JumpStart Inc., a Cleveland-based nonprofit focused on entrepreneurship and economic development, will team with the New Economy Initiative (NEI) to open a new high-tech accelerator in Detroit, says NEI executive director David Egner.
Egner (an Xconomist) says a variety of state and regional investors will fund the accelerator and he expects it to have an annual operating budget of between $1.5 million and $3 million.
Egner says the accelerator, which will likely open this fall inside TechTown, will join a field of local accelerators and incubators that some feel is already too crowded given the relatively small geographic area they cover in Southeast Michigan. But Egner says that although accelerators like TechTown and Ann Arbor SPARK nurture high-tech startups, they aren’t solely devoted to them. “We don’t have a designated organization doing marketing to increase deal flow,” he says. “There currently isn’t capacity to go out and find new deals. We’ll have a $5 million fund with the ability to move $250,000 per deal.”
What Detroit has that still hasn’t been fully capitalized upon, Egner argues, is an innovation corridor that stretches from Dan Gilbert’s buildings downtown to Henry Ford Hospital in New Center. “That three and a half miles could be one of the most innovative districts in the country, and we’ll help to accelerate that corridor,” he says, adding that innovation is already flourishing in places like Wayne State, the Detroit Medical Center, Next Energy, Bizdom, D:Hive, Sustainable Water Works, the Detroit Creative Corridor Center,Inforum, and all the startups housed in the Madison Building.
The NEI is itself a $100 million initiative formed in 2008 to increase economic activity in Southeast Michigan; it’s funded by the Skillman Foundation, Community Foundation for Southeast Michigan, Max M. and Marjorie S. Fisher Foundation, the Hudson-Webber Foundation, the Ford Foundation, the W.K. Kellogg Foundation, the John S. and James L. Knight Foundation, the Kresge Foundation, the McGregor Fund, and the Charles Stewart Mott Foundation.
Egner is “delighted” JumpStart is on board and says their involvement will result in a much more successful accelerator. In 2008, JumpStart was approached by the U.S. Department of Commerce and asked to franchise its successful revitalization strategy in Cleveland and take it to other struggling “rust belt” cities. The result is the Regional Entrepreneurship Action Plan Project partnership between the U.S. Economic Development Administration, the Knight Foundation, the Surdna Foundation, and JumpStart.
Starting in 2010, the partner foundations shelled out money for JumpStart to go into five Midwestern cities—Fort Wayne and Gary, IN; Duluth and St. Paul, MN; Akron, OH; and Detroit—and work with local economic development organizations, investors, entrepreneurs, and philanthropists to accelerate the entrepreneurial ecosystem. “Detroit has a lot of characteristics in common with Cleveland,” says Steve Berger, Detroit project leader for the Regional Entrepreneurship Action Plan. “They’ve both suffered from global competition. I wish I knew the magic formula for doing it smarter and better, but not all ecosystems are the same. This is a unique marketplace with a significant number of universities and engineers, and a high-tech accelerator is important in moving the ball forward.”
Berger says the goal of the Detroit JumpStart accelerator is twofold: to increase the number of fast-growing tech startups that will lead to significant economic development in Southeast Michigan, and to enhance the entrepreneurial ecosystem by collaborating with the existing market and encouraging other players in the market. So far, Berger says, there has been “tremendous cooperation.” In addition to the NEI, JumpStart also has support from the Michigan Economic Development Corporation, Detroit Venture Partners, the First Step Fund, and Renaissance Venture Capital Fund.
Berger says JumpStart’s role will be “catalytic” and that once the accelerator is up and running and dynamic leadership is in place, he’ll return to Cleveland. That, Egner says, is when the real work will begin. He sees this as the beginning of a 10-year process to create the right environment for innovation to flourish and get closer to critical mass.
“Some folks would say we don’t have 10 years to wait,” Egner muses. “But the alternative is to rush it and fund programs that will never be sustainable.”