Ben Kazez defines the new economy lifestyle. He's the founder of a successful mobile app start-up, lives near Kerrytown, and walks to his downtown office. With promises that success won't lure him away (Mobiata was acquired by Expedia last fall), Concentrate chatted with Kazez about good food, apps, and launching a start-up.
Thanks to the launch of the Venture Michigan Fund II, venture capital firms in Michigan have $120 million in new funding available to them and Ann Arbor-based firms are well positioned for a shot at that money.The new fund will be run by Credit Suisse and serves as the sequel to the $96 million Venture Michigan Fund launched in 2006. The Venture Michigan Fund II will act as a fund of funds, investing its capital in local VC firms. Those firms will use the money to invest in seed and early stage Michigan-based start-ups in the advanced manufacturing, health-care, life sciences, IT, alternative energy, homeland security and defense sectors.Ann Arbor-based VC firms and start-ups received the lion's share of the first Venture Michigan Fund. Nine of the 11 VC firms to receive commitments from the first fund were either based in Ann Arbor or have offices there. Twelve of the 15 start-ups that have received VC investments are also based in Ann Arbor."Most of the firms based in Michigan are based in Ann Arbor," says Bob Payne, who runs Credit Suisse's Michigan-based investment funds. "A lot of that comes from the University of Michigan Office of Tech Transfer."State tax vouchers are providing the capital for the Venture Michigan Funds, the first of which is fully committed to 11 venture fund vehicles, with about one-third of that money invested in 15 Michigan-based companies. That money supported the creation of 200 new jobs and has leveraged $186 million from other investors.The idea behind the Venture Michigan Fund is to grow the state's fledgling VC industry. Many of those firms (both new and established) are in based in Ann Arbor. A Thomson Reuters study shows that there were 26 VC investments in Michigan in 2006, representing $117.3 million. Those numbers went up to 44 deals worth $231.1 million last year, the year the U.S. officially emerged from a recession.Source: Bob Payne, manager of the Michigan Venture Fund II Writer: Jon ZemkeRead more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.
Erick Bzovi and Lance Carlson knew they wanted to get a piece of the emerging mobile app game, and saw their best shot in a sector most people wouldn't expect – debt collection.The pair of young entrepreneurs started HealPay in Ann Arbor nine months ago. They now have a team of six people who have helped get the idea from concept to Beta testing last fall to market debut earlier this month. "A lot of these payment collection programs are ripe for innovation," Bzovi says.He points out that debt collection is a fragmented industry that hasn't been a leader when it comes to keeping up with technology trends, such as mobile apps. HealPay's app automates the collection process by integrating it with other software programs, such as accounting software. The duo is now focusing its effort on municipal debts, such as parking ticket fines."This presents an opportunity to streamline a fragmented industry," Bzovi says.Bzovi and Carlson plan to focus on getting HealPay to be adopted in Michigan municipalities during the first quarter. They hope to start spreading it across the Midwest by this spring/summer, and even the nation by the end of the year. If successful, they expect to have a staff of 15-20 people by 2012.Source: Erick Bzovi, co-founder of HealPayWriter: Jon ZemkeRead more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.
