Ann Arbor : Innovation & Job News

Three Metro Detroit firms have landed a couple of pieces in the latest round of financing disbursed by the Michigan Microloan Fund Program.

Ann Arbor SPARK manages the Michigan Microloan Fund Program, which makes loans in the low five figures (organizers often decline to specify the size of each loan) to young start-ups looking for seed capital that are based in Michigan. That money is often used for things like prototype development or marketing. Eligible firms are often so new they are unlikely candidates for bank loans or angel investment or even steady revenues.

"These funds are reserved for pre-seed organizations," says Joe Licavoli, manager of capital programs for Ann Arbor SPARK.

The Michigan Microloan Fund Program recently made nine microloans worth $397,000. Most of those loans went to Ann Arbor-based firms because the program also has sub categories that are funded by the city of Ann Arbor and Washtenaw County to invest in local firms in their municipalities. The three Metro Detroit start-ups to receive microloans include:

- Berylline, a Rochester Hills-based company, that is commercializing a specialized, three-wheeled hybrid scooter

- ENT Biotech Solutions, based in Grosse Pointe, is developing a handheld device used to simultaneously clean cut, cauterize and remove larger adenoid tissue portions

- EcoFuel Technologies, of Troy, which is working on technology that turns garbage plastic into diesel fuel

"We'll need a lot more money but (the microloan) did give us some help," says Swaminathan Ramesh, founder & president of EcoFuel Technologies.

Source: Joe Licavoli, manager of capital programs for Ann Arbor SPARK and Swaminathan Ramesh, founder & president of EcoFuel Technologies
Writer: Jon Zemke

Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.

The Michigan University Research Corridor (URC) helped create $2.6 billion in added economic impact in Michigan compared to similar figures released in 2007, according to a report released by the non-profit earlier this month.

The URC is a consortium of the state's three research universities (University of Michigan, Michigan State University and Wayne State University) focused on helping creating synergies between Michigan's universities and increasing research that comes from them. Its more recent report shows the URC contributed $15.5 billion to the state's economy.

"We think that is pretty impressive when we benchmark ourselves against Research Triangle and Massachusetts and Northern California," says Jeff Mason, executive director of the Michigan University Research Corridor.

One of the factors in that growth is the increase of spin-out companies from technology developed at research at Michigan's three research universities. In 2011, the three universities spun out 18 companies, which ranked it third against other similar innovation clusters.

"What you see is these institutions spinning out on average of one company every month," Mason says.
 
Source: Jeff Mason, executive director of Michigan University Research Corridor
Writer: Jon Zemke

Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.

One of the things Accelerate Michigan Innovation Competition excels at is bringing together a broad variety of entrepreneurial players with ties to the Great Lakes State. This makes for some invaluable business connections.

The third annual business plan competition kicked off in the Guardian Building lobby Tuesday evening. The lobby, provided by Bank of America, which has a branch in the ornate hall, provided the right space for investors, entrepreneurs and local shot callers to mix freely. Small enough to be intimate for a crowd of about a 100 people but it's soaring ceiling giving an air of roominess.

This reporter never felt crowded but couldn't stop long enough to send a text message to his wife or an email to his editor without someone tugging at his elbow to say, 'Hello.' In that time, I ran into some of the most successful angel investors in the state as well as aspiring entrepreneurs, like one who is currently trying to launch a start-up while attending medical school at Wayne State University. All of these people mingled both casually and comfortably.

There weren't hard pitches or tables with literature. Those come later during the official part of the competition on Wednesday and today at the Westin-Book Cadillac Hotel. But for the first night, many of the people who are actively building Michigan's new economy came out of the silos of their sectors and made connections with others interested in helping them build a company.

Accelerate Michigan got its start in Ann Arbor as a way to showcase the cream of the crop of Michigan's entrepreneurial ecosystem and connect them with both local and out-of-state resources and investors. This year it moved to downtown Detroit to show off the Motor City's emerging tech hub and vibrant downtown. That shined through Tuesday evening where attendees walked past office buildings lit up with young people working for the likes of Quicken Loans, GalaxE.Solutions, Compuware and Strategic Staffing Solutions.

Accelerate Michigan offers $1 million in prizes to start-ups based in or looking to move to Michigan. This year the top three finishers will take home $500,000, $100,000 and $50,000. For information, click here.

Source: Accelerate Michigan Innovation Competition
Writer: Jon Zemke

Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.

A trio of significant changes are coming to this year's Accelerate Michigan Innovation Competition.

