ANN ARBOR – If you need further proof that Detroit has become a technology hub, you only need to read the latest report from the Michigan Venture Capital Association. It says over the past three years the number of startups has exploded by 50 percent. The only thing holding back even more robust growth is a lack of adequate startup capital.
These conclusions come from the 2017 Detroit Entrepreneurial Study, released Monday by the Michigan Venture Capital Association. It suggests the city is becoming an increasingly attractive hub for entrepreneurs who are looking for an energetic, vibrant urban center to locate, live and launch their startups.
“The 2017 Detroit Entrepreneurial Study shows the incredible momentum occurring in the city’s entrepreneurial community,” said MVCA Executive Director, Maureen Miller Brosnan. “Detroit has long been at the forefront of innovation, and it is becoming the ideal place to build a business. Our goal is to connect entrepreneurs with investors to open the door for greater economic opportunities for all members of the community.”
According to the study, 25 percent of venture-backed startups in Michigan are emerging from the Detroit area. Over half these startups are in the startup or early stage, indicating the companies are earning revenue from operations and are approaching cash flow positive.
To support these growing companies, Detroit will need to improve access to capital to fund its fastest-growing businesses and bolster the city’s economic prosperity. Data from the study indicates the heightened demand for funding from new startup companies, coupled with the need for follow-on funding by existing enterprises that are entering their next stages of growth, exceeds what is currently available. These findings reflect the need for additional funds to ensure the success of Detroit’s many venture-backed companies.
2017 Detroit Entrepreneurial Study Key Findings
· There are currently 35 active venture-backed startups in Detroit. Venture-backed startups in Detroit represent 25 percent of the startup companies growing in Michigan.
· In the last three years, there has been a 50 percent increase in the number of Detroit-based startup companies.
· There are five venture firms headquartered or with an office in the Detroit area. These venture firms represent 15 percent of the firms in Michigan.
· In the last year, 14 startups in Detroit received more than $62,000,000 from venture capital firms.
· Currently, 43 percent of the startup companies that have received venture capital funding in Detroit are information technology companies, while 23 percent are life science companies.
· Over 50 percent of the startup companies in the Detroit area are in the startup/early stage.
“Detroit’s evolution toward becoming a premier hub for entrepreneurial and investment activity in Michigan has been a long time coming,” said Gab Karp, Partner at Detroit Venture Partners. “The talent and networking opportunities in the city provide new startups a strong base to grow and make an immediate impact on Detroit’s economic resurgence. We’ve already seen the positive impact made by the influx of entrepreneurs investing in the future, and it’s only going to accelerate going forward. We expect the startup landscape to continue to grow and define Detroit as a nationally recognized startup destination.”
For more information and a look at the complete 2017 Detroit Entrepreneurial Study, visit www.michiganvca.org/research/detroit-study/.
To learn more about the Michigan Venture Capital Association, click on www.MichiganVCA.org.