Ann Arbor's entrepreneurial reputation not only preceded the move of Greenfield Partners, but it inspired the investment firm's move to Tree Town.The Bloomfield Hills-based firm run by Benjamin Rye and his father, Jon Rye, both University of Michigan graduates, is in the midst of moving to Ann Arbor's start-up rich pastures. The reason? The multitude of investment opportunities coming from U-M."It's really a question of brain power," says Benjamin Rye, managing partner of Greenfield Partners. "We see a number of opportunities in Ann Arbor because of the entrepreneurial culture."Jon Rye started Greenfield Partners in the 1980s, focusing his efforts on private equity and business turnarounds. He put the company on hold in 1995 until resurrecting it in 2008 with his son. Now the younger Rye plans to focus on seed investments coming from places like U-M's School of Engineering. Jon Rye plans to be active in the firm from a private equity standpoint.Both Ryes and one more principal plan to raise an investment fund this year. The team plans to have a fully funded investment vehicle and 1-2 portfolio investments primarily made up of university spin-outs and Ann Arbor-based firms by the end of the year. To start, Greenfield Partners is offering a $10,000 grant to a student-run start-up participating in an entrepreneurial experience contest at TechArb. "We think Ann Arbor is going to be the hub for the state moving forward," Rye says.Source: Benjamin Rye, managing partner of Greenfield PartnersWriter: Jon Zemke
The Accelerate Michigan Innovation Competition served a higher purpose for ePack than the normal networking and fundraising efforts. It helped the Ann Arbor-based company take a serious look at itself."It was a good excuse to re-evaluate our business plan and get some feedback," says Jay Mitchell, president of ePack.Part of that re-evaluation is a tweaking of its focus. The start-up that is developing technology to protect micro devices is shifting its focus from consumer electronics to defense. Revenue at the 3-year-old company reached $400,000 in 2010, with about two-thirds of that coming from government defense grants."We're going to focus on the lower-volume and higher-margin markets," Mitchell says.ePack's two co-founders are now full-time with the company after serving as part-time researchers at the University of Michigan. Mitchell expects to go after more grants and contracts in 2011, which should allow the company to go from two full-time employees and an independent contractor to a staff of 4-5 people full-time.ePack expects to finish product development and bring it to market within two years. The long-term plan is to reach the point where it can open a manufacturing facility.Source: Jay Mitchell, president of ePackWriter: Jon Zemke
David Fry's re-entry into the web-development entrepreneurial scene is one part serendipity, one part intentional and another part in the cards, considering Ann Arbor's entrepreneurial ecosystem.Fry built up Internet firm Fry over the last decade before selling it to Micros Systems in 2008. He now serves as the CTO of Fry Communications and is active with other local startups, such as Current Motors Co. (Ann Arbor) and gloStream (Southfield). And he's rolling back into the start-up game by acquiring Aysling Digital Media Solutions through Fry Communications.This is where the serendipity comes in. Fry was looking for a top digital content company to buy, and Aysling happened to be based in Ann Arbor. "It was a lucky, happy occurrence," Fry says. He plans to grow the 20-person firm's staff by 25-40 percent over the next year.The intentional part is staying active in Ann Arbor's entrepreneurial ecosystem. Aysling will allow him to be an active executive again, building up another company locally. "I firmly believe that you stay with the girl that took you to the dance," Fry says.The in-the-cards part comes from Fry's belief that it was inevitable before this happened. The entrepreneurial talent pool in Ann Arbor runs deep and continues to grow; he points to local angel investment meetings for Ann Arbor Angels as an example. "Those are very crowded meetings," Fry says. "There are probably 30-40 people in that room. There is a lot of talent in Ann Arbor."Source: David Fry, CTO of Fry CommunicationsWriter: Jon ZemkeRead more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.
Plenty of Ann Arbor's companies have been acquisition targets in recent months, but Proquest has been on the other end of the deals this year. The firm has been on an acquisition spree in recent years, including two more purchases in the last two months.Its acquisitions of e-book pioneer ebrary and the Congressional Information Service and University Publications of America product lines from LexisNexis have allowed it to notch double-digit growth in the last four years, after becoming a subsidiary of the Cambridge Information Group. ProQuest has grown its Ann Arbor and Ypsilanti staffs by 100 people, to reach a headcount of 585."Our growth has been extraordinary," says Elliot Forsyth, senior vice president of human resources for ProQuest. "We have grown in excess of 60 percent."ProQuest focuses on offering specialized information electronically, which it sells to researchers at every level, from grade school to commercial. The ebrary and LexisNexis-line acquisitions are expected to strengthen its product line for researchers."Our vision is to become central to researchers around the world," Forsyth says. "Our strength has been in journals, dissertations, and newspapers." Source: Elliot Forsyth, senior vice president of human resources for ProQuestWriter: Jon ZemkeRead more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.
