TechTown Report Sheds Light on Its Economic Impact
TechTown, the business incubator and entrepreneur training program located just north of Wayne State University in Detroit, recently released a report with some hard numbers to shed light on the economic impact it has had since it first opened in 2007.
According to the report, which took seven months to prepare, TechTown has provided support to 647 companies, which have created 1,085 jobs. TechTown president and CEO Leslie Smith says the jobs figure represents “actual noses we could count.” The official tally doesn’t include part-timers or contract employees, and doesn’t rely on any multiplier calculations commonly used to assess economic impact. “The numbers are actually probably higher,” she says.
Active startups at TechTown and its graduate companies generated a combined total of $52 million in revenue in 2011. In 2010, TechTown-supported companies and alumni from the program generated $41 million. Since 2008, more than 2,200 have received entrepreneurial coaching through TechTown, and in 2011, 62 executives graduated from its Shifting Gears training program.
“The report is exciting for me because it’s the first time we’ve publicized hard data,” Smith says. “Compared to other urban cores, I think it’s right on par. Economic development is a long-term game.”
Smith is particularly impressed by the diversity of TechTown’s clients: 60 percent are women, 66 percent are minorities, and 47 percent are age 46 or older. “I think that answers concerns I had that we weren’t serving the city,” she says.
Smith says the numbers also point to the growing amount of investment capital in Michigan. With TechTown’s assistance, clients have raised more than $84 million in funding since 2007. (TechTown directly invested $790,000.) “The notion that there is no active capital in Southeast Michigan is patently untrue,” Smith says. “A lot of this money was leveraged when there weren’t a lot of angel investors in town. Now we’re seeing that bubble up around the city.”
Smith says TechTown will continue to collect data and work with its newest tenant, the highly respected nonprofit Data Driven Detroit, to refine what the program’s targets and focus should be. The data also revealed opportunities to work with more people in a shorter amount of time. The impact of TechTown’s relationship with its clients has less impact after a certain amount of time, Smith says, so TechTown will work to find the appropriate amount of time of it should engage with clients. TechTown also plans to use the data to narrow its focus, particularly in the area of intellectual property.
Smith is perhaps proudest of TechTown’s contribution to the “demonstrable culture shift” in Detroit. TechTown is headquartered in a refurbished 1920s Chevy factory in a part of town that was formerly fairly desolate. Smith tells me of a venture capitalist who recently visited from Cincinnati looking for projects to invest in. That would have never happened five years ago, she notes.
“These numbers demonstrate the power of a truly collaborative effort between foundations, industry partners, government, and our many dedicated mentors,” Smith says. “Other cities don’t have a mechanism where small-business entrepreneurs can engage and get real business support, especially on business creation. We’re regularly called upon to explain how we do it.”