The Michigan Economic Development Corp. created a $3 million fund to aid technology startups affected by the COVID-19 pandemic.
Early-stage tech startups can apply for investments and loans of $20,000 to $100,000 from the Tech Startup Stabilization Fund, depending on their stage, sector, estimated runway, and a demonstration of need. The fund, administered by Detroit-based ID Ventures, “will prioritize early-stage tech companies that are beyond ideation and have previously raised capital from angel and/or venture capital sources,” the MEDC said today in an announcement.
“In the face of this public health crisis and the economic uncertainty it is creating, it is more important than ever to encourage and support high-tech companies in the state in bringing their innovations to life,” said Fred Molnar, vice president of entrepreneurship and innovation at the MEDC. “Through the creation of this fund, we are hoping to provide a critical source of capital for early-stage tech companies in Michigan that will allow them to survive and succeed once this crisis is over.”
The fund is for startups that:
- Are headquartered in Michigan with the majority of employees located in the state.
- Have early-stage technology and an innovation-based business with fewer than 50 employees.
- Have a strong team with a proven execution capability.
- Have received a prior investment from angel or venture capital sources, with matching angel and or/venture capital funds encouraged.
- Were on path, pre-pandemic, for its next round of funding, with favorable relationships in place.
- Have a strong customer value proposition.
- Convey that the company can survive and thrive post-crisis.
Companies can apply to the fund here.
“ID Ventures is an investor in many early-stage tech startups across Michigan and deeply embedded in the state’s startup ecosystem. We are already seeing firsthand how the pandemic is negatively affecting promising companies with a high potential for job creation,” said Patti Glaza, managing director of ID Ventures and executive vice president of Invest Detroit. “Just as important as supporting main street businesses, we need to ensure we are protecting the economic diversity of our economy by shoring up our high-tech community.”
ID Ventures currently manages the MEDC’s First Capital Fund that supports early-stage tech companies and startups. Since 2017, the First Capital Fund has invested more than $5 million in more than 40 companies that created over 200 Michigan jobs and raised more than $50 million in leveraged capital.
The Michigan Strategic Fund board earlier this week allocated $2 million to a Marquette-based small business lender to increase activity across the state. Under the program, Northern Initiatives will provide loans to companies that are shut down or have severely curtailed operations because of the COVID-19 pandemic, as MiBiz previously reported.
The MSF also authorized an initiative to ease economic hardships from the COVID-19 pandemic for companies and real estate projects that earlier received state incentives through a grant, loan or equity investment.