GRAND RAPIDS –– Partners in West Michigan’s startup ecosystem continue to explore how best to allocate resources to the region’s entrepreneurs.
The emergence of co-working spaces for small startups and the availability of venture capital and other resources have been a breath of fresh air for people like Eric Haslinger, a serial entrepreneur who relocated back to his hometown of Grand Rapids after five years in Chicago. However, the co-founder and head of operations at Grand Rapids-based TOP Performance LLC says that in some ways, it feels as though the area is simply checking boxes rather than fully exploring how to mobilize those resources.
“We have all these resources and West Michigan does have a lot of them,” Haslinger said. “But I do think we need to take it further and ask the question of how well are new entrepreneurs set up for success in West Michigan, rather just do we have the resources in place. It’s not just about having the resources in place. It’s about the ease in which those resources can be accessed and brought together to create value.”
Haslinger launched TOP Performance with Grand Rapids chiropractor Dr. Jason Ross. The company recently raised almost $12,000 via an online crowdfunding campaign that it’s using to support its efforts to manufacture and distribute MOBI, an athletic training product TOP Performance developed.
Haslinger, who was in the process of fulfilling about 300 orders last week, acknowledges the startup has benefited from numerous local resources, including his network of contacts and a partnership with Classic Die Inc., a Grand Rapids-based contract manufacturer.
From Haslinger’s perspective, the region’s challenge lies in better connecting its diverse components in a manner that helps startup companies –– high-tech or otherwise –– to grow.
“I think the big opportunity is figuring out how to mobilize all these resources and make them easy to connect with entrepreneurs,” Haslinger said.
It’s a sentiment that rings true to Paul Moore, a co-director at Start Garden Inc., the Rick DeVos-founded organization that began in 2012 as a pre-seed venture capital fund and later evolved into the region’s entrepreneurial support organization (ESO) through a contract with the city of Grand Rapids.
“We have a lot of support, but we don’t have targeted support,” Moore said.
If the 2017/2018 Michigan Entrepreneurial & Investment Landscape Guide by the Michigan Venture Capital Association is any indication, the West Michigan area has a ways to go in terms of getting a holistic base of entrepreneurial service organizations.
The state boasts 152 ESOs, according to the report, but only about a dozen operate in the West Michigan area.
However, Moore notes that Start Garden defines ESOs differently than the MVCA and counts nearly 70 in the region, including resources ranging from coding bootcamps to pitch competitions.
“I think what we saw is there (has been) a lot of emphasis on coaching and the ideating, and then there was more supporting existing businesses that were already up and running,” Moore said.
For its part, Start Garden is working on niche projects it thinks are needed in the West Michigan entrepreneurial landscape.
Specifically, the organization recently responded to a Request for Proposals from the city of Grand Rapids’ SmartZone Local Development Finance Authority (LDFA), a tax incremental financing (TIF) mechanism aimed at bolstering the region’s technology sector.
The public body seeks to deploy up to $2.5 million for applicants with emphasis placed on “high-tech innovation and entrepreneurship,” according to a statement.
Start Garden administers the SmartZone’s “technology parks” on behalf of the city of Grand Rapids.
The various proposals had not yet been made public at the time this report went to press. However, Moore shared Start Garden’s proposals with MiBiz.
The organization’s three proposals include various partners and range from installing new public Wi-Fi technology in the city to helping its portfolio companies develop new methods of talent acquisition.
“I think it’s a signal that the public sector is seeking to come alongside the private sector, which is really important,” Moore said of the city reaching out to the private sector and higher education. “How can (they) support what is already gaining momentum and the people that are out there innovating, as opposed to trying to operate in a vacuum.”
Cities like Grand Rapids and Ann Arbor have used the SmartZone TIF mechanism since its inception in the early 2000s. But recently, more cities around the state continue to express interest in the financing tool.
For instance, officials in Traverse City are pushing to designate a district in the city as the state’s 21st SmartZone, according to a report last week in The Ticker, an online news publication.
“The idea is to attract high-tech entrepreneurs to diversify Michigan’s economy,” Fred Molnar, vice president of entrepreneurship and innovation at the Michigan Economic Development Corp., said in the report. “It’s pulling in the university, pulling in the city, pulling in the business community so that everyone’s working together.”
Holland became a satellite of the Grand Rapids SmartZone in April 2016, allowing the lakeshore community to use the funding mechanism while also extending the lifespan of the Grand Rapids designation.
Lakeshore Advantage, the economic development organization serving Ottawa County, administers the Holland SmartZone. Since launching last year and building revenues, the SmartZone satellite has started paying for services to help small businesses, including for web development, public relations and marketing, and legal advisers.
While the companies in the SmartZone still have expressed a need for mentorship, it’s often more practical, day-to-day services that many growing startups require to be sustainable, said Brooke Corbin, manager of innovation solutions at Lakeshore Advantage.
“The reason we hear about those services is because there’s a cost,” Corbin said. “Mentors are a little more abstract.”
Aside from using SmartZone-generated TIF dollars to reimburse established companies that offer guidance or services to startups, Corbin said the community hopes to invest in various infrastructure projects in the coming years that can attract a more talented workforce to the area.
Start Garden’s proposals to the city of Grand Rapids SmartZone also offer a glimpse into the workforce needs of the area’s burgeoning startup sector.
Five of the city’s fastest-growing startups estimate they’ll need to hire at least 40 people in 2018, according to the Start Garden proposal that aims to bolster the region’s reputation as a desirable location for startups and the talented workforce they require.
Those talent needs are driving the high turnover that results when existing workers leave to take more lucrative jobs, according to one executive cited in the proposal.
“There is no doubt that VNN’s growth has outpaced the local talent available,” Ryan Vaughn, CEO of Varsity News Network LLC, a high school sports media company, stated in the proposal. “And the candidates we do recruit are subject to poaching from companies here and in much bigger markets.”
At TOP Performance, the needs are bit simpler at this point, Haslinger said, noting that mentorship and near-term funding remain the key priorities as the firm looks to the future.
Ultimately, it’s high-level mentorship that Haslinger said he finds most needed as ESOs and other groups examine how best to allocate resources to emerging startups in West Michigan.
“I think just offering … open office hours for someone who maybe doesn’t even have a startup, but is considering taking a leap,” Haslinger said, adding that many would-be entrepreneurs hesitate to take the risk because they’re unaware of what the process will entail. They need places to ask fundamental questions ranging from what it means to be an entrepreneur and what it takes, to what the journey could look like, he added.
“I think that fear of the unknown stops so many aspiring entrepreneurs,” Haslinger said.