Three Ann Arbor-based economic development agencies received $15.5 million from theMichigan Economic Development Corp. for several programs to invest in tech startups, train entrepreneurs and provide various services to early-stage companies.
The 21st Century Jobs Fund, managed by MEDC through the Michigan Strategic Fund, announced this afternoon that it is distributing millions to several different groups.
Ann Arbor SPARK, a public-private group co-founded by Gov. Rick Snyder and formerly led by MEDC CEO Michael Finney, got $10.8 million for three programs. Of those funds, $9.17 million will go to SPARK’s Michigan Pre-Seed Capital Fund, which invests in early-stage companies throughout the state on behalf of the MEDC; $1.05 million to a new initiative called the Michigan Angel Fund, which will invest in very early-stage ventures; and $600,000 to theAccelerate Michigan Innovation Competition for startups.
“The funding awarded by the MEDC recognizes Ann Arbor SPARK’s leadership in creating and executing programs that drive economic growth in the state,” SPARK CEO Paul Krutko said in a statement. “Ann Arbor SPARK has a track record of collaborating with our economic development partners throughout Michigan, and these efforts have generated broad impact and business growth. MEDC’s funding awards will extend these programs that are critical to business expansion and the creation and retention of jobs in the state.”
SPARK makes investment decisions in coordination with the state’s 15 high-tech economic development districts called SmartZones, which oversee the investment funds. The Michigan Pre-Seed Capital Fund, launched with funds from the MEDC under former Gov. Jennifer Granholm’s administration, has invested or loaned $13.4 million to 61 companies, including several in Ann Arbor.
MEDC also said today that it had distributed $3.1 million to the Ann Arbor-based nonprofitMichigan Venture Capital Association for programs to develop executive leadership for startup companies and venture capital firms and to develop new angel investors throughout the state.
Biotechnology Business Consultants, an Ann Arbor-based for-profit company, received $1.6 million to help early-stage companies secure grants from the federal government.
MEDC’s decision to use the 21st Century Jobs Fund dollars to distribute funds to economic development groups marks a change in strategy from the early days of the fund, when MEDC used the dollars to loan cash directly to startup companies.
Finney and Snyder have argued that the MEDC is not well positioned to make informed decisions about business investments and that cash should be distributed to groups that are on the ground and can make better decisions.
It comes after AnnArbor.com reported in January that the MEDC was planning to distribute more funds to economic development groups throughout the state.
“Early-stage companies require seed capital and access to a strong network of public and private resources,” Finney said in a statement today. “We are confident that with the funding of these organizations and the types of programs — from federal grant support to business plan completion to providing services and angel and pre-seed funding — we will continue to accelerate the growth of innovative technology start-ups in Michigan.”
Other groups that received cash included the statewide Michigan Small Business & Technology Development Center, which received $3.5 million to set up a fund to distribute cash to other business acceleration groups; Lansing-based Great Lakes Entrepreneurs Quest, a nonprofit formerly based in Ann Arbor that will use its $1.1 million to run a business plan competition; Western Michigan University’s Biosciences Research & Commercialization Center, which will use $3.8 million to invest in startup life sciences companies throughout the state; Detroit Creative Corridor Center, which got $400,000 to provide services to digital firms and media production companies; the Inforum Center for Leadership of Detroit and Grand Rapids, which got $700,000 to encourage mentorship and boost women entrepreneurs.
By Nathan Bomey, AnnArbor.com