Detroit Turns Into A Large Startup Ecosystem, Great For Young Entrepreneurs

The cost of living in dense technology hubs like San Francisco, among others, outpaced Detroit, nearly 88%. That according to EntryPoint’s 2021 Detroit Entrepreneurial Ecosystem Report.

In unpacking why Detroit is an attractive location for entrepreneurs to locate, live and launch their companies, Benzinga spoke with Jared Stasik of Detroit Venture Partners (DVP).

Venture Dollars Flowing: Venture, nearly a decade ago, was not a big thing in Detroit.

“There was not a lot of VCs. There’s still not a lot of funds," said Stasik.

More and more, however, venture capital dollars are coming into Detroit. The trend began in the early 2010s, the tail end of a recession that turned the Motor City into a ghost town of sorts.

“We were able to leverage Quicken Loans, Amrock – everything associated with the residential real estate vertical – and bring all the knowledge of that space to our investments,” Stasik recollected in a discussion on initiatives, spearheaded by leaders like Dan Gilbert, that helped revitalize the city.

No longer is Detroit known only for its innovation in mobility. Through the DNA of organizations like Rock's Family of Companies, there are opportunities for all kinds of companies.

“I think there’s a lot of fintech here, but I do really view it more as a generalist market,” Stasik added. “You’ve got companies like Bloomscape, Airspace Link, which is in govtech, providing software around drone air traffic control, Guardhat, which is in industrial and construction safety, and then you’ve got StockX which has been a big success.”

Given the passing of the COVID-19 coronavirus pandemic, Stasik said the prospects for Detroit, as a technology and financial ecosystem, are great.

“I think the pandemic caused people to think about how they want to live and what sort of lifestyle they want,” he said in reference to the city, and surrounding suburbs, being a great place to raise a family. “You’ve got all the nature of the Great Lakes, as well as a lower cost of living and great access.”

Stasik’s comments come alongside a so-called exodus from once unparalleled innovation ecosystems like San Francisco, as founders and companies look to new, more sustainable places to build.

“I think every city has its natural advantages and disadvantages,” Stasik said. “I think in Detroit, if we’re going to focus on the advantages, it’s a lower cost of living for sure, compared to some of these other markets, and … you definitely have a lot of talent here,” given the manufacturing presence, great schools, and a financial ecosystem dominated by legacy brands like Quicken, and now, Alphabet Inc GOOGL, Amazon Inc AMZN, and Microsoft Corporation MSFT."

Differentiators: Stasik said there’s more collaborative energy in Detroit.

If a company in Detroit raises, everyone knows, said Stasik. The leaders at local companies like BenzingaAutobooks, Signal, StockX are in tune and willing to support each other.

“The CEOs of all these companies are reaching out and it really feels like there’s a startup community here, and I think it’s not something we’re going to lose,” he said. “I really feel like it’s getting stronger as we grow.”

In keeping things prosperous, Stasik believes leaders in government have been phenomenal in helping develop and nurture Detroit’s young technology and finance ecosystem.

“They’ve sort of put together different programs to help people build new companies … and you’re starting to see more and more venture funds, venture investors – both locally and from outside – participate in lead rounds, too.”

Advice For New Founders: It all starts with a vision.

Then comes the ecosystem which, in Detroit’s case, is able to support young founders with talent, low costs, and easy living.

Given the diversity of venture dollars coming into the city, founders also have a choice.

“You can be selective with the investors you’re bringing on you’re cap-table. You’re not just getting capital with venture investments. It’s really about some of those softer things like the network and connections, to customers and talent.”

Post-Pandemic Visions: In terms of DVP, Stasik is readying for an active year-end. 

“We did a lot of leaning in with our portfolio companies, helping stabilize everything we possibly could when it seemed like the world was falling apart and nobody knew what to expect,” Stasik said.

Moving forward, DVP is honing in on early-stage, pre-seed, seed, and Series A ventures. The organization, alongside outside investors like General Catalyst, Durable Capital, Altos Ventures, and OG Capital, is looking to help Detroit recover and become the next great technology and finance ecosystem.

“It is a great validation and broadening of our network for all these companies when they can bring on big-name investors, not from Detroit.”

Photo by Visual Tag Mx from Pexels.

Posted In: FintechEntrepreneurshipStartupsTechInterviewGeneralDetroit Venture PartnersDVPJared Stasik