Funding Information Funding Information for Southeast Michigan Startup Businesses

Funding Information Funding information for Southeast Michigan startup businesses

By Han Peng 8/16/2011

Contents

Funds Available (Stage A: Investigation) ...... 4 Thrive One Fund: ...... 5 Hebrew Free Loan: ...... 5 Emerging Technologies Fund (ETF): ...... 5 Crowdfunding: ...... 6 Profounder: ...... 6 Kickstarter: ...... 6 IndieGoGo: ...... 7 Kiva Detroit: ...... 7

Funds Available (Stage B: Seed) ...... 8 The Small Business Detroit MicroLoan Program: ...... 8 Michigan Pre-Seed Capital Fund Micro Loan Program: ...... 8 ShoreBank Enterprise Detroit Small Business Loan: ...... 9 The Opportunity Resource Fund – Microenterprise/Small Business: ...... 9 Detroit SOUP: ...... 10

Funds Available (Stage C: Development) ...... 10 Michigan Pre-Seed Capital Fund: ...... 10 Automation Alley's Pre-Seed Fund: ...... 11 Detroit Venture Partners, LLC: ...... 11 BELLE Capital, LP: ...... 11 The Detroit Micro-enterprise Fund: ...... 12 First Step Fund: ...... 12

Funds Available (Stage D: Early) ...... 12 The Ann Arbor Region venture capitalists and Angel investors...... 13 Fletcher Spaght Ventures: ...... 13 Beringea ...... 13 EDF Ventures ...... 13

Funds Available (Stage E: Growth) ...... 15 Detroit Investment Fund: ...... 15 Stage 2 Innovations: ...... 16 Venture Capitals: ...... 16

Funds Available (Stage F: Maturity) ...... 16 Michigan Supplier Diversification Fund: ...... 17 The Wayne County Urban Loan Fund: ...... 17

Industry / Demographics ...... 17 The Detroit Food Movers Fund:...... 17 The Green Enterprise Fund: ...... 18 The Women's Empowerment Fund: ...... 18

DTE Energy Ventures: ...... 18 iNetworks: ...... 18 iNetworks BioOpportunity Fund, L.P.: ...... 18 iNetworks Community Impact Fund: ...... 19 iNetworks Michigan Fund, L.P.: ...... 19 iNetworks, LLC Investments: ...... 19 LISC Detroit: ...... 19 LISC Detroit Offers: ...... 20 Technical and Financial Resources ...... 20 Project Feasibility and Predevelopment Activities ...... 20 Construction Financing ...... 20 Permanent Financing ...... 21 Equity and Intermediary Capital ...... 21 Midtown Development Partners: ...... 21 Detroit Empowerment Zone: ...... 21 Detroit Urban Retail Loan Fund (DURLF): ...... 22 Midtown Detroit Inc. Façade Grant and Building Loan Program: ...... 22 Woodward Corridor Development Fund: ...... 22

General Resources ...... 23 Small Business Administration (SBA) Loan Programs: ...... 23 The State Small Business Credit Initiative: ...... 23 Venture Capital Funding: ...... 24 21st Century Investment Fund: ...... 24 Venture Capital & Angels Network: ...... 24 Michigan Minority Supplier Development Council (MMSDC): ...... 24 Detroit Industrial Revolving Loan Fund: ...... 25 Creative Corridor Incentive Fund: ...... 25 Commercial Banks: ...... 26 Hatch Detroit: ...... 26

Startup Financing Cycle

Funds Available (Stage A: Investigation)

At this stage of growth, the organization is still a simple one; the owner typically does everything from sales to managing daily operations. Systems and formal planning are minimal to nonexistent. The company’s strategy at this point is simply to survive. The owner is the business, performs all the important tasks, and is the major supplier of energy, direction, and, with relatives and friends, capital.

Companies in the Investigation Stage range from newly started restaurants and retail stores to high technology manufacturers that have yet to stabilize either production or product quality. Many of such companies never gain sufficient customer acceptance of product capability to become viable. Because of the importance of customer acceptance factor in this stage, businesses are encouraged to use crowdfunding as a fundraising method to generate potential customer interest and test the market.

Profile of typical company that is funded here Revenue Zero Product Concept Stage Team Few Full Time Market Undefined 4

Thrive One Fund:

The objective of the Thrive One Fund is to encourage minorities and women business owners to build their businesses in Southeast Michigan and contribute to the economic growth of the region. TechTown is empowered by the City of Detroit to manage this fund and provide guidance, coaching, general entrepreneurial training and funding to suitable loan candidates.

The business must be at least 51% minority or woman owned and located in the City of Detroit. The terms of the loan will be unique to each applicant based on funding requirements and ability to repay. It is incumbent on the applicant to provide documents that outline their funding needs and ability to repay by presenting a thoughtful business plan.

Loan amounts: up to $15,000

For more info: http://techtownwsu.org

Hebrew Free Loan:

HFL has pledged a starting pool of $300,000 to begin issuing short-term loans to Jewish entrepreneurs committed to remaining in Southeast Michigan. TechTown is responsible for identifying loan candidates who have viable business ideas. Candidates who are granted a Hebrew Free Loan will also receive access to TechTown’s comprehensive entrepreneurial support system which includes business coaching, mentoring, workshops and space for lease.

Funding available for all business models — from startups, to established entities seeking to upgrade or expand, to legacy models seeking to re-invent.

