Tom Henderson|Crain’s Detroit

For at least one city, Detroit has become a model of entrepreneurial development.

Dismayed by a study that showed the Cincinnati region ranked behind its metropolitan peers in venture

Chris Rizik, president of Renaissance Venture Capital Fund

capital attraction and investment, executives at the consumer products giant Procter & Gamble wanted to figure out a way they and other corporate citizens in southern Ohio could help young companies get formed and grow.

For advice, they engaged the consulting firm ofMcKinsey & Co., which said, in effect, don’t reinvent the wheel, do what Detroit is doing with its Renaissance Venture Capital Fund.

Members of the organization then known asDetroit Renaissance had decided in 2007 to raise a fund of funds that would invest in venture capital companies that would, in turn, invest in tech start-ups in southeast Michigan.

It would soon prove a lousy time to begin raising money, and if they had any idea the worst recession in 70 years was about to hit, the Renaissance folks probably would have put things on hold. But they managed to raise $45 million, anyway, with corporate investors including the Kellogg FoundationHuntington Bank,Blue Cross Blue Shield of MichiganAAA and DTE Energy Co.

It was the first effort of its kind in the nation — large companies raising a fund to invest in start-ups. While there was a sense of community good in doing it, there was a lot more to it than charity.

One, if things worked out, the companies would get a nice return on their investments. Two, they would be able to vet new technologies and better help young companies meet the needs of the marketplace. Three, the big companies would have first dibs on the products and services they had invested in.

Based on the success of investments made from the first fund, fund manager and President Chris Rizik was able to close on a second fund of $60 million in April, broadening his reach to add theDow Foundation, the McGregor Fund, and three companies from western Michigan, includingMeijer Inc.

Success? How about these numbers? The fund invested in three state VC firms and six outside the state. Two of those outside Michigan subsequently opened offices here: Florida-based Arsenal Venture Partners and Illinois-based MK Capital LLC.

The fund has made commitments of $33 million and written checks for $11.3 million. The fund’s VC partners have in turn invested $34 million in 15 state companies and leveraged about $136 million more in coinvestments from their VC partners.

“That means we’ve leveraged our original investment about 15 times, in terms of Michigan companies raising money,” Rizik said.

And seven of those companies have already had exits, returning 2.7 times their investors’ money.

Gerry Anderson, the president, CEO and chairman of DTE, said that sort of leverage ratio is just what local execs had in mind when the first fund was formed. So, too, he said, was boosting Michigan’s ranking among states when it comes to getting VC money.

The state had been middle-of-the-pack at best in quarterly rankings released by the National Venture Capital Association. While it still lags well behind such states as California, Massachusetts, New York and Texas, Michigan has fared better lately.

In the first quarter this year, for example, Michigan ranked No. 15, with 12 companies getting $48.4 million in VC investment. In the second quarter, according to numbers released this morning by the NVCA, Michigan was No. 17, with eight companies getting $25.6 million.

All of which led McKinsey to point Cincy toward Detroit.

Several months ago, P&G officials contacted Rizik and told him they were doing a clone. CalledCintrifuse, it has raised $55 million thus far, and P&G has lent its vice president of global business development, Jeff Weedman, to lead it for two years.

“When we formed Renaissance, I kept saying that if what we did worked, it would become a model for the rest of the national as a way to increase capital and innovation in regions that are underserved,” says Rizik. “It was very cool for us that they found us via a McKinsey study that identified us as the best model. Good news for us and for Michigan.”

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