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First Step Fund invests in 4 TechTown firms

Firms with a connection to Detroit's TechTown small business incubator took the lion's share of the first round of financing from the First Step Fund.

Four of the seven firms that received five-figure loans are either housed in or are utilizing programs in the Detroit-based business accelerator. Those firms include Clean Emission Fluids, NextCat, Ann Williams Group, and Air Movement Systems. The other three start-ups came from or are connected to the Ann Arbor SPARK incubator.

Air Movement Systems plans to use part of its $50,000 loan to help it conduct an independent test of its air-circulation and purification technology at a chicken farm at the University of Georgia. The price tag to proving this technology comes to $25,000, to start. The rest of the money will go toward upgrading the firm's equipment.

"Nothing is free," says Dennis Danville, president of Air Movement Systems, which is utilizing TechTown's SmartStart program.

Invest Detroit and Ann Arbor SPARK, which runs the Michigan Micro Loan Fund, created the First Step Fund. The idea is to create a funding source for local start-ups starving for seed capital.  The current credit crisis has resulted in traditional lending institutions cutting back on investment capital.

Each loan averages about $50,000 and is
either short-term or in the form of a convertible note. Proceeds are usually used to push forward product development or expand inventory.

The First Step Fund expects to make 40 loans this year. The recipients are picked by a board independent of TechTown. The next round of financing is not far away.

"The next investment will be in mid-June," says Mahendra Ramsinghani, managing director of the First Step Fund and the husband of a co-founder of Metromode's parent company, Issue Media Group.

Source: Mahendra Ramsinghani, managing director of the First Step Fund, and Dennis Danville, president of Air Movement Systems.
Writer: Jon Zemke

Teach for America expands into Detroit

Some of the best young minds in the U.S. are coming to one of the places most in need of their student-teaching services, now that Teach For America is sending college grads to schools in Detroit.

The national organization will send 100 of the top college graduates from across the U.S. to teach at public and charter schools in the city.

"The core members will have their own classroom and be led by a teacher," says Deborah Loewenberg Ball, dean of the University of Michigan School of Education, who is helping organize the effort.

Teach For America sends new grads to work in troubled school districts nationwide. Thousands of students apply for the positions, and only 7 percent are accepted. The organization had been sending these teachers to schools in Detroit until a few years ago. It is now reforming that relationship as part of a multi-year commitment.

The idea is to foster innovation in education and focus on preparing teachers for urban schools.

Source: Deborah Loewenberg Ball, dean of the U-M School of Education
Writer: Jon Zemke

Automation Alley invests $300K in local firms

Automation Alley has invested $300,000 into three local start-ups, providing them with seed capital to develop technologies and push their business plans forward.

Cargo Solutions Group, CircleBuilder Software, and Clean Emission Fluids were awarded the funds. So far Automation Alley has invested $5 million in 25 companies in Metro Detroit, and more investment is on the way. The next round of investments from the evergreen fund could be announced as soon as this summer.

"We still have funding available and we will be making more investments later this year," says Michelle Zellen, a spokeswoman for Automation Alley.

Cargo Solutions Group received the lion's share of the money, taking in $250,000. The Sterling Heights-based firm specializes in advanced automotive manufacturing of personal transportation consumer products. It specializes in pickup truck cargo management systems. It is also developing hybrid power train solar re-charging systems integration as a second phase project tied to the cargo system.

CircleBuilder Software is receiving its second infusion of cash from Automation Alley, with $25,000 this time around. The Franklin-based start-up received $250,000 from Automation Alley last spring. CircleBuilder creates an Internet and social media presence for churches, providing a private, rules-based community, networking, and outreach management Internet service that the churches use to connect with their members and other organizations.

Clean Emission Fluids also received a follow-on investment of $25,000. The Detroit-based firm, which calls TechTown home, develops a patent-pending biofuel and clean diesel system called FAST, Fluids Affordably Stored. The technology stores and blends variable-ratio biofuels and fuel additives.

Automation Alley is still open to taking applications for funding. For information or to inquire about applying for seed funding, call (800) 427-5100 or send an email to info@automationalley.com.

