By Tim Mullahy
Michigan’s been trying to build a startup ecosystem for quite some time. Its efforts are paying off. Today, the region is well on its way to thriving.
Six years ago, the startup ecosystem in Michigan looked very different from how it looks today. At that time, the state had a paltry seven early-stage startups in the first quarter of the year. By Q1 2014, that number skyrocketed to 31. As of 2015, that number has increased to more than 50.
This meteoric growth has been over a decade in the making, and was the result of a concerted effort by state and local leaders who desired, above all else, to lay the groundwork for a thriving startup ecosystem. These efforts have inarguably paid off, notes TechCrunch. The number of venture capital professionals in Michigan increased by 84 percent in five years, while the number of firms increased by around 50 percent.
This becomes truly impressive when you consider that this occurred in the face of a 13% nationwide decline in venture capital manpower.
“I’ve been involved with this since Michigan began its push in late 1999 or early 2000,” Michael Finney, former Michigan Economic Development Corp President and CEO, explained to TechCrunch. “Fast forward 15 years later, and most of the strategies we put in place are things that are really starting to bear fruit.”
“Michigan was a state that had a handful of VCs with maybe three or four firms, and now we have several billion of capital under management,” he continues. “We were not competing in the venture capital space in a real way.”
Thanks to the efforts of Finney and other like-minded individuals, Michigan is now one of the best regions in the nation to found a startup, thanks both to the wide selection of venture capitalists and the state’s overall lower cost of living which, according to venture capitalist Jan Garfinkle, cuts the funding cost of a start up by at least two-thirds.
Michigan’s position as a leader in automotive production makes it an ideal location for tech startups related to transportation or manufacturing. Large businesses certainly see the writing on the wall in this regard. Earlier in May, General Motors announced plans to invest $1 billion in the expansion and renovation of its technical center in Warren, Michigan. It isn’t just businesses in automotives and manufacturing that stand to gain from Michigan’s newfound prominence as a startup hub, mind you.
Internet-based ventures, for example, are thriving in the region, and startups here run the gamut from marketing to food production to golf ball retrieval.
Looking at it now, it’s a little hard to believe that just a few years ago, Michigan was hardly a blip on the radar as far as venture capital was concerned. Today, it’s far more than that; a center for business and entrepreneurship very much on par with New York or San Francisco. Perhaps it’s not the perfect place for every business – but if you take a look, you might find that it’ll be just right for yours.
– Tim Mullahy is the general manager at Liberty Center One. He built a modern 20,000 square foot facility that went from the design board to production in less than six months and is a proud member of Michigan’s startup community.