Bizdom U: Transforming Detroit’s Brain Economy
Starting with the fall session, which began on October 17, Bizdom switched to a model similar to that of TechStars or Y Combinator: After undergoing a rigorous screening, 30 startups will each receive $10,000 in seed money, plus $4,500 per founder, in exchange for an 8 percent equity stake and a promise to locate their business in Detroit. While at Bizdom, the entrepreneurs will spend three months in the collaborative Launch Lab, where they’ll receive training in marketing, sales, and business, as well as intenstive coaching and feedback from serial entrepreneurs and other business experts. At the end of the Launch Labs program, entrepreneurs will be put in a room with multiple investors, where they will have the opportunity to pitch for the necessary funding to take their business to the next level.
With its previous business model, Bizdom U invested more seed money, but took a 60 percent share of the startup. Ross Sanders, Bizdom’s CEO, says they made the switch to “open up the funnel.”
“We realized we were missing a lot of great startups who didn’t feel comfortable giving up majority ownership right off the bat,” Sanders says. “We decided we’d offer less money in order to get more applicants.”
Bizdom U offers a separate program called the Idea Generator for those who have a business idea they want to explore, but who aren’t ready to devote their lives to pursuing it yet. The Idea Generator is an eight-week, part-time program held at night designed to show aspiring entrepreneurs how to break down their idea, research it, and turn it into a business.
“With the Idea Generator, you don’t have to quit your day job,” Sanders says. “It allows people to play with their idea before making the full-time leap.”
Bizdom U was established in 2007, when the atmosphere in Detroit was pretty bleak. Comerica Bank had just packed up and left town, and some once-thriving auto factories were vacant buildings.
“Dan was one of the first to say that Detroit needs to transform from a muscle economy to brain economy,” Sanders says. “He wanted to take empty buildings and fill them with work spaces for entrepreneurs.”
The challenge back then was that there wasn’t a one-stop shop where entrepreneurs could go for training, coaching, funding, mentorship, and access to clients and investors. Gilbert founded Bizdom U as a sort of factory to meet those needs.
“But instead of building cars, he wanted to create successful entrepreneurs,” Sanders says.
Today, Bizdom U sustains operations through proceeds received from its share of ownership in the businesses it incubates. Its goal is to be self-sustaining while creating waves of entrepreneurs and new businesses, all while adding to the general buzz in Detroit.
“Dan Gilbert is passionate about the role of entrepreneurs in urban revitalization,” Sanders says. “He’s a man on a mission.”