Source: Michelle Zellen, spokeswoman for Automation Alley
Writer: Jon Zemke

Half of GM's patents include green technology

General Motors is beefing up its green credentials through both its research and development and manufacturing capacity. It has also been able to eliminate landfill waste from dozens of its manufacturing plants.

"We're seeing an increase in electrical and advanced propulsion patents," says Kevin Kelly, a spokesman for GM. "Both are classified as green technologies."

The drive toward hybrid and electric automobiles has helped push GM toward greener technology advances. So much so that more than half of its 1,300 patents in 2009 qualified as green technologies. Kelly expects the percentage of green tech patents to increase in the near future as the automaker continues to trend toward hybrid, electric and hydrogen technologies.

A study of the patent activity of the top-15 global automakers released by Ocean Tomo lauded GM leadership in the development of these sorts of green technologies.

"Green automotive technologies are the building blocks for creating and improving alternative power plants and increasing fuel efficiency," James E. Malackowski, CEO of Ocean Tomo, said in a press release. "GM has higher average quality and newer green technology and patents than the other 14 automakers combined."

At the same time GM has been able to make 62 of its manufacturing plants achieve Zero Landfill status. That means those facilities recycle or reuse all of their normal waste material. So far, 43 percent of the automaker's global manufacturing plans have reached this status, closing in on GM's goal of having half of its factories reach that height by the end of this year.

Source: Kevin Kelly, a spokesman for General Motors
Writer: Jon Zemke

BizdomU spins out PostEgram in Detroit

Facebook isn't just for young junkies. One of Detroit's newest start-ups is making it more accessible to older folks who want to be part of the conversation.

PostEgram helps turn a Facebook page into an automatic journal and scrapbook. The company has developed software that saves the posts and pictures of a Facebook user and creates a monthly newsletter that is mailed to the customer.

"You set it up once and it does it automatically," says Judy Davids, CEO of PostEgram. "You pay $4.99 a month and you get a monthly newsletter."

The idea for this month-old start-up came to Davids, an admitted Facebook addict, when she was explaining the social media site to her elderly mother-in-law. Her mother-in-law wanted to be part of the online conversation with her family and close friends, too, but wanted an easy way to reflect on the conversation and picture exchange. That set off the CFL over Davids' head.

"It's something they can touch," Davids says. "Older people are very tactile. They don't even like direct deposit. They want a check they can touch."

The Royal Oak resident enrolled in BizdomU to help put her idea into motion. She teamed up with Ken Bloink, also a BizdomU graduate, and created PostEgram. Today the two-person firm is establishing itself in the TechTown business incubator in Detroit's New Center neighborhood.

Source: Judy Davids, CEO of PostEgram
Writer: Jon Zemke

Q&A: Randal Charlton of TechTown, FastTrac

Ever wonder if you have what it takes to run your own business? Be your own boss? Detroit's TechTown incubator could help you answer those questions at its FastTrac event next weekend.

FastTrac welcomes anyone and everyone looking for either a job, a chance to cash in on their dream, or both. It provides the support staff to point would-be entrepreneurs in the right direction and hosts lectures on what it takes to run a business and whether it's the right track for you. The event will be held on May 25-26 at TechTown. For information, call Rene Kelly at (313) 879-4484 or rene.fasttrac@techtownwsu.org.

TechTown Executive Director Randal Charlton is quarterbacking the event and agreed to answer a few questions over email about FastTrac and what it takes to be an entrepreneur.

What can attendees long on entrepreneurial dreams and short on business expertise expect to take away from this event?

First of all, that they are not alone. A large number of attendees will be people who have had careers in large corporations who are now looking to set up their own businesses. Secondly, that we have in place a series of training programs designed to fit particular needs.

For example, if your entrepreneurial dream is to build a high-tech company, we have a training program called FastTrac Ventures. If on the other hand you're setting up a small life-style company, maybe a shop or a business service, FastTrac First Step may be for you. Overall, the object of the event is to let you know that there are a host of services available to support you as you begin your entrepreneurial adventure. They include space, business services, access to technology, access to finance, mentoring, interns, networking and long-term training.

