Eyebrows and champagne glasses were raised last June when it was announced that Detroit ranked No. 1 among the world’s top 100 startup ecosystems for startups, beating out cities like Minneapolis, Houston, Brussels and Hong Kong.
That upbeat news came from the 2022 Global Startup Ecosystem Report published by Startup Genome, a research firm in San Francisco that has analyzed hundreds of cities around the world and evaluated data from nearly 3 million companies.
Detroit’s top ranking marked a 13-point jump from the previous year, cementing its status in supporting early-stage financing and investor activity.
Startup Genome was intrigued by the results, as were two local organizations that worked to help the economy by serving as catalysts to foster new businesses and jobs, the William Davidson Foundation and Endeavour, as they decided to work together and take that research one step further. there.
They spent much of 2022 looking at how these fast-growing local startups are faring, and how the region has supported them along the way. Their findings will be released next Wednesday during a virtual town hall held by those three organizations.
“We are looking at every opportunity to take our region to the next level and compete on the national and global stage,” said Diana Callaghan, CEO of Endeavor. “Entrepreneurs have fueled massive economic development in our region, now we want to see how our region can help fuel this momentum.”
The headline of their findings: Detroit has had some organic success in recent years, but other communities are pursuing aggressive strategies with these fast-growing companies, which could threaten the region’s top position. And to continue to compete on the global stage, the local startup ecosystem needs to think big, take risks, and push policies to attract more resources, while helping the cause by raising the narrative about it.
The group hired Justin Mast, founder of Bloomscape, to interview dozens of “founders,” as they are described, entrepreneurs who have grown their successful companies, with some, including Dug Song, who sold his company Duo Security for $2,350. million to Cisco Security in 2018: to hear your thoughts.
“Justin asked the top founders in our region: ‘What worked for you?’ ‘Where are we missing?’ and ‘What suggestions would you have to elevate our region?’” Callaghan explained. “We wanted to know how our funders, support organizations, philanthropic leaders, and government leaders could best work together to give our companies and entrepreneurs an edge in their hyper-competitive markets.”
Marc Penzel, co-founder and president of Startup Genome, spent three months in Detroit speaking with entrepreneurs, venture capitalists, and others. Among some findings that will be discussed during Wednesday’s event:
- The “founders” felt there was no clear strategy guiding the region’s efforts and believe that the supporting organizations (accelerators and incubators) are disjointed and have provided limited services.
- The “founders” believe that investors and local angel groups are old-fashioned minded and provided limited support to help the founders grow and scale. They added that there is not enough capital here and that investors are reluctant to take the necessary risks in start-ups.
“Unlike other states, we just haven’t been as deliberate about our local strategy,” said Lisa Katz, senior program officer for the William Davidson Foundation’s Economic Vitality and Entrepreneurship program. “We’re good at supporting community businesses like those that sell baked goods and things that make our neighborhoods prosper. But how do we support companies like another future Duo Security or the future Amazon?
There are some subtle signs that things are headed in the right direction.
Penzel said the number of “unicorns” here, startups that sold for more than a billion dollars, was far fewer here than in New York or Silicon Valley, where they proliferate with investors and venture capitalists backing the startups. in their backyards.
“But the good news is that there have been more unicorns in recent years than in the previous 25 years,” Penzel added. These unicorns often highlight the health of a business community.
Chris Rizik has been laser-focused on helping startups since Renaissance Venture Capital opened in 2008. He was one of those interviewed for this effort.
“We have helped bring more than $2 billion to Michigan,” he said of his venture capital organization. “But we had to consciously focus on bringing in more late-stage capital, because that has been a deficiency here.”
Katz said other states like Ohio have a more cohesive approach to helping entrepreneurs looking to grow their businesses.
Katz pointed to success stories like Workit Health, May Mobility, Our Next Energy, Lip Bar, and Air Space Link, as some of the types of companies that will benefit from their efforts as they fly the flag.
“Historically, Southeast Michigan has been extremely focused on the automotive and mobility sector,” Callaghan added. “However, companies like Duo Security and Rocket Mortgage have had a huge economic impact in our region. If we worked together to build more companies like Duo and Rocket Mortgage, we could really transform our region.”
Going a step further, Callaghan told me that if the Metro Detroit ecosystem led to the creation of 60 of these fastest-growing companies, it could increase local GDP by more than $5 billion annually.
He added: “If we work together to support these entrepreneurs, we would have more companies like Duo or Rocket, which could transform our region.”
Contact Carol Cain: 248-355-7126 or [email protected]. She is a senior producer/host of “michigan affairs”, which airs Sundays at 8 am on CBS 62. Catch John Gallagher, Bill Haney, Paul Vachon and Jamie Ruthenberg on this Sunday’s show.
