I was recently asked how Detroit could best launch a meaningful venture capital industry to help solve the economic crisis which has so brutally hit the mid-west. Weigh in with your own suggestions…
Building a sustainable innovation ecosystem is hard and will require patience married to a sense of real optimism. It will require numerous centers of innovation: academic settings, corporate research labs, world-class hospitals all operating with an entrepreneurial culture – which cannot simply be mandated, but rather it comes about over generations of start-up success stories. It also will require plenty of capital – both angel and venture funds – as well as a deep roster of service providers (lawyers, accountants, consultants and bankers). That is why it is so hard to build. A couple of specific things to consider:
- Trumpet your successes: Identify the areas where Detroit can dominate and then feature them. Obviously the historic successes in automotive industry augers well for the exciting robotics and industrial automation fields; Detroit should own that industry in the eye’s of venture capitalists. Where else can you be dominant in the early stage marketplace?
- Engage the Old Guard: Executives who have successfully built entrepreneurial businesses should be encouraged to serve as mentors and importantly, as angel investors. Incent them to invest in the next generation of entrepreneurs. The angel communities in the Valley and Boston are robust and are a wealth of insights and capital for those just starting out.
- Eliminate any friction in the system: Anything that impedes matching capital to brilliant people with innovative ideas undermines the entire process.
- Make it really easy to keep students engaged: Your next great entrepreneurs are in your high schools and colleges – show them why they should stay, create networking events and open houses at start-up companies across the region. Reach out to students who have already left to study elsewhere and make it clear to them that “Detroit is open for business” and that they should come home.
- Above all, patience: This will be hard and take time but the rewards are tremendous. Each successful start-up can generate dozens to hundreds of jobs and in turn, each company will spawn more start-up’s creating a virtuous cycle of company creation.
Welcome to the Future, Detroit…