One of the event topics is "Spend 15 minutes with a start-up expert to find out if entrepreneurship is right for you," which implies that entrepreneurship isn't for everyone. Could you give one example of how TechTown's advisors would know entrepreneurship is right for someone and one example of how they would know it is not?

A former GM executive who has spent a lifetime in procurement might want to setup a business that helps companies access the services they need efficiently and at lowest cost. Provided they had at least an idea of how they would differentiate themselves from the competition and provide value to their customers, we would encourage them to explore the opportunity.

However, if the same individual had significant family commitments, and little or no financial resources, we might encourage them to think twice. If they need a paycheck in the next six months to look after themselves and their family they should maybe focus on getting an immediate paying job rather than investing their time in developing a company which may not be able to support them for several months or years.

Most start-ups, like most businesses and other ventures in life, end up failing at one point or another, and usually sooner rather than later. How does TechTown educate new entrepreneurs that this is normal and a sign of a healthy entrepreneurial ecosystem?

We try to tell it straightforwardly and honestly at every level and every opportunity. As an entrepreneur myself, I've had my share of failures and I always point out that I have learned more from failed businesses than the successes. We also point out that the chances of success are dramatically increased if you incubate your business in a supportive environment like TechTown. The Kauffman Foundation, which surveys entrepreneurial activity on a regular basis, points out that the chances of a business succeeding in a business incubator increase by as much as 300 percent. At TechTown we are putting in place a unique and comprehensive range of services designed to help you succeed.

How does TechTown also help instill this sort of mindset into new investors who aren't used to the sometimes volatile world of investing in start-ups?

We have set up a First Step Fund which invests up to $50,000 at a time into our early stage companies. The rules of investment are much less rigorous than from other sources such as angel investors or venture capital companies or banks. The funds are made in the form of an unsecured loan which is interest-free for two years.

If you could ensure that those who attend this event leave with at least one idea or mindset, what would that be?

That even small steps count. As long as the day makes you think about how you can take charge of your future and it empowers you to recognize that you have more options than you might think, then the day will be a success. If you end up setting up a successful company, then it will be a smash hit success.

Source: Randal Charlton, executive director of TechTown
Writer: Jon Zemke

WSU offers first degrees in electric auto engineering

Wayne State University is launching the first engineering curriculum in the nation focusing on the electrification of the automobile, and it has a few million in federal stimulus funds to make it happen.

The U.S. Dept of Energy gave the university a $5 million grant to set up bachelors and masters degree programs dealing with the emerging sector. The idea is to help start training the next generation of engineers to tackle fuel-efficient automotive technology.

"We have created and standardized programs that I don't think exist anywhere else," says Mumtaz Usmen, dean of the college of engineering at Wayne State University.

Wayne State's Electric-Drive Vehicle Engineering programs are following the transformation of the automotive industry from the gas-powered engine to hybrid and electric-only propulsion systems. The transformation is expected to accelerate as automakers race to meet the new 2020 CAFÉ standards.

Expect to see more hybrid and plug-in electric vehicles, and electric and fuel cell cars. Wayne State's new degree programs cover all of these areas and relate them to alternative energy sources. The new programs (a bachelor of science in Electric Transportation Technology and a master of science in Electric-Drive Vehicle) are set to begin this fall.

"This will be the type of curriculum to provide them with the background to be successful and for the automotive industry to be successful," says Jerry Ku, director of electric drive engineering graduate program at Wayne State University.

Mumtaz Usmen, dean of the college engineering at Wayne State University and Jerry Ku, director of electric drive engineering graduate program at Wayne State University
Writer: Jon Zemke

TechTown's MitoStem wins $200K stem cell research grant

Stem cells are paying off for TechTown, or at least for one of its start-ups, now that MitoStem has nailed down a $200,000 federal grant.

The Detroit-based firm, originally called TechTown Ventures, plans to make its first hire this spring. It expects to have a staff of three by the end of year and seven employees by the end of 2011.

"As soon as we have the money in the bank we will hire a lab person," says James Eliason, president and chief scientific officer with MitoStem.

