The Story of Detroit Added Some Significant Chapters in 2010; Here Are 10 of Them
When Xconomy Detroit launched in April 2010, I wrote that this city is a verb, in a constant state of action, of “becoming,” of striving for something greater. Having lived in Michigan for much of my life, I can say that this was true even in good times, and certainly even more so in bad.
I think we launched Xconomy Detroit at just the right time, because this year has been one filled with stirrings toward another period of great change. It might still be fashionable to bash Michigan if you do not live here, but those who stayed can really feel something new beginning. It is not only Midwestern stoicism at work, but something more concrete.
I’ve written about Michigan for Xconomy and other publications for decades now and can feel that 2010 marked the beginning of something brand new. Here are what I believe are the Top 10 reasons for optimism this year.
Jennifer Granholm, Michigan’s outgoing governor, deserves a great deal of credit for working toward her vision of the state as a center for battery innovation and manufacturing. Batteries will not replace the jobs lost in the automotive industry as a whole, but she recognized early on that Michigan has the engineering know-how and manufacturing infrastructure to attract and retain companies developing and making the lithium-ion batteries that will be crucial to Auto Industry 2.0.
In 2010, her proselytizing — and creation of tax incentives — seemed to pay off, with A123 Systems, Compact Power, Johnson Controls, Dow Chemical, and TSC Michigan all either opening or announcing new lithium-ion battery plants in Michigan. Also, ALTe, developer of electric propulsion systems, opened a new plant in Auburn Hills, MI, and longer-range battery developer Sakti3, based in Ann Arbor, waiting in the wings while attracting venture capital funds
Michigan has competition from surrounding states in battery manufacturing, but Granholm’s efforts made sure that the Great Lakes State will remain an important player. Now, of course, consumers will have to actually start buying those electric cars.
Michigan entered 2010 with some pretty dismal VC numbers, in terms of numbers of firms and dollars invested, even during a dismal time for venture capital in general. The only good thing that wassaid at a meeting of venture capitalists in Ypsilanti, MI in May was that if the nationwide trend is toward smaller investments, Michigan already has a head start and knows how to spend its VC dollars wisely. Still, there is reason for optimism, such as a close of nearly $50 million in investment funds for the Renaissance Venture Capital Fund, a “fund of funds.” Renaissance has so far invested nearly $6 million in six venture capital funds. Those funds, in turn, have put more than $23 million into 12 Michigan companies that have raised nearly $146 million in total and created over 200 new Michigan jobs, according to Renaissance’s tally.
Our automobiles, like our phones, are going through some big changes. We expect them both to be always “connected.” In the case of cars, that could mean connected to the power grid, if you have an electric vehicle, connected to GPS navigation, connected to our music and entertainment systems, connected to onboard video monitors. This new demand comes just in time for automotive suppliers like Delphi, which recently emerged from bankruptcy and is eager to find new markets and new connections to the automotive industry.
Delphi had a kind of post-bankruptcy coming-out party at the Society of Automotive Engineers World Congress in April, where it showed off its products that connect electric cars to the grid and your smart phone to your car. Delphi, however, does not enjoy the leadership status it once had in automotive parts, so it needs to fight its way back from the brink. It is working with Google and others to connect your smart phone to your car. Meanwhile, Ford and GM are also rolling out similar new systems, including ones that help you avoid texting while driving — an increasing focus for law enforcement nationwide and one that needs a technological solution.
And GENEVI, a coalition of auto companies, suppliers, silicon providers, and software companies predicts its own open-source operating system will be running most in-vehicle infotainment systems by 2017. It plans to showcase its technology at the Consumer Electronics Show in 2011.
As it is with batteries and with automobiles, themselves, Detroit will not necessarily be dominant in infotainment systems moving forward. But in 2010, auto companies and suppliers took steps to make sure they are at least in the game.
