it had become very real in 2025.”
Grand Ventures has expanded its due diligence process for investments to examine how the potential company uses AI, Streit said.
The offers
Nationally, in 2025, venture capitalists closed 16,709 deals totaling $339.4 billion, compared to 15,250 deals in 2024 for $213.2 billion.
PitchBook and the NVCA list only a handful of West Michigan venture capital deals closed in the fourth quarter. They include $41.2 million for HealthBridge Financial Inc., a health care financial technology company based in Kentwood. In December, HealthBridge secured a $1.5 million state grant to support a $17.2 million expansion that includes opening a new office to manage a contract with a major health system on the East Coast. The company plans to create at least 200 jobs through this expansion.
BFKW LLC, a Grand Rapids-based company that developed a temporary implanted device to help obese patients lose weight, raised $1.8 million in later-stage capital during the quarter, according to PitchBook and the NVCA.
Strong prospects
Despite the decline in venture capital operations, Michigan and the Midwest remain active markets for investing in innovative startups.
“The deal flow is exceptional and the quality is really good right now,” Grogan said. “There’s a ton of really good innovation happening in the Midwest and across all sectors. Life sciences, advanced manufacturing and advanced materials are exploding right now.”
Michigan Capital Network made only a handful of investments last year, but had six successful portfolio company exits that constituted a “record year,” Grogan said. He expects 2026 “to be a very, very good year” for the investment firm, with a new fund targeting critical defense technologies in the final stages of fundraising.
“I expect we’ll invest in more deals with bigger checks, and that depends on how optimistic we are,” Grogan said.
Streit said Grand Ventures is “pretty bullish on 2026,” especially as AI allows startups to scale and increase revenue faster than ever, making it “a phenomenal year for doing deals.”
“We think it’s a very conducive environment for us,” he said. “Businesses are growing much faster than they were before the AI era, and that’s great for the AI companies we invest in and the customers they support.”
Learn more about Crain’s Grand Rapids company:
Developer abandons apartment plans for 183 middle-income homes in Netherlands
Battle Creek Signs Key Technology Deal to Launch Drone Fleet Operations
Ludington’s first major housing project in decades is a $20 million bet on high-end apartments