MitoStem specializes in stem cell research, focusing on regenerative medicine, or the way stem cells can reproduce themselves. The six-figure grant is a Small Business Innovation Research Phase I grant from the National Institutes of Health, which received the money from the federal stimulus program. The grant will be used to optimize its stem cell technology developed at Wayne State University.

The technology promises to have an impact on a variety of diseases. The idea is for the stems to help a patient's cells reproduce and replace diseased or damaged tissues. It was originally developed by Jianjun Wang, an associate professor of biochemistry in the School of Medicine at Wayne State University.

"So you can take a skin cell of a blood cell and turn it into a cell with all of the properties of any other cell in the body," Eliason says.

Source: James Eliason, president and chief scientific officer with MitoStem
Writer: Jon Zemke

Q&A: Franck Nouyrigat of Detroit Startup Weekend

Startup Weekend is returning to Detroit for the second time this Friday at Wayne State University's College of Engineering.

Startup Weekend holds these types of events all around the world, including at Compuware's headquarters in downtown Detroit last year. Detroit Startup Weekend is designed for students and professionals from all disciplines who have big ideas and who actually want to make these things happen. The 54-hour long event focuses on community building, networking and finding ways for entrepreneurs to improve their start-ups or get their ideas off the ground. More about the event here.

Franck Nouyrigat, the director of Startup Weekend, agreed to answer a few questions over email about Startup Weekend and Metro Detroit's entrepreneurial ecosystem.

What can people expect to come away with from this year's Detroit Startup Weekend?

We expect them to come away with more experience and a better understanding of what being an entrepreneur is about. According to our past Startup Weekend, 10 percent of them should have incorporated their start-up within the next six months. Finally, the greatest thing about Startup Weekend is networking.

Metro Detroit has put a lot of emphasis on building up its entrepreneurial ecosystem in recent years. How far along is it developmentally in comparison to other major metro areas?

The entrepreneurial ecosystem requires two things, a community of entrepreneurs and some investors to support them. In the case of Startup Weekend we focus on start-ups (Silicon Valley like). The pieces necessary to build the ecosystem already exist in Detroit, but the shift is to truly instill a culture that fosters innovation. The entrepreneurs need to understand how a start-up works and the investor needs to learn the differences between a classic investment and a high-tech or early stage investment. Some cites like Seattle or San Francisco have already developed these models, some have already evolved and changed a lot these past years, like Austin or Boulder. I think the financial crisis is accelerating this process, and more and more major cities are facing the challenge of redefining their local economy.

Metro Detroit and Michigan have invested a lot of money in business accelerator agencies like TechTown and Ann Arbor SPARK, and their programs, such as the Michigan Micro Loan Fund. How important is it to have these sorts of resources if a region or a state wants to reinvent itself economically?

This is a good move. Start-ups need a place to be nested. This is part of industrializing the "Silicon Valley Magic." Again, it is about building a system and a culture that truly supports start-ups, entrepreneurs and innovation. All you need is a physical space, some money, and a chance to let the best developers and entrepreneurs work together. The failure rate can be high, and investors need to remember that results will not happen overnight. This process is a long one, and little by little cities like Detroit will be able to have their own start-up industry.

Name one no-brainer change that the leadership of Metro Detroit or Michigan could make to help encourage more entrepreneurship?

Entrepreneurs are people. Having the leadership of Detroit or Michigan meeting their new ecosystem and discussing it with them is what will make a difference. What does this mean? Have them attend local events not as speakers or public figures, but as attendees. This is a learning process for everyone.

Source: Franck Nouyrigat, director of Startup Weekend
Writer: Jon Zemke

The LaunchPad takes off at Wayne State, Walsh College

The future of business in Metro Detroit isn't in the stodgy private clubs or wine tastings with the khakis/blazer/no tie crowd. It's in the halls of higher education and the students who walk them today.

That's why The Blackstone Charitable Foundation is investing $2 million into establishing the Blackstone LaunchPad program at Wayne State University and Walsh College. The idea is to help everyday students harness their entrepreneurial ambitions and create the companies and jobs that will carry the region into the 21st Century.

