New Economy Initiative Scores $33M in New Funding
Nine of the New Economy Initiative’s (NEI) ten original funders have committed another $33 million to the initiative, which allows the NEI to continue its work supporting innovation and entrepreneurship in Southeast Michigan. The William Davidson Foundation has come on as a new funder.
“We have a heavy focus on entrepreneurial and innovation outputs with a big concentration on the 4.3 miles between downtown and TechTown, basically,” NEI executive director and Xconomist David Egner says. “There are about 35 service organizations in that corridor that make up one of the most mature startup ecosystems in the United States. The infrastructure has been here for decades, but it has been fragmented in silos and grossly underfunded.”
The NEI was launched in 2008 when 10 foundations came together for a $100 million philanthropic initiative of up to eight years. The new $33 million is intended to cover the next three years of NEI’s work. At the time NEI was created, the money was intended to be a one-time grant, with NEI leaders initially unsure exactly when the money would be renewed. The Skillman Foundation is the only original funding organization that didn’t pitch in for this second allocation, though Egner says he expects Skillman to participate later.
Rather than investing in businesses directly, NEI supports organizations like TechTown that grow innovation and entrepreneurship. Since 2009, Egner says NEI has awarded 115 grants worth $76 million, which has resulted in the creation of 675 new companies, 716 patents reviewed, and 1,725 business ideas vetted during competitions.
NEI also claims its work has added 8,000 jobs to the region, with its grants attracting $200 million in matching dollars. Accelerate Michigan, the annual business plan competition it funds, has given a total of $4 million in awards since 2010 and, last year alone, got local startups in front of 70 venture capitalists.
“The market is pushing on its own, and that, to me, is success,” Egner says. “The question is, how do we harness that power?”
Egner says NEI’s new priorities are to fill the gaps that still exist in the entrepreneurial ecosystem, increase the network of service providers to entrepreneurs, and foster entrepreneurship across the region through promotional events and activities.
One specific area NEI is looking to improve is reaching companies that are earning between $5 million and $25 million in annual revenues. “We’re looking at model programs across the country,” he adds.
NEI also wants to combat the lack of teamwork between entrepreneurial service providers. “Our funding actions have not been consistent with our desire to see people work together,” he explains. “It has had the effect of making people compete with one another, and that’s not consistent with our words. The outputs we’re looking for are as much about networks and supportive collaboration. The ecosystem itself has to get new expectations.”
Egner says NEI is also looking for opportunities to support entrepreneurial efforts in the neighborhoods outside of the downtown-Midtown corridor if they align with the directives of Detroit Future City, which produced a 50-year urban planning document that was released last year. He points to the work of TechTown’s SWOT City, ACCESS, and ProsperUs as the kinds of organizations outside downtown that NEI already supports.
“The thread to all of this work is inclusion and social equity,” Egner says. “Traditionally, startup culture isn’t very inclusive of women or people of color. We support organizations working to bridge that gap and we will continue to do so.”