Loan amounts: up to $25,000

For more info: http://hfldetroit.org/small-business.php

Emerging Technologies Fund (ETF):

The Michigan Emerging Technologies Fund (Michigan ETF) is designed to expand funding opportunities for Michigan technology-based companies in the federal innovation research and development arena. The Michigan Small Business and Technology Development Center (MI-SBTDC), in partnership with the Michigan Economic Development Corporation (MEDC), dedicated $1.4 million per year in 2008 through 2011 to match federal SBIR/STTR funding opportunities for exceptional research and technical innovation generated in Michigan. The fund will match both Phase I and Phase II SBIR/STTR awards until funds are exhausted.

The Michigan ETF will match 25% of phase I SBIR/STTR awards up to $25,000, and 25% of phase II SBIR/STTR awards up to $125,000.

For more info: http://www.mietf.org 5

Crowdfunding:

ProFounder:

ProFounder is a crowdfunding website that provides entrepreneurs access to the capital they need through the engagement of supportive communities.

Unlike Kickstarter and IndieGoGo, ProFounder does not fund startup businesses through contribution and donations from general public, but through investment from investors. Those investors can be friends, family, classmates and other individuals. In return, the entrepreneur can offer a percentage of their revenue to the investors for a certain amount of years. Investors do not need to be accredited or sophisticated. Currently, accredited investors will be treated just like unaccredited investors on the platform. ProFounder makes no distinction.

In order to get investments, entrepreneurs would:

Create a pitch with a compelling story of the business, including the forecasted revenue and costs. Set investment terms, based around sharing a percentage of the revenues with investors. The entrepreneur will decide how much revenue to share, and how long he will share it. The fundraising page will then be published through ProFounder, which will include the pitch, legal document and investment terms. The business starters then invite investors to the fundraising website and invest by sending them an email through ProFounder’s interface. Investors will then pledge funding directly on the fundraising website, in any amount they choose over the minimum investment. The default minimum is $100. The number of people who can invest is limited depending on the state in which those investors live (15 investors in Michigan). After the funding goal is reached, ProFounder will get signatures from investors to sign off the investment and release the fund to the entrepreneur. ProFounder will also manage the entrepreneur’s account and his or her investors’ accounts on the site. The entrepreneur uses the funds raised to build the business. The entrepreneur reports quarterly revenues on ProFounder, which then will distribute proportionately to all of the investors.

For more info: https://www.profounder.com

Kickstarter:

Kickstarter is an online threshold pledge system of crowdfunding for funding creative projects. Instead of releasing the fund immediately, Kickstarter keeps the donation in an escrow fund. When the threshold is reached, the contributions are retired from the escrow fund and a contract is formed so that the collective good is supplied.

Project owners choose a deadline and a target minimum of funds to raise. If the chosen target is not gathered by the deadline, no funds are collected. Money pledged by donors is collected using Amazon Payments, and initiating projects require a U.S. bank account.

Kickstarter turns a profit by claiming 5% of the fund raised (only if the funding goal is met); Amazon takes an additional percentage (~2%).

For more info: http://www.kickstarter.com

IndieGoGo:

A crowdfunding website founded in 2008. Headquartered in San Francisco, IndieGoGo has hosted over 12,500 funding campaigns in areas such as music, charity, small business and film. The sites structure allows users to create a page for their funding campaign, set up an account with PayPal, make a list of “perks” for different levels of donation, then create a social media-based publicity effort.

Users publicize the projects themselves through Facebook, Twitter and similar platforms. The site levies a 4% fee for successful campaigns, and 9% for campaigns that fail to reach their target amount. Unlike similar sites, IndieGoGo disburses the funds immediately whether the funding goal is met or not.

According to the Wall Street Journal, 10% of IndieGoGo projects raise their requested amount, while 40% of projects raise at least $500. IndieGoGo is also used by already-funded projects to create publicity or find distributors.

For more info: http://www.indiegogo.com

Kiva Detroit:

Kiva Microfunds, commonly known as Kiva.org is an organization that allows people to lend money via the Internet to microfinance institutions in developing countries around the world and in the U.S., which in turn lend the money to small businesses and students.

It is a 501(c)(3) non-profit organization headquartered in San Francisco, supported by loans and donations from its users and through partnerships with businesses and other institutions. Kiva itself does not charge any interest; the loans made by Kiva members are passed interest-free to the independent field partner indicated for each loan. These interest rates are disclosed and are discussed in the relevant section on the Kiva website. Lenders browse and choose an entrepreneur they wish to fund. Kiva aggregates loan capital from individual lenders and transfers it to the appropriate Field Partners to disburse to the entrepreneur chosen by the lender. As the entrepreneurs repay their loans, the Field Partners remit funds back to Kiva. As the loan is repaid, the Kiva lenders can withdraw their principal or re-lend it to another entrepreneur.

For more info: http://www.kiva.org/detroit

Funds Available (Stage B: Seed)

In this stage, the business is still fragile. Its main concerns are if the business has enough money to cover the considerable cash demand of this startup phase, and if the company can get enough customers, deliver their products and provide services well enough to become a viable business.

Stage B and C are also called the “valley or death.” This is a period of financial losses that startup companies often have to survive before reaching profitability. For most companies, going through the Valley of Death is a difficult journey. It is a place that’s filled with companies that shut their doors before reaching the state of self-sufficiency.

Profile of typical company that is funded here Revenue Zero to small Product Pilot or Alpha Team Full time with Consultants Market Proposed

The Small Business Detroit MicroLoan Program:

The Small Business Detroit MicroLoan Program (SBDMP) was created through a partnership between the City of Detroit’s Mayor’s Office of Neighborhood and Commercial Revitalization (ONCR) and the Center for Empowerment & Economic Development (CEED). The purpose is to provide business start-up and expansion financing to those businesses in Detroit that cannot obtain traditional financing.