"Most growth in terms of job creation took place in firms that are less than 15 years old," Stephen A. Schwarzman, CEO and chairman of Blackstone, said during a recent press conference.

The $2 million is part of The Blackstone Charitable Foundation's new commitment to invest $50 million over the next five years into institutions and programs that will foster entrepreneurship and economic opportunity in the regions hardest hit by the Great Recession, such as Metro Detroit. The Blackstone Charitable Foundation's multi-million dollar pledge is accompanied by another $800,000 grant from The Kresge Foundation to provide central coordination services and an evaluation tool to measure the success of the project.

The Blackstone LaunchPad program is modeled after a similar program developed at the University of Miami in 2008 that has led to the creation of 45 new businesses and 102 new jobs, primarily from students. Wayne State's version will be housed near the front doors of its Undergraduate Library.

Advisors and mentors will help aspiring studentpreneurs turn their ideas into real businesses by providing practical skills, advice, and contacts. Think of it as a TechTown for Wayne State students or the TechArb student business incubator that the University of Michigan launched last year.

The program's organizers will spend this spring and summer setting up offices and infrastructure in anticipation of helping students in the fall. The office will be open to any student with an idea who wants to walk in. Organizers hope to expand to recent graduates in 2011.

"We're open to accommodate as many students as we can," says Ahmad M Ezzeddine,
associate vice president of education outreach and International Programs at Wayne State University. "As many students that are interested."

Source: Stephen A. Schwarzman, CEO and chairman of Blackstone and Ahmad M Ezzeddine, associate vice president of education outreach and International Programs at Wayne State University
Writer: Jon Zemke

After 5 Detroit launches new summer intern program

A start-up and a foundation walk into a bar full of corporations and walk away with a few hundred interns. That's not a joke. The latest initiative to keep young talent in Metro Detroit helps them take advantage of the region's lifestyle.

The Connect After 5 Summer Intern Program is being run by Detroit-based After 5 Detroit and is being funded by the Hudson-Webber Foundation. It's signed up 205 interns from DTE Energy and Digerati to take part in the program. It hopes to add a few hundred more from other area companies by the time the summer turns consistently warm.

"We are working with a number of other companies right now to get them and their interns on board," says Kerry Doman, CEO of After 5 Detroit, a website that highlights events, hot spots, and information targeted at young professionals who wish to fully experience the Detroit lifestyle. It's one of a number of programs that are being employed to help staunch the state's brain drain of young, educated, and entrepreneurial professionals.

"That's who we need to retain for a strong workforce and deeper workforce and overall stronger economy," Doman says.

For information on the program, click here.

Source: Kerry Doman, CEO of After 5 Detroit
Writer: Jon Zemke

DTE scores $84M for smart grid; 1,050 jobs

Metro Detroit's transformation to a smart grid got a big boost last week when the U.S. Dept of Energy gave DTE Energy an $84 million grant to improve Metro Detroit's electric grid.

DTE Energy's SmartCurrents initiative is spearheading the smart grid transformation, which involves the development of a high-tech electrical infrastructure to prepare for new technologies that will provide customers with ways to better manage their energy consumption. DTE Energy will match the grant, bringing the initiative's war chest to about $170 million.

That investment is expected to create 1,050 new jobs over the next couple of years, consisting of 700 deployment and construction jobs for IT contractors and overhead linemen and 350 permanent supplier positions.

"It will begin shortly," says Scott Simons, a spokesman for DTE Energy, adding that it will take 6-8 years to make the switch to a smart grid.

Part of the smart grid switch will include installing 600,000 new smart meters in parts of Wayne, Oakland, Livingston, Lapeer, Ingham, and Tuscola counties. These meters allow for easier access to energy usage information through wireless communications. This and other technologies are expected to improve electrical service reliability and give better control of energy consumption and costs.

Scott Simons, a spokesman for DTE Energy
Writer: Jon Zemke

S3 creates 53 new IT jobs in downtown Detroit

Strategic Staffing Solutions has established a new IT center in downtown Detroit, creating 53 new jobs immediately with a further promise of expanding employment to 150 by year's end.

