Entrepreneurship

Gilbert philanthropy commits $10 million to grow startups in Detroit

As part of its involvement in the initiative, ID Ventures will source high-growth venture deals and invest between $25,000 and $250,000 using the SAFE note mechanism. The early-stage funding organization will also provide business coaching and other programming, according to the release.

“ID Ventures is pleased to be a partner in Venture 313,” stated Martin Dober, senior vice president and managing director of ID Ventures, the venture capital team of Invest Detroit. “ID Ventures is committed to removing barriers and helping Detroiters scale their great ideas into venture-backed companies, and appreciates the Gilbert Family Foundation’s support of inclusive entrepreneurship in Detroit.”

The ID Ventures website shows that the fund has deployed $21 million to more than 200 startups, 54 percent of which have had diverse founders, and the fund has achieved 17 exits.

TechTown Detroit, a longtime small business incubator in Detroit affiliated with Wayne State University, will invest in smaller businesses that are primarily looking to evolve from ideation to the creation of a minimum viable product (MVP).

The incubator will provide grants ranging of $500-$25,000, as well as ongoing support and coaching for entrepreneurs.

“It is critical that we empower founders with the resources they need to turn a passion into a product, and continue to invest in their entrepreneurial journey,” Ned Staebler, vice president for economic development at Wayne State University and president and CEO of TechTown Detroit, said in the release. “The only way to achieve real and sustainable economic development is by investing on Main Street, and we are excited to join the Gilbert Family Foundation and Venture 313 to support the next generation of Detroit startups.”

Executives at the Detroit Development Fund, meanwhile, tout the fund as something of a venture capital fund for businesses that don’t traditionally secure such funding. The fund has provided money to a variety of Detroit restaurants and other consumer-facing businesses, according to its website.

The fund provides working capital, lines of credit and other loans of $25,000-$250,000.

“As a lender, we look at every aspect of a business when analyzing their potential, but often prioritize future growth over finances and big ideas over balance sheets,” stated Ray Waters, president of the Detroit Development Fund. “We are excited to be a founding partner of Venture 313 and collaborate with organizations like the Gilbert Family Foundation who, like us, understand that dreams are worth investing in.”

The push by the Venture 313 partners to deploy capital to early stage startups comes during a period where such investing has slowed, at least when compared with the record highs of last year, according to industry data.

Both deal count and deal values for early stage companies declined from the first quarter to the second quarter of this year, according to a July report from industry publication Pitchbook and the National Venture Capital Association.

The report notes that investors are being increasingly cautious when it comes to deploying capital to untested businesses.

“The increasing cost of capital is leading investors to consider whether startups can efficiently manage their runway through subsequent milestones,” the report reads. “With investors refocusing on the durability of businesses through economic downturns, we expect due diligence efforts to prioritize return on invested capital and free cash flow.”

Chris Rizik, the CEO and fund manager of Ann Arbor-based Renaissance Venture Capital, said the capital being committed for the Venture 313 initiative is something needed in the marketplace, because few traditional VC funds like to play that early in a company’s life cycle.

“If you’re 18 months from revenue, it’s tough,” Rizik said of early stage companies seeking capital.

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