On May 05, 2006, the city of Detroit announced that the Small Business Detroit MicroLoan Program will be handled by the Mayor’s Office of Neighborhood Commercial Revitalization (ONCR). Upon meeting the criteria and requirements, CEED was selected to administer Detroit’s MicroLoan Program.

CEED is the leader in the proficiency of microloans; making microloans since its inception in 1984.

The Small Business Detroit MicroLoan Program is funded through the Casino Business Development Fund created under the temporary casino agreements. One-and-a-half million of the funds are designated to assist first-time entrepreneurs and other underserved populations with startup or expansion of small businesses. The Small Business Detroit MicroLoan Program will offer microloans ranging from $5,000 to $35,000.

For additional information, contact the Small Business Detroit MicroLoan office at (313)·255-1020.

Michigan Pre-Seed Capital Fund Micro-Loan Program:

The Pre-seed Fund is now addressing the need for “investigative” capital through a micro-loan program to help companies achieve milestones that will make the company more attractive to equity investors or achieve first sales. Micro-loan funds can be used to further flesh out a competitive analysis, prepare financial pro formas, develop plans to cross regulatory hurdles, finish a prototype, complete a market

study, travel to customers or partners, or other issues that are typically required by investors before they will invest.

Loans will be for amounts between $10,000 to $50,000 without needing a match. Each independent SmartZone is responsible for due diligence of the startup company and submit only those opportunities which meet an agreed upon set of defined criteria for a loan. Two SmartZones, Automation Alley and the West Michigan Science and Technology Initiatives, will evaluate these early stage, pre-revenue companies’ proposals. They will also actively follow up with companies and their respective SmartZones to ensure the reporting requirements are complete.

Loan amounts: up to $50,000

For more info: http://www.annarborusa.org/business-accelerator/funding-incentives

ShoreBank Enterprise Detroit Small Business Loan:

The purpose of this small business lending program has been to support the growth of Detroit-based business, particularly those owned by entrepreneurs of color and by women. It targets small businesses with growth potential and management insight that lack sufficient collateral or owner equity to qualify for financing from mainstream lenders.

To qualify for a small business loan, a business should be located in the City of Detroit, have annual sales of at least $100,000, have demonstrated growth potential, and have the ability to continue to grow and retain or add new jobs, etc.

Loan amount: $50,000 to $150,000

For more info: ShoreBank Enterprise Detroit (313) 886-2091

The Opportunity Resource Fund – Micro-enterprise/Small Business:

The Opportunity Resource Fund provides loans to spur economic development in Michigan communities. Loans are generally $10,000 to $200,000 with terms up to six years. Borrowers must have been turned down by another lender or the project or business does not meet traditional underwriting standards.

The Fund provides loans for the startup or expansion or a small business. These loans can be used for pre-development costs, acquisition, construction or renovation of a building, or purchase of land. Inventory and working capital for planned business expansion are also available.

For more info: http://www.oppfund.org/lending/micro-enterprisesmall-business

Detroit SOUP:

SOUP is a monthly dinner funding micro-grants for creative projects in Detroit. Anyone can submit their project proposal for micro-grant funding to [email protected] by Friday before the first Sunday of the month.

The SOUP grant amount is typically $600-$900 per project.

For more info: http://www.detroitsoup.com/home/about/

Funds Available (Stage C: Development)

In reaching this stage, the business has demonstrated that it is a workable business. It has enough customers and satisfies them sufficiently with its products or services to keep them. The key problem therefore shifts from mere existence to the relationship between revenues and expenses.

Systems development is still minimal. Formal planning is, at best, cash forecasting. The major goal is still survival, and the owner is still synonymous with the business.

Profile of typical company that is funded here Revenue “Lumpy” Revenue at best Product Proof of Concept and/or Beta Team Full Time, Low if any wages Market Defined

Michigan Pre-Seed Capital Fund:

The second program within the Michigan Pre-Seed Capital Fund supports high-tech startup companies as they near commercial viability by providing access to early-stage capital co-investment or micro-loans to accelerate company development. Supported by a consortium of Michigan SmartZones, these state funds will extend the personal investment of entrepreneurs during the critical stage when they are developing their businesses to the point of readiness for growth capital investment.

The fund targets companies throughout the state that are creating the newest technology businesses.

Eligible companies will need to be past the concept development and analysis phase, and have specific milestones identified for achieving commercialization suitable to a matching investing partner of the Pre-Seed Fund.

These needs might include hiring key management executives or specialized consultants, regulatory review, contract manufacturing agreements, marketing strategies and sales plans, etc. At this stage, the Pre-Seed Fund is able to invest $50,000 to $250,000 per company alongside their investment partner who will provide a minimum match equal to half of the requested pre-seed investment.

For more info: http://www.annarborusa.org/business-accelerator/funding-incentives/pre-seed-fund

Automation Alley's Pre-Seed Fund:

Automation Alley's technology business accelerator program connects select Southeast Michigan startup technology companies to vital pre-seed funding for development and prototyping as well as commercialization capital from angel investors, venture capitalists and bankers.

The Pre-Seed Fund offers qualified companies in competitive edge technologies (alternative energy, advanced manufacturing, life sciences, homeland security, etc.) access to up to $250,000. Counseling services, business plan assistance and technology development support is also available. A guide to Competitive Edge Technologies companies, toward which the pre-seed fund is targeted, is also available.

