TechTown’s New $5M Fund Only a Baby Step for FastTrac Entrepreneurs
Don’t get Randal Charlton wrong. The executive director at the TechTown business incubator in Detroit is thankful for a recent announcement of $5 million coming his way to help graduates of his FastTrac business training program launch their companies. But, he says, look at it this way: The money, granted by the New Economy Initiative, a Detroit-area philanthropic partnership, is not being thrown at comfortable entrepreneurs. This is, essentially, aid to the unemployed. And, as such, $5 million barely scratches the surface.
Many of the entrepreneurs to be helped by the First Step Fund, the entity created by NEI’s $5 million investment, are not launching startups because it seems like a promising thing to do. They have nowhere else to go, Charlton says. Their former jobs in the auto industry are gone, never to return. Their choices are to leave the state or try to create their own jobs in Michigan.
In the world outside Detroit, Charlton says, the national unemployment rate of 10 percent is a grim figure that conjures images of the Great Depression. Inside the alternate economic universe of Detroit, with a 15 percent unemployment rate, that 10 percent figure would hail a new era. “If we could get down to 10 percent unemployment in the city of Detroit in the next three years, we’d be holding block parties to celebrate,” Charlton says.
So, March’s announcement of a $5 million investment from the New Economy Initiative to create the First Step Fund is just that-a first step, Charlton says.
The companies chosen to take that first step are:
- Air Movement Systems of Southgate, MI, which develops and sells thermal recovery systems.
- Current Motor Co. of Ypsilanti, MI, which designs and sells, electric mopeds and scooters.
- Clean Emission Fluids of Detroit, which designs and sells fuel blending systems for biofuel dispensing stations.
- NextCAT of Detroit, a Wayne State University startup whose catalyst technology allows for low-cost production of biofuels.
Charlton’s TechTown has been basking in positive international media attention lately as it attempts to fling startups out into the world. Or, as Charlton puts it, each new company is a “bet,” since many of them will fail. The $5 million? At $50,000 per company, that will pay for “100 bets, if you will,” he says.
And that $50,000 only gets them to the next stage. That will get their websites up and running, get them some basic market research, and cover attorneys fees and some of the other fundamentals of getting a business going. TechTown hosts companies targeting a wide range of industries.
“We’ve entertained students with ideas ranging from medical supply and logistics companies, to organic markets, PR firms, and digital Web designs companies,” says TechTown spokeswoman Nichole Christian. “More than half of the people who enroll in our courses come through via the new venture course, a 10-week-session designed for individuals with little more than an idea. Through the course work, the idea morphs into an actual business plan.”
TechTown has seen 1,300 people go through its doors for training since FastTrac was established about a year ago. Of those, 730 have graduated and are ready to set up companies. Another 600 are entering right now and about 100 serious inquiries for training come in every month.
“Take those numbers and you can see that we need to identify really significant sources for funding way beyond this $5 million,” Charlton says.
In late March, Charlton was looking to put together an angel network of high-net-worth people in Southeast Michigan, with the goal of raising a $25 million fund.
At the same time, he was also looking at how Michigan Gov. Jennifer Granholm will follow through with an agreement she made with the Michigan Credit Union League to provide about $43 million in loans to companies that have gone through the FastTrac programs.
“That would be a major step in the right direction,” Charlton says.
Charlton says that he would not say that he is “confident” additional funding will come through. Instead, “I would say we have no choice.”