Michigan Pre-Seed Capital Fund Invests $600K in Three Tech Startups

7/12/12Follow @XconomyDET

The Michigan Pre-Seed Capital Fund announced this week that it has invested $600,000 in three tech startups: Flocktag, Larky, and FreeStride Therapeutics. To date, the Michigan Pre-Seed Capital Fund has invested $16.5 million in 75 Michigan companies. While Flocktag and Larky both want to leverage customer satisfaction and their hunger for discounts, FreeStride Therapeutics is working on treatments for bone-related conditions. Flocktag and Larky received $250,000 each, and FreeStride Therapeutics received $100,000.

Ann Arbor, MI-based Flocktag, which has eight employees, was founded by Adrian Fortino (who also started University of Michigan spin-off Shepherd Intelligent Systems and San Francisco-based ride share startup Sidecar) and David Lin a year and a half ago. Lin owns the Bubble Island beverage shops in East Lansing and Ann Arbor, and Fortino says Lin’s challenge as an independent restaurant owner was to fight against the encroachment of Starbucks and other “big box” entities. “The whole point is to get businesses in tight geographical areas to share customers and fight big box stores,” Fortino says. “We’re encouraging regional independence.”

What exactly is a Flocktag? It’s a universal loyalty card combined with a deals engine. Meant to replace all those “buy 10, get one free” punch cards in your wallet, Flocktag offers customized deals via text and e-mail based on a consumer’s behavior. From point-of-sale machines where customers swipe their Flocktags, the company collects and analyzes more than 20 factors of customer behavior—which one imagines could eventually be quite lucrative—to craft the deals they offer. Fortino says they have a 30 percent rate of redemption because that data allows them to give their customers only what they’re truly interested in.

So far, Flocktag has over 60 participating businesses in four Big 10 college cities: Ann Arbor and East Lansing, MI; Columbus, OH; and Champaign, IL. Despite only word-of-mouth advertising, Fortinto says Flocktag already has 40,000 users, and that the company plans to use its pre-seed funding to prepare for a “massive” launch in other Big 10 cities once school starts up again in the fall.

Larky is a brand new startup based in Ann Arbor that also wants to give its users the best bang for their bucks. Co-founders Gregg Hammerman and Andrew Bank are also serial entrepreneurs who previously worked together to start TechStreet, which they went on to sell to Thomson Reuters. With Larky, Hammerman jokes that they’re “getting the band back together” to help consumers keep track of the various perks and discounts in their lives.

For instance, depending on what credit card they carry, clubs and organizations they belong to, and even where they work, many people are elligible for a variety of discounts or special promotions. Larky offers a free mobile app and website to help people keep track of the various perks and discounts they’re entitled to. If, for instance, a Larky user wants a new set of tires, the user can search the website for a tire shop offering compatible discounts. The mobile app alerts users as they walk into a place offering relevant discounts. (Hammerman uses the example of walking into the Grand Rapids Art Museum and getting an alert that, thanks to his membership at the Detroit Institute of Arts, he’s entitled to free admission.)

Since Larky is in its infancy, Hammerman prefers not to share user numbers just yet, but he says the iPhone app is currently available and the Android version is coming by the end of the year. Already, Hammerman says he’s been surprised and pleased to find so much financial support so close to home. The First Step Fund and North Coast Technology Investors are among its investors, along with five local angels. “We feel very fortunate to have gotten such great support from Southeast Michigan,” he says.

Sarah Schmid is the editor of Xconomy Detroit. You can reach her at 313-570-9823 or sschmid@xconomy.com. Follow @XconomyDET

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