With initial support from the Ralph C. Wilson Jr. Foundation and the Michigan Economic Development Corp., Invest Detroit Ventures is kicking off a fundraising effort to pool enough philanthropic support to create a sustainable source of early capital for Michigan’s diverse, under-represented entrepreneurs, and technology start-ups committed to bolstering the local economy.
The Wilson Foundation contributed $3 million and the MEDC added $2.5 million to Invest Detroit’s original $11 million in assets to turn its First Capital Fund into a sustainable, evergreen fund that will support early stage Michigan startups for years to come.
“This initial support from the Ralph C. Wilson Jr. Foundation and the MEDC is truly exciting and exemplifies the dedication of the state and local funding community to supporting Michigan growth and innovation,” says David Blaszkiewicz, president and CEO of Invest Detroit. “As an organization committed to economic health and job creation in the region, we are grateful to our partners for supporting our efforts to bring critical resources to local entrepreneurs and career opportunities for residents.”
Though ID Ventures has been doing seed investing since 2010, the First Capital Fund launched in 2017 with $3.3 million in funding from the MEDC, the New Economy Initiative (NEI) and Invest Detroit.
“It has since been overwhelmed with requests for funding, receiving over 300 applications since inception — a trend we anticipate will continue in the coming years,” said Patti Glaza, senior vice president and managing director at Invest Detroit Ventures. “With demand rising and availability of local seed capital extremely limited, we recognize a need to build greater funding capacity and to fill this critical funding gap today and into future decades.”
The fund will focus on seed funding for technology start-ups with high-growth potential that can grow the economy and create local job opportunities.
“Successful start-ups are helping to grow our local economy by creating jobs and spurring greater diversity and innovation among Southeast Michigan’s businesses,” say Lavea Brachman, vice president of programs at the Ralph C. Wilson Jr. Foundation. “We are excited to support the work of Invest Detroit Ventures to supply the seed capital that funds early firm development and creates the basis for long-term growth.”
The Invest Detroit team says it frequently hears from start-ups that there is a lack of venture funding at the earliest stages in Michigan, and that it takes too long to raise additional syndicated funding – a challenge reported across the state as most local venture capital firms concentrate on later-stage investment. The Michigan Venture Capital Assn. reports that only 7 percent of Michigan venture capital is invested at the seed stage. This creates a significant gap in funding for pre-seed and early-seed companies – a gap that the First Capital Fund strives to fill.