"We have people who are starting in the facility every day," says Cynthia J Pasky, president and CEO of Strategic Staffing Solutions. "Our goal is to pass that number."

The Detroit Development Center is located in the Penobscot Building, which is also Strategic Staffing Solutions headquarters. It will handle IT work for Blue Cross Blue Shield in house in Detroit instead of offshoring that work.

"There is a tremendous amount of IT talent here that is available," Pasky says.

Strategic Staffing Solutions has existing commitments from two anchor customers to be serviced by the Detroit Development Center, putting the firm on track to achieve its four-year commitment to hire more than 400 IT specialists.

Source: Cynthia J Pasky, president and CEO of Strategic Staffing Solutions
Writer: Jon Zemke

Oakland County opens $500K microloan fund

Microloan funds are spreading through Metro Detroit faster than the flu, with the latest outbreak taking place in Oakland County.

The Oakland County Microloan Program will provide loans of $500 to $35,000 to small businesses. It is modeled after the highly successful Michigan Microloan Fund run by Ann Arbor SPARK. The idea of the microloans is to help fill the capital void for small businesses that want to grow and create jobs but are being hampered by the nearly frozen credit lines of the financial industry.

"We expect the demand will be high for these loans because traditional lending channels are all but dried up for small businesses," says Maureen Krauss, director of Economic Development and Community Affairs for Oakland County. "There are a lot of people who want to start their own businesses."

Eligible businesses must be based out of Oakland County, pay a $75 application fee, have a business plan if they are under three years old, and at least two letters of denial from traditional lending sources. Owners must be current on child support, student loans, and income taxes.

Oakland County, in partnership with the Center for Empowerment & Economic Development and the U.S. Small Business Administration, is giving $100,000 towards creating the fund, as well as a $500,000 pool to start with.

The Michigan Microloan Fund draws from a $1.5 million pool and also from other six-figure funds provided by Washtenaw County and the city of Ann Arbor that are geared toward businesses in those respective communities. It
expects to make 24-48 loans this year. Detroit's TechTown has also formed its own fund and Oakland University's OU INCubator is taking steps to set up its own program.

Maureen Krauss, director of Economic Development and Community Affairs for Oakland County
Writer: Jon Zemke

Grant allows Wayne State to debut The LaunchPad

The Blackstone Charitable Foundation will announced a multi-million dollar gift for the New Economy Initiative in Metro Detroit tomorrow as part of a much bigger financial commitment to help foster entrepreneurship and economic recovery in communities hardest hit by the global economic crisis.

Wayne State University and Walsh College will split the money to establish the Blackstone LaunchPad, which will encourage and support entrepreneurship for local college students and recent graduates. The 10 foundations behind the New Economy Initiative will also add a significant grant to provide central coordination services and an evaluation tool to measure the success of the project.

"The Blackstone Launch Pad program at Wayne State University and Walsh College is a tremendous step forward in fostering entrepreneurship, a critical part of the economic revitalization of southeast Michigan," Dave Egner, executive director of the New Economy Initiative, said in a prepared statement. "The New Economy Initiative supports opportunities, like the Blackstone Launch Pad, which focus on developing entrepreneurial ecosystems, capitalizing on existing resources, and developing a solid workforce with the hope that these opportunities will create a more diversified, knowledge-driven economy."

The idea is to foster entrepreneurship that will serve as the basis for a growing, diversified economy based in 21st Century business models. The Blackstone Charitable Foundation plans to make multi-million grants
from its commitment.

The Blackstone LaunchPad will employ a program first started at the University of Miami in 2008 that worked to foster entrepreneurship through higher education.
The program promotes entrepreneurial thinking and activity among undergraduate, graduate students, and new alumni. In its first two years at the University of Miami, the program attracted 1,000 students and alumni who created 45 new businesses and 102 new jobs.

It accomplished this through providing  practical skills, seasoned advice, and professional contacts. The same tactics will be employed at Wayne State University and Walsh College.

Source: The Blackstone Charitable Foundation
Writer: Jon Zemke
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