Michigan Creates $6.8 Million Fund for Tech Startups

Posted on May 1, 2014

Economically speaking, the news concerning Michigan typically focuses on the purported death of Detroit.

To counter that negative trend, the Michigan Economic Development Corporation (MEDC) is hoping to spearhead some new growth among high-tech startups. The Michigan Pre-Seed Fund 2.0 is actually a continuation of a previous effort. It will provide $6.8 million. That’s $5.8 million to high-tech startups in the state and another $1 million to help universities transfer technology to the marketplace.

A previous Pre-Seed Fund invested $20 million in 90 firms beginning in 2007.

The money to fund Pre-Seed Fund 2.0 comes from the public sector. The initiative is being managed by a private firm called Invest Michigan. Invest Michigan President and CEO Charlie Moret says his company’s goal is to learn lessons from the first version of Michigan’s Pre-Seed Fund and make smart investments.

The idea is to invest in private companies that are barely off the ground. Moret told Small Business Trends in a recent interview that the goal is to back those that will eventually pay back the investment. This would make Pre-Seed Fund 2.0 an “evergreen” fund continuing to invest in new startups into the future:

“We can be that kind of catalyst to drive these companies. A big portion of the evaluation process is – are these companies going to be sustainable? We are looking for those with the most viable business plan.”

Invest Michigan hopes to find tech startups in some of the following areas: advanced automotive, manufacturing and materials, agricultural technology, alternative energy, homeland security, information technology, and life sciences.

New funding will become available in May first for companies that missed their chance to apply for the previous Pre-Seed Fund. Then the funding will be open to applications from new tech startups by June.  Moret says companies applying for potential seed money from the fund will hear their fate within 45 days.

In a statement announcing the fund, MEDC Vice President of Entrepreneurship and Innovation Paula Sorrell said:

“These Pre-Seed Funds are intended to help innovative companies take those last steps to become commercially viable and more attractive to private investors. With the wealth of entrepreneurial talent we have in Michigan, we want to make sure good ideas turn into businesses that help expand and strengthen the state economy.”