1. Focus on areas of competitive advantage such as Michigan’s global leadership in the automotive industry where innovation in transportation, energy, software and materials can take advantage of existing technologies, market know-how, industry talent and potential investment synergies.
2. Establish a local venture and/or angel fund community in Michigan to scout the local deal flow and attract co-investors from other markets. Providing state funding support for new Michigan-based venture firms could help jump-start fund formation in Michigan. At the same time, take advantage of the regional proximity to venture communities in Chicago, Madison WI, Minnesota and Toronto. There are many national groups that host events (Xconomy, National Venture Capital Association, TechStars, others) at technology centers around the country — make Michigan a “can’t miss” destination on their calendar!
3. Promote the University of Michigan and Michigan State University as growing hubs for thought leaders, entrepreneurial culture and progressive business climate. Then deliver on these claims by making university technology available for license on competitive terms.
4. Invest in an “ecosystem” to serve the startup community. Experienced lawyers, bankers, advisors, and regulatory and intellectual property experts are all part of the ecosystem that increase the chances of success for a startup. Understanding the “industry standard” can make deals easier to negotiate and foster further capital infusions into the region. Whether through a trade association, a university or an existing technology or angel investor forum, offering this ecosystem a venue for networking and access to startups is also an important step.
5. Get the state government more involved. This is something Michigan already has quite a bit of experience with, and should build on its existing momentum. The Smart Zones effort has evolved into successful government/private sector partnerships and incubators, like TechTown, Automation Alley and Ann Arbor SPARK. Consider an early-stage funding source from the state (such as Washington’s Life Sciences Discovery Fund). Technology zones that offer free space, incubation services or tax credits, or a trade association that specifically promotes an area of industry development are an effective way to stimulate startup creation. Implement tax incentives to accelerate investment in certain industries or regions of the state. Government support for the startup business climate is critical.
[Editor’s note: To help launch Xconomy Detroit, we’ve queried our network of Xconomists and other innovation leaders around the country for their list of the most important things that entrepreneurs and innovators in Michigan can do to reinvigorate their regional economy.]