For more info: http://www.automationalley.com/page?pageid=a0E60000001I6Ef

Detroit Venture Partners, LLC:

Detroit Venture Partners is a Detroit-based venture capital firm that backs seed and early-stage technology companies. Their purpose is to help rebuild the Detroit area through entrepreneurial fire. They view business building as a palate for creative expression and an opportunity to make a difference and change the world.

Detroit Venture Partners are creative business builders, not money managers. They are entrepreneurs helping other entrepreneurs build and grow meaningful companies. It is about backing passionate entrepreneurs that can both dream and execute. Great thinking trumps fancy diplomas. Detroit Venture Partners are looking for investment opportunities in these sectors: internet, digital media, marketing technology, direct-to-consumer, sports & entertainment, social media, e-commerce and software.

Contact: 1050 Woodward Avenue Detroit, MI 48226 313.373.7751 E-mail: [email protected] http://www.detroitventurepartners.com/

BELLE Capital, LP:

BELLE Capital, LP is an early stage angel fund focused on building great companies in Michigan and other regions in the Midwest and South.

BELLE Capital is looking for capital efficient companies with a unique product or service filling an urgent market need. They target the mobile/internet/IT, technology-enabled services, life sciences/medical devices, advanced manufacturing and clean tech market sectors. Companies seeking capital must have at least one female founder or C-level exec, and/or be willing to recruit top female talent to the C-suite and board of directors.

For more info: http://www.bellevc.com

The Detroit Micro-enterprise Fund:

This program provides micro-loans to startup and established small businesses lacking access to traditional financial sources in Detroit, Hamtramck, Highland Park, Ecorse, River Rouge, Pontiac, and Lincoln Park. Loans up to $10,000 for startups and up to $35,000 for established firms (2+ years) are available.

For more info: http://www.detroitmicroenterprisefund.org/inquire_now.html

First Step Fund:

The First Step Fund is a $5 million fund created by the New Economy Initiative (NEI) to help fund emerging companies in Southeast Michigan. The Fund represents a partnership of the Invest Detroit Foundation, TechTown, Ann Arbor SPARK and Automation Alley intended to support a revolving loan pool to provide financing to emerging and newly-formed small businesses in Southeast Michigan that have successfully completed a training program through a qualified regional business incubator/accelerator. The First Step Fund provides emerging companies with access to capital, addressing the deficit of financing in the marketplace for startup companies. The intent is to promote economic development, providing loans to early stage, commercially viable businesses creating jobs and increased tax revenue for the region.

Loan amounts: up to $50,000

For more info: http://www.investdetroit.com/managed-funds/first-step-fund/

Funds Available (Stage D: Early)

In this stage, the company may grow in size and profitability and move on to the next stage. Or it may, as many companies do, remain in this stage for some time, earning marginal returns on invested capital and eventually go out of business when the owner gives up. Some of these businesses have developed enough economic viability to ultimately be sold, usually at a loss. Or they may fail completely and drop from sight.

Profile of typical company that is funded here Revenue Smoothing out, but still hard to predict. Moving toward breakeven. Product Go to market Team Full time with gaps in management team Market Defined and replicated

Ann Arbor region venture capitalists and angel investors

The mission of these private firms is to make equity investments in early stage and emerging growth companies. Further info on angel and capital investors in Michigan can be obtained through the Michigan Economic Development Corporation. Ann Arbor Angels Venture Investors 125 S. Fifth Ave 201 S. Main Street, Suite 900 Ann Arbor, MI 48104 Ann Arbor, MI 48104 www.annarborangels.org 734.274.2904 www.ventureinvestors.com BlueWater Angels MidMichigan Innovation Center Wolverine Fund 4520 Ashman Road, Suite M University of Michigan Business School Midland, MI 48642 701 Tappan Street 989.839.2333 Ann Arbor, MI 48901 www.bluewaterangels.com 734.936.3920

Capital Community Angels Arboretum Ventures 1181 Ridgewood Drive 334 E. Washington Street East Lansing, MI 48823 Ann Arbor, MI 48104 517.242.0972 734.998.3688 www.capitalcommunityangels.org Fax 734.998.3689 www.arboretumv.com Fletcher Spaght Ventures 201 South Main Street, Suite 900 Beringea Ann Arbor, MI 48104 32330 West Twelve Mile 734.214.3008 Farmington Hills, MI 48334 www.fletcherspaght.com 248.489.9000 www.beringea.com Frankel Fund http://www.zli.bus.umich.edu/ EDF Ventures vc_pe/frankel_fund.asp 425 North Main Street Ann Arbor, MI 48104 Grand Angels 734.663.3213 www.grandangels.org Fax 734.663.7358 www.edfvc.com Great Lakes Angels www.glangels.org North Coast Technology Investors 206 South Fifth Avenue, Suite 550 Seneca Partners Ann Arbor, MI 48104 300 Park St., Suite 400 734.662.7667 Birmingham, MI 48009 www.northcoastvc.com 248.723.6650 www.senecapartners.com Plymouth Venture Partners