First, the $1 million business plan competition will be held in downtown Detroit this fall. The third installment of the new economy competition will take place in the Book-Cadillac Hotel, the Guardian Building and Orchestra Hall, using the Motor City's vibrant downtown and emerging tech economy as a back drop.

Accelerate Michigan will also welcome Terry Jones as its keynote speaker. The founder & former CEO of Travelocity will speak about start-up culture and building tech businesses in broader terms than previous speakers, which have all been Michigan-based.

"He's a very unknown quantity," says Lauren Bigelow, executive director of Accelerate Michigan. "He has enjoyed an awful lot of success. He has done 10 start-ups."

Accelerate Michigan will also beef up its top prizes. The competition has traditionally had a $500,000 top prize and smaller five-figure prizes. This year the first place winner will still receive $500,000 while second place will take $100,000 in seed capital home and third place will received $50,000. Bigelow explains that in previous years the top-prize competitors came down to three very-worthy start-ups and only one would walk away with a big check. The new prize break down helps solve that.

"Every year it has come down to three like clockwork," Bigelow says.

Accelerate Michigan will be held between Nov. 13-15. For information, click here.

Source: Lauren Bigelow, executive director of Accelerate Michigan
Writer: Jon Zemke

Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.

Sheilah and Ray Markham have been married for 30 years and been in business together for 25 years, raising three kids in Metro Detroit in the process.

In that time, the Markham's have built up their business, California Closets to the point where, as Sheilah puts it, "business is really our family."

"Our business is our baby," Sheilah says. "We don't separate. We talk about it 24/7."

That baby has grown. The company now has showrooms in Birmingham and Commerce Township, where it also has it manufacturing facility. The firm employs 25 people after hiring five this year and up from just 10 at the height of the last recession.

California Closets creates closet systems and shelving, utilizing contemporary design and an ergonomic use of space. The Markhams are looking at upping the business' revenue to $3 million over the next year and penetrating the Ann Arbor area.

Source: Sheilah Markham, co-owner of California Closets in Michigan
Writer: Jon Zemke

Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.

WorkForce Software hit its stride in 2012. The Livonia-based software company opened a new satellite office in Ann Arbor and hired 60 people overall in the last year.

"Last year was our largest growth year ever," says Kevin Choksi, CEO & co-founder of WorkForce Software. "It all comes down to exceptional market acceptance of our product."

WorkForce Software creates management software for large employers. That software provides workforce management solutions for companies with complex labor policies and compliance demands. Its EmpCenter suite enables organizations to fully automate time and attendance processes, manage employee absence and leave, optimize staff scheduling, gain real-time visibility into labor costs and activities through robust analytic and reporting tools, and mitigate the risks associated with employee fatigue across the enterprise.

The 13-year-old firm employs 250 employees and seven interns. It opened an office in downtown Ann Arbor last summer which now employs a dozen people. It currently has 10 job openings for software developers, interface designers, and technical support.

Source: Kevin Choksi, CEO & co-founder of WorkForce Software
Writer: Jon Zemke

Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.

The Accelerate Michigan Innovation Competition is back again this fall and it's bring hundreds of innovative start-ups to downtown Detroit.

The business plan competition has attracted a little more than 300 applicants to vie for the contest's $500,000 top prize. Accelerate Michigan, in its third year, routinely attracts the cream of the crop of start-ups from the Great Lakes region along with a smattering of companies from across the U.S. who are looking at relocating to Michigan.

Accelerate Michigan also serves as a stage for these start-ups to showcase their technology to investors. Last year it attracted 60 investment professionals, ranging from angel investors to venture capitalists to private-equity firms. This year organizers have been able to up that number to more than 100.

"The focus this year is going to be putting Michigan on the map for the investment community," says Lauren Bigelow, executive director of Accelerate Michigan. "We were able to get more venture capital and private equity firms here to mingle with out local investors."

Accelerate Michigan will be held at the Book Cadillac Hotel in downtown Detroit from Nov. 13-15. For information, click here.

Source: Lauren Bigelow, executive director of Accelerate Michigan
Writer: Jon Zemke

Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.

The entrepreneurial duo that brought you flipfrog has launched its own custom application business, Ambr Detroit.

"We're a web start-up that uses web standards to create awesome things," says Anthony Montalbano, co-founder of Ambr Detroit.

Montalbano and Brian Ritter started the company three months ago, creating custom mobile and Internet applications for businesses. The pair left their day jobs (software developers for Domino's) a year ago to launch flipfrog, a mobile app that allows users to share their calendars. The friends are still working on growing flipfrog but are also looking to stretch their entrepreneurial legs a bit more with Ambr Detroit.

