Ann Arbor SPARK to put $7 million in pre-seed funding to use

Funding for little businesses has a new home at Ann Arbor SPARK.The business incubator is now in charge of the Michigan Pre-Seed Capital Fund, which looks to command about $7.5 million by the end of the summer, funding fledgling small businesses. It has already made four investments for a total of $750,000 so far this year, and the pre-seed fund plans to make many more.”It’s about business acceleration and it’s about products and services that are in the right place at the right time,” says Elizabeth Parkinson, vice president of marketing and communications for Ann Arbor SPARK.The Michigan Pre-Seed Capital Fund is being deployed in three tranches (investment industry jargon for phases): The first tranche has already been invested and half of the second tranche ($1.5 million) has been dispersed. The Michigan Economic Development Corp is expected to sign off on the third tranche ($6.8 million) sometime in August or September.Pre-seed investments are usually the capital that comes before venture capital and angel investments. Such investment can range from high five figures to low six-figures. Ann Arbor SPARK has also secured three lines of micro loans for start-ups.Micro loans are the smallest of the investments made in start-ups and usually made first. These loans can range from $10,000 to $50,000 and are usually used to help fledgling businesses get the word out about their product or service. “There are companies that aren’t even in the pre-seed stage yet,” Parkinson says.The micro loans include $1 million from the Michigan Pre-Seed Capital Fund, which can be invested in any company in the state. Another $225,000 came from Washtenaw County and $275,000 from the city of Ann Arbor. That money must be invested in companies based in the county and city respectively.Source: Elizabeth Parkinson, vice president of marketing and communications for Ann Arbor SPARKWriter: Jon Zemke