3840 Packard Rd., Suite 110 Frost Bank Tower Ann Arbor, MI 48108 401 Congress Ave. Suite 2950 734.747.9401 Austin, TX 78701 www.plymouthventurepartners.com 512.721.1200 www.santeventures.com RPM Ventures 320 North Main St., Suite 400 SWMF Life Science Fund Ann Arbor, MI 48104 241 East Michigan Ave. 734.332.1700 Kalamazoo, MI 49007 www.rpmvc.com 269.553.9588 www.southwestmichiganfirst.com Chrysalis Ventures 737 Bolivar Rd. Suite 2500 Triathlon Medical Ventures Ann Arbor, MI 48104 250 East Fifth St. 734.864.0237 1100 Chiquita Center www.chrysalisventures.com Cincinnati, Ohio 45202 513.723.2600 Endurance Ventures www.tmvp.com 122 S. Main St., Ste 200 Ann Arbor, MI 48104 Allos Ventures www.enduranceventures.com 11611 North Meridian St. Suite 310 Carmel, IN 46032 TGap Ventures 317.275.6800 259 E. Michigan, Suite 208 www.allosventures.com Kalamazoo, MI 49007 269.217.1999 DFJ Mercury www.tgapventures.com 1 Greenway Plaza. Suite 930 Houston, TX 77046 5AM Ventures 713.715.6820 2200 Sand Hill Road. Suite 110 www.dfjmercury.com Menlo Park, CA 94025 650.233.8600 Resonant Ventures www.5amventures.com 425 North Main Street Ann Arbor, MI 48104 Early Stage Partners [email protected] 1801 East 9th Street, Suite 1700 www.resonantvc.com Cleveland, Ohio 44114 216.781.4600 Arsenal Venture Partners www.esplp.com 201 S. Main Street. Suite 1000 Ann Arbor, MI 48104 Hopen Life Science Ventures [email protected] 3133 Orchard Vista Dr SE www.arsenalvp.com Grand Rapids, MI 49546 616.464.5071 EnerTech Capital www.hopentherapeutics.com Building D Suite 105 625 W. Ridge Pike Sante Ventures Conshohocken, PA 19428 14

484.539.1860 415.983.9983 www.enertechcapital.com www.nthpower.com

Huron River Ventures Cultivian Ventures 320 North Main Street. Suite 400 11550 North Meridian St. Suite 310 Ann Arbor, MI 48104 Carmel, IN 46032 [email protected] 317.208.3333 www.huronriverventures.com www.midpointvc.com

Nth Power One Embarcadero Center. Suite 1550 San Francisco, CA 94111

Funds Available (Stage E: Growth)

In this stage, the key problems are how to grow rapidly and how to finance that growth. One of the concerns in this stage is whether there will be enough cash to satisfy the great demands growth brings and cash flow that is not eroded by inadequate expense controls or ill-advised investments brought about by owner impatience.

This is a pivotal period in a company’s life. If the owner rises to the challenges of a growing company, both financially and managerially, it can become a big business.

Profile of typical company that is funded here Revenue Accelerating. Profit growth Product Generally Available Team Full Staff Market Well Defined

Detroit Investment Fund:

The Detroit Investment Fund (DIF) is a source of private sector financing designed to be a catalyst for investment in Detroit by financing qualified commercial projects and entities to stimulate economic development and job creation.

The DIF provides gap financing intended to leverage owner equity so that the transaction merits traditional bank/senior lender financing. Investments in strategic projects are considered when potential exits for a significant long-term, clear benefit to the economic development of Detroit that would likely not be completed without the DIF.

For more info: http://www.investdetroit.com/managed-funds/detroit-investment-fund

Stage 2 Innovations:

Stage 2 Innovations is a $100 million stage two investment fund established to accelerate the large-scale commercialization of innovative, patentable technologies in the global market. The core leader of this fund is Tom LaSorda, former President and CEO of Chrysler and an experienced investor in startup companies.

The goals of this fund are to empower and support the commercialization of innovation-based technologies, and to provide hands-on business strategy and operational support.

For more info: http://www.stage2innovations.com/index.cfm

Venture Capital: BioStar Ventures Fontinalis Partners 560 W. Mitchell St. #480 Penobscot Building Petoskey, MI 49770 645 Griswold Street. Suite 4321 231.487.9186 Detroit, MI 48226 www.biostarventures.com 313.432.0321 www.fontinalispartners.com H.I.G. BioVentures 1450 Brickell Ave. 31st Floor GM Ventures Miami, FL 33131 300 Renaissance Center 305.379.2322 Detroit, MI 48265 www.higbio.com [email protected] www.gmventures.com River Cities Capital Funds 221 East Forth St. Suite 2400 Sail Capital Partners Cincinnati, OH 45202 3162 Michelson Dr. Suite 750 513.621.9700 Irvine, CA 92612 www.rccf.com 949.398.5100 www.sailvc.com MK Capital 130 South First Street. Suite 201 Open Prairie Ventures Ann Arbor, MI 48104 400 East Jefferson 734.663.6500 Effingham, IL 62401 www.mkcapital.com 217.347.1000 www.openprairie.com Funds Available (Stage F: Maturity)

A company in its maturity stage has the staff and financial resources to engage in detailed operational and strategic planning. The management is decentralized, adequately staffed and experienced. And systems are extensive and well developed. The owner and the business at this point are quite separate, both financially and operationally.

The greatest concerns of a company entering this stage are, first, to consolidate and control the financial gains brought on by rapid growth and, second, to retain the advantage of small size, including flexibility of response and the entrepreneurial spirit.

Profile of typical company that is funded here Revenue Leveling-Out. Profit growth slows. Product Mature Team Experienced Market Mature and tapering off.

Michigan Supplier Diversification Fund:

In recognition of the current economic climate and its effects on suppliers, the Michigan Economic Development Corporation has created a fund to help address these issues. The Michigan Supplier Diversification Fund is a three-part program that targets suppliers seeking to diversify into emerging growth industries.