"We want to have the flexibility to do what we want," Montalbano says. "We want to be in control of what we're doing. We have very high web standards."

The pair are currently working virtually from their homes in Rochester and Ann Arbor for now. Montalbano says they are currently looking to set up their first office in Detroit. Ambr Detroit has been so busy from the get-go that they are seeking a software developer now and want to grow to a staff of as many as half a dozen within its first year of operation. The partners are also open to striking up partnerships with clients who have a promising idea for a mobile or web app.

"If a good idea comes along we will offer a reduced rate for equity," Montalbano says. "That has already happened once."

Source: Anthony Montalbano, co-founder of Ambr Detroit
Writer: Jon Zemke

Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.

Lakeside Software continues its rapid expansion, hiring about 30 people in both its Bloomfield Hills headquarters and its new Ann Arbor satellite office.

The IT/software firm signed a deal with the state of Michigan to open up its research-and-development office in Ann Arbor (instead of elsewhere in the U.S., like Silicon Valley) and create 198 jobs over five years. So far the 15-year-old firm has expanded its staff to 50 people, including a dozen employees, mainly software engineers, in Ann Arbor.

"We will take as many good software engineers as we can find," says Mike Schumacher, president of Lakeside Software. "Right now our biggest need is in engineering."

Lakeside Software creates management software called SysTrack for the Windows operating system. Schumacher likes to call it business intelligence for IT. SysTrack monitors and analyzes applications for businesses. The company has doubled its customer base and revenues over the last year as it continues to grow in Michigan.

"It has been an unbelievably good year for our business," Schumacher says.

Source: Mike Schumacher, president of Lakeside Software
Writer: Jon Zemke

Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.

The Michigan 21st Century Investment Fund launched in 2006 but the impact of the $109 million fund is just getting started.

Credit Suisse, which helps manage the venture capital fund of funds, released a report last week with some interesting statistics attached to it. The VCs that have received funding from the Michigan 21st Century Investment Fund have invested $97.4 million in 24 Michigan-based companies. Those start-ups now employ 790 people.

"We are at the inflection point where we can say, 'Hey, it's working,'" says Sean O'Donnell, vice president of Credit Suisse's Michigan office. "There is a lot of dry powder left."

The Michigan 21st Century Investment Fund launched with a goal of providing capital to fund managers making venture capital, private equity and mezzanine investments in Michigan. Those funds are then expected to invest in local companies in the life sciences, manufacturing, healthcare, IT and media industries. Some of the most active firms have been Ann Arbor-based Arboretum Ventures, investing $17.5 million in eight Michigan-based companies. Pegasus V has also made one investment worth $35 million.

"We are far from the (peak)," O'Donnell says. "We are less than 60 percent deployed. There is a lot to be done so the companies that have been invested in have the money to continue to grow."

Source: Sean O'Donnell, vice president of Credit Suisse's Michigan office
Writer: Jon Zemke

Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.

Michigan doesn't lack for money. It's one of the wealthiest states in the union, but much of its investment capital ends up being deployed out of state.

"There is a lot of money in Michigan that is available for investing but it goes to the coasts mostly," says Merrill Guerra, executive director of the Michigan Venture Capital Association. "Our challenge is to get it to stay here."

The Michigan Venture Capital Association's Annual Research Report shows that dynamic is starting to shift in Michigan's favor. Capital under management by Michigan-based VCs is up 64 percent over the last five years. That $3 billion under management also has nine figures worth of dry powder, coming to nearly $370 million available for new investments, the report states.

The report adds that four Michigan venture capital firms successfully closed funds last year, raising $348 million. Ann Arbor-based Arboretum Ventures and Plymouth Venture Partners led the way. Michigan-based VCs are also trending toward raising bigger funds. The Great Lakes State now has six funds worth more than $100 million, eight more funds with a value between $50 million and $100 million and another 13 funds smaller than $50 million.

"One of the great things about putting your money into Michigan venture capital firms is the higher return on investment," Guerra says. "The companies here are more capital efficient and can be bought at a lower price but when they exit it's on a national scale."

Source: Merrill Guerra, executive director of the Michigan Venture Capital Association
Writer: Jon Zemke

Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.

The number of seed capital options for early entrepreneurs in Metro Detroit have risen significantly in recent years, prompting the Michigan Economic Development Corp to increase efforts to connect these entrepreneurs with cash funds.