All new businesses strive to make the leap from start-up to second-stage company. However, the real challenge is moving from second-stage to established firm, a jump Adaptive Materials recently made and its founders have an opinion or two about.The Ann Arbor-based company made that leap last week when Ultra Electronics, a global firm traded on the London Stock Exchange, acquired it. Ultra Electronics' 4,020 employees will allow the newly blended company, Ultra-AMI, to sell its fuel cells world wide, a task it couldn't do with only 60 employees."For fuel cells to be successful they need to be deployed in several different markets simultaneously," says Aaron Crumm, who co-founded Adaptive Materials with his wife Michelle Crumm. So although growing a company to 60 people is a number to be proud of, it's not enough to reach their window of opportunity in the market organically. Since IPOs have been basically non-existent since the financial meltdown, acquisition was the only growth path for establishing Adaptive Materials as a significant business player in Metro Detroit.Nonetheless, acquisition has become a loaded term, often inspiring workers in Michigan to duck when they hear it. But the Crumms, now executives with Ultra Electronics, are convinced this acquisition will be more HealthMedia than HandyLab, staying local and growing their presence. Ultra-AMI has 11 open positions and plans to continue growing in Ann Arbor for the foreseeable future."We carefully choose our acquisition company to be the right-sized company," Aaron Crumm says. "They're big, but not too big. They operate globally with 24 business units. We're No. 25, but they're not too big that they can't have another business unit."He adds that acquired companies are likelier to stay put if their products are more innovative. If it's a start-up in a mature industry, then it makes more sense for the bigger company to eliminate the corporate staff to streamline the new combined operations. However, if it's in an emerging sector than it's not as easily assimilated into bigger operations. Those companies are often left to grow and continue to create jobs locally."That's ultimately the true measure of success locally, at least in my opinion," Aaron Crumm says.Source: Aaron Crumm, co-founder of Adaptive MaterialsWriter: Jon ZemkeRead more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.
Toyota is spending $50 million to establish a new Collaborative Safety Research Center in Ann Arbor, partnering with several prominent hospitals and universities, including the University of Michigan.The new safety R&D center will be based in the Toyota Technical Center, where researchers from North America and Japan will work over the next five years. "The vast majority of the $50 million will go to our research partners," says Chuck Gulash, senior executive engineer with the Toyota Technical Center. "It will support their principal investigators, researchers, and post-docs."Toyota will work with U-M's Transportation Research Institute on a multidisciplinary project to assess the potential benefits of advanced safety systems in a systematic way, combining their expertise in driver behavior, crash data analysis, and driver modeling. The automaker is also working with Virginia Tech and The Children's Hospital of Philadelphia, among other institutions.Toyota employs 1,179 people between its two tech centers in the Ann Arbor area. Although this new investment won't require more hiring at those centers, the company has a number of engineering and research job openings at both centers. For more information on those, click here.Source: Chuck Gulash, senior executive engineer with the Toyota Technical CenterWriter: Jon Zemke Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.
There isn't much that's small about the work performed by Michigan Pre-Seed Capital Fund in 2010. The start-up financing fund distributed $2.5 million worth of loans to dozens of companies in Michigan, many of which are in the Ann Arbor area.The $11.6 million fund has given microloans, about $50,000 each, to 52 start-ups, such as U-M spinoff and Accelerate Michigan winner Armune BioScience. These companies mostly use the cash to help commercialize their first products. These companies employ 285 people and have since attracted another $16.4 million in outside investment."These are the companies that aren't bankable in a traditional sense," says Skip Simms, interim CEO of Ann Arbor SPARK and administrator for the Michigan Pre-Seed Capital Fund and the other funds in Michigan Microloan Fund. "There is still a milestone or two they need to achieve before they are investment worthy."Michigan's 21st Jobs Fund provided the money for the Michigan Pre-Seed Capital Fund. Ann Arbor SPARK ran the Michigan Microloan Fund, which is comprised of the Michigan Pre-Seed Capital Fund and two other smaller funds focused on eastern Washtenaw County and Ann Arbor.The Michigan Microloan Fund was the first of its kind, proving quite popular with local entrepreneurs battling the investment cash crunch of the financial crisis. The fund inspired several smaller-yet-similar funds across Metro Detroit. These new funds are each worth a few hundred thousand dollars and focused on specific communities while the Michigan Pre-Seed Capital Fund is worth millions of dollars and has the freedom to invest in any Michigan company.The state hasn't decided yet whether its going to invest more money into the Michigan Pre-Seed Capital Fund. The first microloans from the Michigan Pre-Seed Capital Fund aren't due to be paid back until 2012 so the fund is set to go on hiatus unless the state infuses it with more money. Source: Skip Simms, interim CEO of Ann Arbor SPARKWriter: Jon ZemkeRead more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.
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