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An Entrepreneurial Awakening

Detroit’s perfect storm of resources, interest and ability

Page 22-23

By Melissa Anders

The energy is palpable in Detroit.

The Motor City, once a hub for innovation that spawned the nation’s auto industry and countless other enterprises, is returning to its entrepreneurial roots and focusing on small businesses rather than relying on the industrial giants that for decades carried most of the state’s economic burden.

The area had in many ways become victim of its own success, becoming too comfortable with giant employers that were expected to provide jobs from cradle to grave, said Jim Boyle, senior program officer with the New Economy Initiative (NEI) in Detroit.

“But we have this really rich history of innovation in this region that we’re really trying to awaken and get people not only comfortable with becoming entrepreneurs and starting their own business and catalyzing their own ideas, but also having them realize that there is this network of support entities to help them do it,” he said.

Detroit is finding new life in a burgeoning startup culture as it pulls itself out of a painful recession that left thousands unemployed and some of its major employers and the city government bankrupt.

“We have this really rich history of
innovation in this region that we’re really
trying to awaken and get people not only
comfortable with becoming entrepreneurs
and starting their own business and
catalyzing their own ideas, but also having
them realize that there is this network of
support entities to help them do it.”
— Jim Boyle, Senior Program Officer,
New Economy Initiative

“We’re coming to sort of a perfect storm of resources, interest, experience and ability,” said Paula Sorrell, vice president of entrepreneurship, innovation and venture capital at the Michigan Economic Development Corporation. “A lot of experienced entrepreneurs are taking notice of Detroit and experienced investors are setting up shop there.”

But that wasn’t the case in the early 2000s. The problem wasn’t a lack of ideas – some of the founders of Google and Groupon went to the University of Michigan – but they launched their companies outside of Michigan, in areas that had more robust entrepreneurial support systems.

“If you compare late 2011 to today, it’s night and day as far as the activity and the volume and the progress,” said Ross Sanders, executive director of Bizdom. “I think it took awhile for Detroit and the surrounding area to figure these things out, but I think that as a community we’ve made a ton of progress.”

Serial entrepreneur and Quicken Loans Chairman Dan Gilbert started Bizdom in 2007 to promote startups in Detroit and Cleveland. It provides tech-based startups with up to $125,000 in seed funding, mentoring and a collaborative workspace in exchange for an 8 percent equity share in the company and a commitment to headquarter the business in Detroit or Cleveland. Proceeds from the equity are reinvested into future businesses.

So far, 26 Detroit startups have entered the program and have created about 55 jobs since the current accelerator model launched in 2012.

Bizdom received funding from NEI, which has provided $82 million in grants to several nonprofit service providers that help small businesses. NEI started off as a special project of the Community Foundation for Southeast Michigan and has grown to a $140 million program supported by more than 10 philanthropic foundations.

NEI also provided funding to TechTown Detroit, which assists with technology-based commercialization out of several universities and runs business accelerators for university students and tech companies not served by Bizdom. It also supports retail startups and other microenterprises.

But TechTown recognizes the concern about the creation of two Detroits: the increasingly vibrant downtown core that’s disconnected from still-struggling neighborhoods. Through its SWOT City program, TechTown provides entrepreneurship support and economic development assistance to various city neighborhoods. The program has resulted in 21 new jobs, 172 retained jobs, eight new businesses and 15 more in the pipeline.

“For me, it’s perhaps the most important piece of work we do because it really is the desire of TechTown and our board and stakeholders to carry the opportunity of the center to the neighborhoods, knowing fully that without doing that we’ll continue to have a fractured city,” said TechTown president and CEO Leslie Smith.

Boyle also views reaching out to the neighborhoods as a key step in Detroit’s transformation.

“In the neighborhoods, you have some of the most interesting, assertive small business entrepreneurs that you’ll find anywhere, but connecting them to the resources that they need to grow has been a missing link,” Boyle said.

Detroit’s next steps must also involve attracting additional funding sources and getting private industry more involved, Smith said. The lack of a fully engaged private sector is potentially the No. 1 barrier to realizing Detroit’s full potential, she said.

“The beauty of Detroit’s entrepreneurial experience is we’re building it as we go,” Smith said. “And you can sort of put your print on it and be a lasting piece of the history of this entrepreneurial movement … That is going to change our future.” Melissa Anders is a metro Detroit freelance writer.

Melissa Anders is a metro Detroit freelance writer.