For more info: http://ref.michiganadvantage.org/cm/attach/7ebee373-6cfa-4392-b68b- 8a27a5dbc39a/DivFund_LoanProg.pdf

The Wayne County Urban Loan Fund:

This is a loan program for small businesses in Wayne County that provides wrap-around funding. Bank loans of 50% are supplemented by up to 40% from the Loan Fund and at least 10% from the business. Funds are for fixed assets to expand and modernization to increase competitiveness in the current economy.

For more info: http://www.detroitmicroenterprisefund.org/inquire_now.html

Industry / Demographics

The Detroit Food Movers Fund:

This pilot program is designed to put mobile distribution vehicles on the streets of Detroit to provide fresh fruits and vegetables to residents who otherwise would not have access to these products. The loans are for the purchase of trucks and inventory. You may request up to $15,000 to purchase and outfit a truck (ex. Shelving, logo painting, food inventory, startup costs); or $5,000 maximum for food inventory and other startup costs.

For more info: http://www.detroitmicroenterprisefund.org/inquire_now.html 17

The Green Enterprise Fund:

This program is designed to provide funding for startup and established businesses that are looking to build an environmentally sustainable business in Detroit, Hamtramck, Highland Park, Ecorse, River Rouge, Pontiac or Lincoln Park. Loans up to $10,000 for startups and up to $35,000 for established firms (2+ years) are available.

For more info: http://www.detroitmicroenterprisefund.org/inquire_now.html

The Women's Empowerment Fund:

This program is designed to provide funding for startup and established businesses that are looking to promote women entrepreneurs in Detroit, Hamtramck, Highland Park, Ecorse, River Rouge, Pontiac and Lincoln Park. Loans up to $10,000 for startups and up to $35,000 for established firms (2+ years) are available.

For more info: http://www.detroitmicroenterprisefund.org/inquire_now.html

DTE Energy Ventures:

DTE Energy Ventures invests in and works with high potential energy technology companies to develop products and nurture businesses. They seek to build value by creating mutually rewarding partnerships with their portfolio companies that leverage DTE’s extensive energy industry knowledge and tap DTE’s broad network of venture capital partners.

To date, DTE Energy Ventures have invested over $100 million in energy-related companies and funds, making them one of the largest Michigan-based venture capital operations.

For more info: http://www.dteenergyventures.com/ iNetworks:

The main focus of iNetworks is to provide funding for businesses in the healthcare and life sciences industry that change the game in terms of saving time, money and lives for both people and the healthcare system in its entirety. iNetworks’ principals have worked with management teams on breakthrough products in many areas including medical devices, drugs, vaccines, personalized medicine, diagnostics, and healthcare IT and services. iNetworks has also developed a focus on solving key problems affecting the world’s transition towards energy efficiency and alternative fuels. iNetworks actively invests in innovative green-tech management teams whose focus is on clean water, clean fuel, energy efficiency, and clean transportation. iNetworks BioOpportunity Fund, L.P.:

This is a venture capital fund primarily seeking investments in the healthcare, biomedical and life sciences fields. The Fund targets a top quartile internal rate of return, which corresponds to the

historical results of life science/healthcare investments completed by the founders of iNetworks Advisors, Inc. iNetworks Community Impact Fund: iNetworks and its principals have a long history of social, community, regional development and philanthropic involvement. iNetworks is currently researching, and in discussions with potential co- sponsors for, two alternative community impact funds, one largely real estate-based and another without a real estate component. iNetworks Michigan Fund, L.P.:

The iNetworks Michigan Fund, L.P., a Delaware limited partnership, is designed to invest in seed and early stage healthcare and life science companies either located in or willing to move to the State of Michigan. A special emphasis is placed on Detroit and Southeast Michigan, where there are exceptional resources applicable to medical devices and other "med-tech" applications. iNetworks, LLC Investments: iNetworks, LLC has made and continues to make its own investments, outside of any managed fund, and often in conjunction with one or more investor/owners of iNetworks, LLC.

For more info: http://www.inetworksllc.com

Detroit LISC:

Detroit LISC is committed to providing creative and flexible financial products that meet a variety of real estate development needs. They work with groups to consult, problem solve, and assist with all types of financing opportunities:

Establishing the feasibility of a project at an early conceptual stage Predevelopment funding to secure other critical funding commitments and to complete the work needed to start construction Construction and permanent financing that cannot be met by conventional means

Detroit LISC provides loans, lines of credit, grants, recoverable grants and equity investments to help community development organizations revitalize their neighborhoods. Community projects typically include:

For-sale and rental housing Community facilities (child care centers, schools, health care facilities, playing fields) Economic development projects, including industrial, office, and retail buildings 19

LISC Detroit Offers:

Technical and Financial Resources

GRANTS

LISC provides technical and financial resources to help community development organizations become strong and stable neighborhood institutions characterized by effective, responsible fiscal management and capable of carrying out a range of community revitalization activities. Detroit LISC provides grant funding to assist organizations in developing affordable housing and commercial and retail space, as well as other community development activities. Grants are designed and provided to be consistent with the Detroit office strategies and local community development needs.

Project Feasibility and Predevelopment Activities

RECOVERABLE GRANTS

Recoverable grants are forgivable loans at 0% interest. They are used to cover specific predevelopment costs associated with a real estate development project, such as architectural work, surveys, environmental assessments, market studies, title work and acquisition. Recoverable grants provide the high risk capital to move a project that has already demonstrated initial feasibility to the point of securing financing commitments and the start of construction. Typical amounts of recoverable grant financing range from $25,000 to $100,000 and typical terms range from one to two years. Repayment most often occurs at the point of closing on construction financing.