Arising out of University of Michigan dormrooms, tinkerers and young entrepreneurs are developing smart phone applications. In 2010, a few of them made news, including include Ann Arbor’s Mobiata, which develops apps for the travel industry, and Mobile Sign Language Systems, which converts spoken or written English into real-time sign-language video. Mobile apps developers will not necessarily employ thousands in Michigan, but they represent a new outlet for creative tinkerers to test ideas. And the entrepreneurial culture at U-M seems to encourage it. And, answering the call for marketing opportunities that come with the popularity of the smart phone is Michigan’s new Mobile Monday chapter.
University of Michigan spinouts
Speaking of the University of Michigan’s entrepreneurial culture, in 2010, U-M continued to engage directly with the real-world business community through programs like the Wolverine Venture Fund, in which business students invest real money in real companies.
University of Michigan spinouts are too numerous to name, but it is safe to say that, through companies like NanoBio, what is being achieved in the lab does not stay in the lab.
An issue that does continue to come up, though, is how to keep young talent in Michigan. This problem was highlighted when Ambiq Micro, launched by U-M students, decided this year that it can find more fertile ground in Texas.
TechTown, located in the heart of Detroit on the campus of Wayne State University, has made great strides this year to show the world than not everything in the city is abandoned and decaying. I wrote earlier this year that, although there is great innovation happening in Ann Arbor, the key to Southeast Michigan’s economic revival is to rebuild Detroit and make it thrive again.
TechTown, and TechTown Two, supported by the Kauffman Foundation and the New Economy Initiative, are cranking out entrepreneurs and companies. TechTown Executive Director Randal Charlton calls them “bets,” and most of them will probably fail. But this is how you create a culture of entrepreneurship in Detroit, through programs like FastTrac, which takes ideas and nurtures them. For many entrepreneurs launching their companies at TechTown, this is their Plan B. Their old automotive-industry jobs are gone. TechTown represents hope for Detroit.
Michigan’s highest-in-the-nation 42 percent tax credit for filmmakers might fall victim to political wrangling in Lansing next year, but in 2010, it definitely made many Michigan residents starry-eyed. And not just because movie and TV stars were suddenly seen at local diners and coffee shops, but also because there are the beginnings of a whole new industry here.
It’s called a “film incentive,” but companies like Royal Oak’s Pixofactor are using it to produce interactive video games. The folks at Pixofactor say that even if the tax incentive goes away, 2010 gave them enough of an initial push to keep the momentum going into the future.
Business Accelerator Network
In 2010, Southeast Michigan’s four major business incubators at last discovered how to work together, forming a regional Business Accelerator Network with the help of a $3 million grant from the New Economy Initiative.
And one of the first things they did was create what it called the world’s largest business plan competition. The Accelerate Michigan Innovation Competition in December gave away more than $1 million in prizes to winners, but in terms of encouraging entrepreneurship in Michigan, the contest was priceless.
Call them makers, call them hackers, call them garage tinkerers, but whatever you call them, just remember that a guy named Henry Ford was one. And we all know what happened in his garage. Well, hackerspaces like i3Detroit and OmniCorp Detroit are springing up all over the city with some crazy ideas that just might work.
Even the Ford Motor Co. is getting back into its roots in the maker space, partnering with TechShop to create a branch in the Detroit area. But it all came together in a weekend of full-blown tinkering last summer when the Maker Faire came to Dearborn, MI.
Gov.-elect Rick Snyder
I first began writing about technology back in 2001, when the head of a new Ann Arbor VC firm called Ardesta started making investments in nanotechnology companies.
Part of this guy’s vision was to also create a news organization to cover the industry he was funding. So, he found a bunch of newspeople to do just that. I started writing and editing news about nanotechnology for Small Times Magazine, and the head of Ardesta went on to make some investments in the space.
The guy who hired me was Rick Snyder.
Fast-forward almost a decade, and he is now the governor-elect of the state of Michigan. Whether you agree with his politics and policies or not, there is one thing that Xconomy Detroit readers can be assured of — the new governor understands the language of entrepreneurship.
How this will translate to actual governing? Well, watch this space throughout 2011.
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