Eyebrows and glasses of champagne were raised last June when it was announced that Detroit was ranked first among the top 100 emerging startup ecosystems in the world, beating cities like Minneapolis, Houston, Brussels and Hong Kong.
This upbeat news comes from the 2022 Global Startup Ecosystem Report published by Startup Genome, a San Francisco-based research firm that has analyzed hundreds of cities around the world and assessed data from nearly 3 million companies.
Detroit’s top ranking jumped 13 places from a year earlier, bolstering its status by supporting seed funding and investor activity.
Startup Genome was intrigued by the results, as were two local organizations working to help the economy by serving as catalysts to foster startups and jobs – the William Davidson Foundation and Endeavor – as they decided to work together and d further in this research.
They’ve spent much of 2022 looking at how these fast-growing local startups are doing and how the region has supported them along the way. Their findings will be released next Wednesday at a virtual town hall hosted by these three organizations.
“We are looking at all opportunities to take our region to the next level and compete on the national and global stage,” said Diana Callaghan, Managing Director of Endeavour. “Entrepreneurs have been driving massive economic development in our region. Now we want to see how our region can help fuel that momentum.”
The headline of their findings: Detroit has seen some organic success over the past few years, but other communities are pursuing aggressive strategies with these fast-growing companies, which could threaten the region’s leadership position. And to continue to compete on the global stage, the local startup ecosystem needs to think bigger, take risks, and pursue policies to attract more resources, while helping the cause by elevating the narrative about it.
The group hired Justin Mast, founder of Bloomscape, to interview dozens of “founders” as they are described – entrepreneurs who have grown their successful businesses – with some – like Dug Song, who sold his company Duo Security for 2, $35 billion to Cisco Security in 2018 — to hear their thoughts.
“Justin asked the top founders in our region, ‘What worked for you? “, “Where are we missing the mark” and “What suggestions would you make to elevate our region? Callaghan explained. “We wanted to know how our funders, supporting organizations, philanthropic leaders and government leaders could work better together to give our businesses and entrepreneurs an edge in their hyper-competitive markets.
Marc Penzel, co-founder and president of Startup Genome, spent three months in Detroit talking to entrepreneurs, venture capitalists and others. Among some findings that will be discussed at Wednesday’s event:
- The “founders” felt that there was no clear strategy to lead the region’s efforts and believe that supporting organizations (accelerators and incubators) are disjointed and have provided limited services.
- “Founders” believe that local angel groups and investors have outdated mindsets and have provided limited support to help founders grow and scale. They added that there is not enough capital here and investors are reluctant to take the necessary risks on emerging companies.
“Unlike other states, we just haven’t been as deliberate about our local strategy,” said Lisa Katz, senior program manager for economic vitality and entrepreneurship at the William Davidson Foundation. “We are good at supporting community businesses like those that sell baked goods and things that make our neighborhoods thrive. But how do we support companies like another future Duo Security or future Amazon? »
There are subtle signs that things are pointing in the right direction.
Penzel said the number of “unicorns” here — startups that have sold for more than $1 billion — was far fewer here than in New York or Silicon Valley where they proliferate with investors and investors. venture capitalists supporting startups in their backyard.
“But the good news is that there have been more unicorns in the past few years than the previous 25 years combined,” Penzel added. These unicorns often shine a light on the health of an entrepreneurial community.
Chris Rizik has focused on helping startups since he opened Renaissance Venture Capital in 2008. He was among the interviewees for this company.
“We’ve helped bring over $2 billion to Michigan,” he said of his venture capital organization. “But we had to consciously focus on attracting more late-stage capital, because that’s been a gap here.”
Katz said other states like Ohio have a more cohesive approach to helping entrepreneurs looking to boost their businesses.
Katz cited success stories like Workit Health, May Mobility, Our Next Energy, the Lip Bar and Air Space Link, as some of the types of companies that will benefit from their flag-waving efforts.
“Historically, Southeast Michigan has been extremely focused on the automotive and mobility sector,” Callaghan added. “Yet companies like Duo Security and Rocket Mortgage have had a major economic impact in our region. If we worked together to generate more businesses like Duo and Rocket Mortgage, we could truly transform our region.
Going a step further, Callaghan told me that if Detroit’s metro ecosystem leads to the creation of 60 of these fastest-growing companies, it could increase local GDP by more than $5 billion a year. .
She added: “If we work together to support these entrepreneurs, we would have more companies like Duo or Rocket, which could transform our region.”
Contact Carol Cain: 248-355-7126 or clcain@cbs.com. She’s the lead producer/host of “Michigan Matters,” which airs at 8 a.m. Sundays on CBS 62. See John Gallagher, Bill Haney, Paul Vachon and Jamie Ruthenberg on this Sunday’s show.