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A few weeks ago we had an event we put together (in Ypsi) with the aim of bringing local startups in micro and nanotechnology together. Eventually the goal is to encompass the entire Midwest. In this post, I want to talk about the need for such a group, and hopefully get some feedback in jump starting it, spreading to other areas, and perhaps focusing on other needs/industries. The City of Detroit is indirectly related to what I am writing here, though it may (and I'll give an example how) serve as the ultimate breeding ground for new businesses since it is a central location.
Background (i.e. why did we put this together?):
We (University of Michigan, Ann Arbor) have a newly renovated and expanded research lab open to external users (ie, the industry at large) who pay a modest hourly rate for use of equipment. A local (Kalamazoo-based) healthcare company is probably the biggest (in terms of $$$ spent) user of this lab currently, though the Lurie Nanofabrication Lab has over ~30 different companies partaking in the facilities offered.
Ann Arbor is an enclave of highly-educated individuals - the draw is the university itself. But we're extremely deficient at converting that talent and expertise to new businesses that can hire people - a key, I believe, in getting the trickle down effect to build up the local economy. That is beginning to change. A friend started up a high-technology business a few years back, got a nice tax cut from MEDC (Michigan Economic Development Corporation) to open up offices in downtown Detroit. Today, he's no longer there - he had to move R&D to Ann Arbor (easy access to local talent/brains), and headquarters to Cali. He will tell you, with sadness, that he had to do it because his company couldn't raise money locally. The money is available, its just not here, but in Silicon Valley and California in general. The Cali VCs required him to be local to them and so that obviously meant his company had to split, and Detroit's appeal disappeared.
The conclusion that I draw from his experience is that in order to attract businesses, and especially encourage new startups here, we need more money. But its not that easy. There is money (see MEDC, various tax cuts/breaks, grants etc.) but maybe its not being spent in the right way. The local VCs are seemingly more automotive related. Or have software/internet business portfolios. I can think of two reasons why this is the case - 1) expertise (again, local talent), and 2) the VCs are risk averse.
The first one is self-explanatory, but does point to the fact that Michigan, and especially SE Michigan, is a one-trick pony and that is a major problem. The recent (over last 5 yrs maybe) push for the Life Sciences corridor to compete with the likes of Boston (see Life Sciences Initiative, Ann Arbor, East Lansing, etc) is evident that people are aware of how problematic it is that our state's economy is so tied into the automotive industry. Today it is even more evident, so I don't need to say anything more.
The second one I think can also be linked to the lack of local industry talent. If you have expertise in many areas, then risk goes down when a VC evaluates a new venture. However, this is a chicken-and-egg problem - without funding sources taking risks, you cannot create new industries. This is a mentality that pervades the entire Midwest, apparently. In my opinion, the solution is additional grants, University support, and people just taking risks themselves. But it may not be enough still.
U of M is changing - there is more emphasis on entrepreneurial activities in the last one to two years. Previously, only the business school had such courses. The trick, and what will differentiate and jump start the Ann Arbor area in the coming few years in my opinion, is the interdisciplinary approach we are taking here. Train the doctors/engineers/PhDs (or ideators, if you so choose to use that kind of language) to learn how to interact with the business types and to do basic entrepreneurship-type functions so that they know what needs to be done. Simultaneously, train MBAs in entrepreneurship (of which no typical MBA graduate learns about here, apparently) and how to deal and work with typical enginerds who may have no clue on how to explain their technology or creative work to others. There is a lot of work to do though, especially from the Tech Transfer side of things, but they are most definitely listening.
So here's my point: there is money (ranging from tax breaks to VCs), there is talent (see U of M, Wayne, MSU, Oakland, etc), and there is a big city somewhat empty waiting to serve as the center (can anyone say 'Dubai Internet City'?)
The problem is that there is very little interconnection between all the people supporting each of these items. Our microtechnology group aims to solve this problem by hosting events where people can intermingle and share ideas and, most importantly, share expertise. Our event consisted of lawyers sharing ideas with small business owners, PhD students, academics, and VPs of research in automotive suppliers looking to break into new industries. Silicon Valley started the same way so many years ago, so there is a blueprint... and they continue to innovate and bring in the big $$$ and bolster that states economy and therefore their people (case in point: the University of California educational system).
Please please lets get some feedback and discussion going about this topic. In particular, we (as in those of us working on this forum) have a lot of work to do still so I cannot be confident that this is going to work yet. As I have said before, many of you are more tied into relevant industries or are more educated on this topic than I am and your experience is valuable and educational, especially to me, but probably for the rest of us as well. And what may come out of this discussion can affect us all in some way sometime in the near future...
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razi