The MEDC will host a series of events showcasing the seed-funding and business-building options available to Michigan's growing class of entrepreneurs. These free events, which kickoff next week, are designed to help entrepreneurs and start-ups find growth opportunities through the business services and financial support made available through MEDC-supported business incubators and accelerators across the Great Lakes State.

"Michigan is different than any other state because we truly fund an ecosystem," says Paula Sorrell, managing director of entrepreneurship for the Michigan Economic Development Corp.

The Metro Detroit meetings will take advantage of programs at Detroit-based Next Energy, along with Ann Arbor-based programs and seed capital funds like Accelerate Michigan Innovation Competition, Biotechnology Business Consultants, Michigan Angel Fund, Michigan Pre-Seed Capital Fund, Michigan Venture Capital Association.

"It's not unusual for a company to take advantage of 4-8 programs from the state to further their businesses," Sorrell says.

The 70-minute presentations based in Metro Detroit will be held on Monday and Tuesday at places like the University of Michigan, Eastern Michigan University, Wayne State University, Next Energy, the Macomb-OU INCubator and Automation Alley. For information, click here.

Source: Paula Sorrell, managing director of entrepreneurship for the Michigan Economic Development Corp
Writer: Jon Zemke

Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.

ReCommunity, a recycling company, has significantly expanded its workforce after investing $5 million into its Southfield location to upgrade it to a single-stream processing facility. The investment is aimed to help the Resource Recovery and Recycling Authority of Southwest Oakland County expand the amount of material it recycles by allowing users to have one recycling bin instead of sorting out their recyclables.

That investment has allowed ReCommunity to hire a dozen new people, expanding its Southfield staff to forty. The company employs 245 people in Michigan at five locations. Those facilities are in places like Ann Arbor, Roseville and Saginaw.

"This will be a large enabler for expanding the footprint we have," says Sean Duffy, president & COO of ReCommunity.

ReCommunity expects its new single-stream recycling facility will create 66 new jobs in the near future.

Source: Sean Duffy, president & COO of ReCommunity
Writer: Jon Zemke

Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.

Money continues to flow into into Metro Detroit's venture capital community thanks to the Venture Michigan Fund II, which just made a $15 million investment into the Ann Arbor office of the Venture Investors Early Stage Fund V.

The Venture Michigan Fund II is a fund of funds, which means it invests in other venture capital firms. It has $120 million to distribute to Michigan-based venture capital firms or VC's with offices in the Great Lakes State, and that money is supposed to be invested in Michigan-based start-ups.

So far, $52 million of that Troy-based fund has been invested into a number of Metro Detroit firms, such as Ann Arbor-based Plymouth Venture Partners. "We have been fairly active in the first 12 months of the program," says Sean O'Donnell, vice president of Credit Suisse's Michigan Office. "Our pacing is just slightly ahead of the deployment of the fund."

O'Donnell expects the rate of investment to slow down in the near term, but to pick up toward the end of this year. He foresees a third of the original fund to be available by 2013.

The Venture Michigan Fund II launched last year as a sequel to the original $96 million Venture Michigan Fund that came out in 2006. Its most recent $15 million investment in Venture Investors Early Stage Fund V will be directed at investing in start-ups in the life science, clean-tech and other high-tech companies in Michigan.

Source: Sean O'Donnell, vice president of Credit Suisse's Michigan Office
Writer: Jon Zemke

Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.

The Hantz business empire continues to expand in Metro Detroit. Most people know the name Hantz from the Hantz Group's retirement financial services or the Hantz Farms proposal from Hantz Group founder John Hantz to bring commercial urban agriculture to Detroit. Now, Hantz Bank is poised to become another signature endeavor.

Hantz Group bought the Davidson State Bank in 2010, creating Hantz Bank to provide banking services for its financial services customers. The newly re-formed bank opened a branch in Ann Arbor last year, an office in Southfield, and plans to open a retail branch at its new Southfield headquarters later this year.

All of that growth has meant more jobs. Hantz Bank has hired 20 people in the last year, expanding its staff to 42 people.

"We'll probably double that (employee growth) in 2012," says David Lamb, CEO of Hantz Bank.

Hantz Bank's deposits are up $24 million in the last year. Lamb expects assets to grow to $100 million by the end of this year. Another $40  million to $50 million in assets are projected to be added to Hantz Bank's bottom line in 2013.

"Almost all of our growth has come from working with financial services clients," Lamb says.

Source: David Lamb, CEO of Hantz Bank
Writer: Jon Zemke

Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.