Young startups across Michigan will get a helping hand from a new multi-million-dollar fund managed by Invest Detroit Ventures and supported by the Michigan Economic Development Corporation and the New Economy Initiative (NEI).
The First Capital Fund's goal is to raise $4.2 million in two years and offer up to $150,000 in capital to tech companies in the earliest stages. MEDC has made an initial $2 million investment in the fund, which Invest Detroit aims to double by bringing private capital into the fund. NEI will support the fund with $800,000.
Adrian Ohmer, principal with Invest Detroit Ventures, says the fund does not require startups to bring along any additional financiers because funding for early-stage startups has become harder to find.
"Something we've observed in our seven years of existence is that a lot of the capital pegged as early stage has moved down the pipeline," Ohmer says. "Even angel investor groups only want to fund startups in the post-production phase."
Ohmer says awarding up to $150,000 to startups means they don't have to spend months on the road, raising more capital from various investors, in order to move on to the next level and then do another road trip to raise even more funds a year later.
"We want to make sure they have enough money to meet certain milestones that we work with them to set in order to get them to a fundraising round that makes sense for them in their industry," Ohmer says.
While Invest Detroit is based in Detroit, it has always had a wider focus, Ohmer says.
"With the rebirth of Detroit, the city is certainly central to a lot of what we care about, but our team has always had a statewide focus," Ohmer says.
That focus includes Ann Arbor, which Ohmer calls a "hotbed for startups."
"Ann Arbor companies are more than likely going to be a prominent part of our fund," Ohmer says.
He notes that the fund hopes to engage a broad range of Michigan startups, including those in the Upper Peninsula.
"Companies from the Upper Peninsula have always come down to big events that the state hosts, like the Michigan Growth Capital Symposium, so we're going to find ways to establish a presence there, though it might be mostly through web-based meetings," Ohmer says.
Sarah Rigg is a freelance writer and editor in Ypsilanti Township. You may reach her at [email protected].
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