One Hand Clapping: Entrepreneurship in Ann Arbor

4/7/11Follow @sgblank

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more diverse business culture. One of the characteristics of a cluster is that it isn’t hard to find other like-minded individuals. In Ann Arbor, they’re scattered in between the auto industry, biotech, hospital workers, etc. As a consequence Ann Arbor lacks the culture of risk-taking and respect for failure critical in an innovation cluster. You see it in the existing angel groups and VCs. They feel more like banks than risk capital. And that lack of tolerance for failure and comfort with the status quo gets fed back to the entrepreneurs. Getting a few experienced super-angels and/or VCs seeding 5-10 Lean Startup deals here a year, with a couple of cleantech/energy deals as well, could kickstart the culture.

Not My Problem

The interesting thing is that no one seems to own the problem. The University of Michigan tech transfer office has an incubator but 1) mixes software, hardware, med devices and life sciences deals in the same program, and 2) takes no ownership of figuring out how to get a risk capital ecosystem in place. Surprisingly, the same with the entrepreneurship center in the Business School. I would have thought they’d be leading the charge.

The new governor of Michigan, Rick Snyder. was a venture capitalist in Ann Arbor, so I’m surprised he hasn’t jawboned some combination of Michigan alumni working in venture capital in Silicon Valley to return, and paired them with the old-school money from the auto industry that’s hiding under mattresses. (If the old money doesn’t get the new mobile/Web app space, note that new money is pouring into cleantech/energy VC funds in the Valley. Silver Lake Kraftwerk’s Fund just raised $1.3 billion for a cleantech/energy growth fund. Bet Ann Arbor and the Detroit Metro area have a few startups in that space. Where are the investors?)

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The real test of a cluster “catching fire” is not when it provides local employment, but when people from outside the area start coming to work and invest there.

These guys are this close to making it happen. It would be a shame if it didn’t.

Lessons Learned

  • U of M has a College of Engineering dean who “gets it”
  • He’s turned the school into an outward facing school, fostering an entrepreneurial and innovation culture
  • The Center for Entrepreneurship is on board with passionate faculty, innovative curriculum and excited students
  • The area has almost no experienced angel, super-angel or venture capital (as we know it in Silicon Valley) for Web/mobile apps, hardware and software
  • The lack of experienced risk capital means a lack of experienced mentors, coaches, and infrastructure.

Steve Blank is the co-author of The Startup Owner's Manual and author of the Four Steps to the Epiphany, which details his Customer Development process for minimizing risk and optimizing chances for startup success. A retired serial entrepreneur, Steve teaches at Stanford University Engineering School and at U.C. Berkeley's Haas Business School. He blogs at www.steveblank.com. Follow @sgblank

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  • http://monkey.org/~dugsong/ Dug Song

    Steve’s wonderful http://a2newtech.org talk from his visit is online:

    http://www.ustream.tv/recorded/13649870

    Don’t miss it.

  • Michael Cole

    Enjoyed your comments Steve.

    Next time in the region, please feel free to touch base. I would enjoy the opportunity to introduce you to a couple of the leaders at Ann Arbor SPARK, the Michigan Venture Capital Association, the Ann Arbor Angels, and Bank of Ann Arbor. Since returning to Ann Arbor ten years ago from California, in addition to UM, these are a few of the organizations that I have seen making significant investments towards building the region’s new economy ecosystem.

    Michael Cole
    Executive Director, Ann Arbor Angels & President, Technology Banking Group, Bank of Ann Arbor