Martin Dober and Patti Glaza from our ID Ventures team write about COVID-19’s impact on Michigan startups, their importance to our economy, and what we are doing to help.
As you know, many Michigan small businesses are struggling to survive the economic crisis caused by the COVID-19 pandemic. Fortunately, many programs have been quickly created to support these businesses through the support of federal, state, philanthropic and individual donors. While the other programs within Invest Detroit are finding ways to support and amplify these efforts, the ID Ventures team is focused on helping Michigan’s tech startups that are also vulnerable to the current crisis.
Tech startups have a big impact on Michigan’s economy, and as more of them are created and expand, they bring tech job and entrepreneurial opportunities for Michiganders who might otherwise look to the coasts for career advancement. Our funding focus is early-stage startups—those that have created businesses, secured some initial investment, and need support to hit milestones that will drive investments from larger institutions. The success of startups in this phase is already vulnerable, but now with funding cycles on pause, sales declining, and efforts shifting to find ways to work from home, these job and density creators are in jeopardy. To help, we are taking two primary approaches.
Our first is to do what we can to support our current portfolio. ID Ventures has active investment capital in 64 early stage startups across the state, many of which started feeling the impact of this downturn early on. Though we are still considering investment in new companies, we are ensuring that we are maintaining enough capital for follow-on funding to those who need it. Additionally, we are leveraging our relationships with industry experts to help with issue-specific challenges that come up, while also connecting these companies with each other for shared problem-solving.
Secondly, with generous funding from the Michigan Economic Development Corporation, we have launched the Tech Startup Stabilization Fund to support a broader reach of Michigan startups that are also struggling to survive through the crisis. While we are still fundraising to grow the impact of the fund, our current goal is to provide one to three months of cash runway to eligible companies that need urgent investment. Since launching the fund on April 16, we have received almost 200 applications that our small but mighty team of five is working hard to process and respond to.
We have yet to understand the ongoing timeframe of the current situation and its long-term impact, but strategy and flexibility are at the core of our work, and we will remain nimble and adaptive to any new challenges our hardworking startups might face.