PREDEVELOPMENT AND ACQUISITION LOANS

Predevelopment and acquisition loans are available for projects that are highly likely to proceed to construction. Amounts available can be greater than the resources of a recoverable grant. Financing can be provided for a term of one to two years and repayment is usually set to occur at the time of close on construction financing. Collateral is required for acquisition loans.

Construction Financing

CONSTRUCTION LOANS

Generally in conjunction with other lenders, LISC provides construction loans for projects. Construction loans are repaid at the time of sale or closing on the permanent loan. Collateral is required for construction loans.

WORKING CAPITAL LOANS AND LINES OF CREDIT

LISC can provide short-term loans to bridge other sources of financing (which are generally committed) that the community development organization will receive over time to support its real estate development activity.

GUARANTEES

LISC issues a guaranty when it commits to responsibility for the repayment of another lender’s loan for a real estate project in the event of default by the borrower. The size of the guaranty and terms are based on the structure of the financing for the project and an assessment of the risk that is appropriate to mitigate on behalf of the conventional lender.

Permanent Financing

MINI PERMANENT LOANS

LISC has the ability to make loans with a term between two and seven years. Almost always a LISC mini- perm loan begins as a construction loan that converts to a mini-perm loan when certain conditions are met at the time of completion of construction. Collateral is required.

Equity and Intermediary Capital

Through the National Equity Fund (NEF), LISC provides equity investments for projects that support community revitalization across the country, including affordable housing, commercial and retail buildings, and arts and community space.

LOW INCOME HOUSING TAX CREDITS

LISC can help a community development organization acquire the equity it needs for residential and mixed-use projects through the syndication of Low Income Housing Tax Credits (LIHTC).

NEW MARKETS TAX CREDITS

LISC can place equity or long term financing into commercial and mixed-use projects through an investment of New Markets Tax Credits (NMTC).

For more info about LISC Detroit: http://www.detroit-lisc.org/index.html

Midtown Development Partners:

Detroit Empowerment Zone:

Midtown is within Detroit’s Empowerment Zone, which provides tax incentives to induce commercial investment in distressed communities. Businesses located within the zone are eligible for a federal tax credit for up to 20% of $15,000 in wages per qualifying employee who resides in the Empowerment Zone. There is also a state property tax discount for improvements above existing valuation, and an increased federal tax deduction for depreciable property. An additional category of federal tax-exempt private activity bonds will also be available for financing purchases of business property and land. For

more information, contact the U.S. Internal Revenue Service at (800) 829-1040; the State of Michigan Department of Treasury at (800) 487-7000, or the Detroit Empowerment Zone Executive Office at (313) 872-8050.

Detroit Urban Retail Loan Fund (DURLF):

Created by the Detroit Investment Fund in partnership with the Michigan Economic Development Corporation, the DURFL is a revolving loan program. It's intended to address a significant deficit in the Detroit market in providing lending support to small and mid-sized, retail storefront businesses in targeted areas of Detroit’s Greater Downtown to include Midtown, Downtown, Riverfront, Eastern Market and Corktown. These include dry cleaners/laundry facilities, boutique grocery stores, neighborhood services and small commercial businesses. Loans provided by the DURLF will range from as low as $50,000 to a maximum of $500,000 with a preferred range of $150,000 to $300,000.

For more info: call Mary King at (313) 259-6368 or visit www.detinvfund.com

Midtown Detroit Inc. Façade Grant and Building Loan Program:

Midtown Detroit is offering 50% matching grants up to $50,000 for facades of commercial buildings along Woodward Ave. between I-75 and I-94. A companion program, the Building Improvement Loan Program offers loans at two points below prime/five year terms for commercial buildings on Woodward between I-75 and I-94.

For more info: (313) 577-5088

Woodward Corridor Development Fund:

The Woodward Corridor Development Fund was established to encourage the development of new and renovated, quality housing in Detroit’s Midtown. Initiatives that will be supported are development projects with a predominance of housing. Mixed use developments with an emphasis on housing and only a minor commercial component may also be considered. Uses of financing from the Fund may include, by way of example and not of limitation, pre-development activities (feasibility and planning studies, architectural and environmental plans, legal analysis and structuring), site improvements, renovation and new construction.

For more info: (313) 259-6368

General Resources

Small Business Administration (SBA) Loan Programs:

SBA guaranteed loans offer small business owners financing on more favorable terms for a variety of business purposes. Lower down payments and longer repayment terms mean more of the business retains more working capital where it can generate additional profits for your business.

There are two loan programs that offer distinctive advantages, depending on your business needs:

SBA 7(a) Program - Offers flexible term financing for virtually any business purpose with variable rates, long-term repayment (up to 25 years), and higher leverage for qualified business owners. This is an excellent choice for buying or building real property, acquiring a business enterprise, or buying equipment for your business. Maximum loan amount is $2,000,000.

SBA 504 Program - Offers long-term financing solutions specifically aimed at acquiring capital assets for business expansion. The 504 Program provides growing businesses with long-term, fixed-rate financing for major fixed assets, such as land and buildings. Some additional restrictions required related to job creation. Maximum loan amount is $6,000,000.

Visit http://www.sba.gov to see what type of program is best suited for your business.

