Invest Detroit Ventures today announced an investment from Bank of America to support the IDV Fund IV, a newly established $20 million fund that provides capital investment to early-stage Michigan startups. The amount of the investment was not disclosed.
“This investment by Bank of America is significant because there is not enough early-stage capital for Michigan-based startups,” says Patti Glaza, managing director of IDV. “Only 10 percent of Michigan venture capital is currently invested at the seed stage, resulting in entrepreneurs spending too much time fundraising instead of executing in a space where time to market is critical. Founders of color have an even bigger challenge as they try to navigate systemic barriers to funding.”
IDV IV is the fourth fund managed by Invest Detroit Ventures and will build on the $22 million invested in 175 companies over the past decade. The unique fund structure will combine traditional investment capital with philanthropic capital to better serve Michigan’s entrepreneurs. Up to half the fund will come from partners, which will have their investments returns recycle into the firms evergreen fund.
The fund will continue to focus on underserved entrepreneurs, including women, minority, and immigrant founders. In addition, capital and support to help bring ideas to early-product release is provided by the organization’s FAM (funding, access, and, mentorship) fund.
“Bank of America’s equity investment in Invest Detroit Ventures underscores our ongoing efforts to address the persistent gap in access to growth capital for minority-led businesses,” says Matt Elliot, president of Bank of America Detroit.
“Being based in Detroit, Invest Detroit Ventures is well positioned to help more women, minority and immigrant entrepreneurs scale their local business ideas, which will ultimately spur job growth and create more economic opportunities across the state of Michigan.”
Last year, Bank of America committed more than $6 million in grants to more than 65 metro Detroit organizations. These organizations create pathways to employment and job training, support community development and housing affordability, address the small business eco-system and its entrepreneurs, and drive healthy outcomes for communities through innovative health care delivery while supporting basic needs functions.
“We are thrilled to see Bank of America add its support of early-stage companies to the Detroit region as startups are a major driver of economic growth,” says Dave Blaszkiewicz, CEO of Invest Detroit. “Though our venture program supports startups across the state, 25 percent of our founders are from Detroit, and the more we can build the state’s ecosystem, the more Detroit becomes a startup destination.”