The State Small Business Credit Initiative:

Small businesses in Michigan today have new opportunities to access the capital funding they need to grow or diversify. On January 14, 2010, Michigan was named the first state in the nation to win approval of approximately $79.1 million in federal funding to support our state’s cutting-edge Capital Access, Michigan Collateral Support and Michigan Loan Participation programs, part of the Michigan Business Growth Fund (MBGF) efforts.

Michigan economic development officials were the driving force behind the creation and passage of the federal program, which will allocate $1.5 billion across all 50 states to support small business loans.

The Michigan Economic Development Corporation (MEDC) was instrumental in the creation of the successful Michigan Supplier Diversification Fund (predecessor to the MBGF) in June 2009 to address the widespread impact of the credit crunch many companies faced as the result of the global economic downturn. Since its inception, the program has committed approximately $20 million, which has sparked loans of more than $191 million to 23 companies. To date, the program has had no defaults and has generated an estimated 4% annual return for Michigan taxpayers. So far, the program estimates that it has created and retained over 1,800 jobs.

Venture Capital Funding:

Michigan's venture funding initiatives are designed to improve access to private venture capital for Michigan growth-oriented firms. The Michigan Economic Development Corporation (MEDC) has developed a comprehensive directory of Michigan resources involved with venture funding, including more detailed profiles of venture funds and their interests.

21st Century Investment Fund:

The 21st Century Investment Fund is prepared to invest up to $109 million in qualified private equity, venture capital and mezzanine firms. A portion of those investments may also be placed directly in companies in which a qualified firm has made or is making an investment.

The 21st Century Investment Fund will seek a superior rate of return and require that firms in which investments are made maintain an office in Michigan as well as make investments in the state that are equal to or greater than the amount invested in those firms. In addition to rates of return, the fund's goals target job creation and diversification of the state's economy.

For more info: http://www.michigan21stcenturyinvestmentfund.com/

Venture Capital and Angels Network:

Established by venture capital and private equity investors in the state, the Michigan Venture Capital Association (MVCA) (www.michiganvca.org) is the state's premier public policy advocate for the private equity/venture capital industry, working to promote entrepreneurship and private equity investment. The MEDC is a founding member of the MVCA. For further details, please contact [email protected].

The MEDC has aggressively supported the growth of angel networks to fill the much needed gap for seed stage financing. Three angel networks are actively looking at investment opportunities. Grand Angels (www.grandangels.org) is based in Grand Rapids while Ann Arbor Angels (www.annarborangels.org) is based in the Ann Arbor area. Great Lakes Angels (www.glangels.org) is based in the Bloomfield Hills area and is Michigan's oldest angel network.

Michigan Minority Supplier Development Council (MMSDC):

Working with minority-owned suppliers brings competitive advantages, and MMSDC members recognize firsthand the importance of this strategy in achieving growth and winning new business.

Minority businesses have powerful, loyal customer connections because these companies have a strong understanding of their customers’ unique heritage and culture. Such insight enables them to create products and services that are in demand within a specific market segment. You can build a network of these diverse suppliers through MMSDC and tap into this multicultural customer base. At the same time, you can contribute to the economic success of minority suppliers, as well as their employees and communities.

For more info: http://www.mmbdc.com

Detroit Industrial Revolving Loan Fund:

This is a city-wide program for fixed-asset financing administered by the Detroit Economic Growth Corporation (DEGC). Applicants for loans from the fund will be evaluated by the DEGC based upon the proposed borrower’s ability to repay and the potential impact for the proposed project on Detroit’s economy.

The fund may be used for up to 40% of the costs of an eligible project, to a maximum of $200,000. The remaining 60% may be provided by a private lender, the borrower or both. The borrower may be required to pledge certain assets not connected with the project and/or personal assets.

The loan term in most cases will be consistent with other loans made on behalf of the project, but in no event shall the term exceed the useful life of the financed asset. A commitment fee of 2% of the amount of the loan financing shall be required of the applicant.

For more info: www.decg.org

Creative Corridor Incentive Fund:

The Creative Corridor Incentive Fund was established with the idea that talented people in design, media production, architecture, fine arts and other creative enterprises benefit from working within a concentrated district.

Detroit’s Creative Corridor covers the Central Business District, Midtown and New Center. The Detroit Economic Growth Association and the Detroit Investment Fund together have identified $2.5 million to assist building owners and creative companies that are located in the Creative Corridor. The assistance is designed to meet the needs of businesses in creative industries and their landlords through two distinct programs.

1. Matching funds for building owners to prepare existing spaces for tenants in creative industries. Eligible projects include build-outs and installing utilities or permanent facilities specifically required for creative activities. Building owners that meet all program requirements will be reimbursed up to 59% of the rest of the projects. 2. Rent and parking subsidies for eligible businesses that are bringing new creative jobs to the Corridor. These are intended to compensate for costs that would otherwise make the Corridor noncompetitive. The amounts and terms of the subsidies will depend on the length of leases, the number of jobs created and the cost and physical size of the leased space.

For more info: (313) 237-6096 or [email protected]

Commercial Banks:

A commercial bank is where small businesses usually turn for a loan. It can be difficult for a startup to get a loan from a commercial bank because of perceived risk. Mature small businesses obtain loans regularly through commercial banks for purchasing machineries or working capital.

Hatch Detroit:

Hatch Detroit is a non-profit organization founded by Nick Gorga and Ted Balowski. Entrepreneurs can submit their business ideas for a chance to win $50,000 in prize money and a suite of free services. The organization accepts submissions for retail business plans.

For more info: http://hatchdetroit.com/the-contest/submission-guidelines/