Bizdom U, the Detroit incubator backed by Dan Gilbert, will now be nurturing even more local entrepreneurs thanks to a change in its business model.

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.”

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“Social shouldn’t be viewed as soft,” says University of Michigan finance professor Gautam Kaul. “Unfortunately, soft and social tend to go together in people’s perceptions.”

But Social Venture Fund, a new investing vehicle out of the University of Michigan that came out of stealth mode just last week, is taking a hard look at social inequality—and is out to prove that investments targeted at ameliorating it can make money. “We want to use rigor in measuring social impact and making investments that are real,” says Kaul, the managing director of the fund.

A handful of students approached him a year and a half ago with the idea for a social venture fund, as a new business model to help solve real-world problems, he says. He made the team formally pitch the idea to him (much in the same fashion entrepreneurs present to investors), to prove the concept went beyond a philanthropic idea, and had the potential to also generate returns.

Social Venture Fund’s team, which is now expanding and could reach a total of 30 students, has been working over the past year to develop the vision for the project and the types of companies it will invest in, Kaul says. The fund adds to the university’s group of student-run funds—the Frankel Commercialization Fund and Wolverine Venture Fund, which has had four successful exits, including an IPO. Unlike the other student-run funds at the university, Social Venture Fund didn’t start with money, Kaul says. “We felt that this was too important to wait on trying to raise money for something.” The 2010 MBA class at the school has already pledged its gift to the Social Venture Fund, which is also working on a big fundraising push.

Broadly, Kaul’s team envisions its investments falling into a handful of sectors: education, food and nutrition, health, finance, the environment, and urban revitalization. He says the team is particularly interested in looking at companies that fuse the latter two concepts, and work on solving problems that are often left to the government.

“We want to create a new type of organization that does not worry only about money making, but worries about policy and impact on society,” he continues. To do that, Social Venture Fund is looking at companies that … Next Page »

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Civic leaders, economic visionaries, and passionate residents often claim that their city is the next to rebound. I say with confidence that my city is next in line for metamorphosis. Some find their new meaning through the arts and other organic movements, but in most recent accounts, it seems, a few deserving cities are staged for a comeback with the help of high-tech industry. Holyoke, Massachusetts, is one of these cities.

Last week, it was announced that the Massachusetts Institute of Technology, University of Massachusetts, and Boston University would be collaborating with Fortune 500 technology giants Cisco Systems and EMC and the Commonwealth of Massachusetts to build a high-performance computing center (HPCC) in the city of Holyoke.

I got involved in the early stages of this effort back in October of 2008, when I was invited to a Technology Roundtable at MIT. It was surreal finding myself, a young web entrepreneur, talking with and having breakfast at the same table as Governor Patrick, MIT president Dr. Susan Hockfield, Cisco’s John Chambers, and various other leaders and innovators in the world of business and technology. Major topics included the future of the tech industry in Massachusetts, its impact on the state economy, and support of entrepreneurship. When the conversation moved in my direction, I was encouraged to share my thoughts and suggest various underutilized opportunities I saw as a young entrepreneur living and working in the western part of the state. I made what I hoped were persuasive statements for my city, advocating that it would be the premier location for sustainable, cost-effective, large-scale data centers. By the look on everyone’s faces, it was clear that Holyoke had been on their radar for such a project.

Western Massachusetts has many valuable resources that would make it an appealing and economically advantageous destination for the tech industry. But what firmly stands out in this region is the small city of Holyoke and its abundance of power—specifically, cheap, renewable hydro-electric power. The city receives approximately three-quarters of its energy from its hydro-electric sources, which include an expansive dam and turbines located along canals powered by water diverted from the Connecticut River. The municipality-owned utility company also announced recently that it would be acquiring hundreds of acres of land on a nearby mountain range to develop a high-capacity wind farm. In regards to technology, Holyoke already has an extensive high-speed fiber optic network throughout its downtown and is located along the Mass Information Turnpike backbone.

It is likely that Holyoke’s new computing and data center will be modeled after Google’s “Project 02″ in The Dalles, OR, and its data-center in Baudour, Belgium. Water from the river or industrial canals will be used to cool the servers and ensure that the hardware runs efficiently.

When it was founded in the mid-19th century, Holyoke was one of the first cities planned for industry—and it promoted its plentiful supply of inexpensive energy and labor to lure manufacturing businesses and investors. It became the center of the global paper industry and spurred tremendous amounts of wealth, laying claim to being the richest city per-capita in the United States by the 1920s. At the city’s prime, Holyoke’s cultural offerings were compared to those of New York City and Paris. After the Great Depression and general de-industrialization that struck the Northeast, Holyoke slowly began to lose its prosperity, businesses, jobs, population, and reputation. For as long as I can remember in my 21 years of existence, the city has been in rough shape. People often blame the city’s reputation as what’s repelling business—but real innovators, entrepreneurs, and “urbanists” see past that image and recognize this diamond in the rough. The raw, undisputed assets stare you straight in the face—and, finally, the right people are staring back. This new computing collaboration will be an anchor, attracting entrepreneurs and young minds eager for involvement in something of great magnitude.

As this high-profile project moves forward, I’d expect many eyes from the technology sector to be fixated on Holyoke. There is still over two-million square feet of vacant building space, consisting mostly of red-brick factory structures ready to be reclaimed by the high-tech community at bargain prices. Is there a chance that a company like Google might look at Holyoke for its next data-center in the Northeast? I believe it’s very likely.

I’m optimistic about what the future holds for the city of Holyoke. High tech offers the much-needed flow of capital, job creation, and stimulus that post-industrial cities like Holyoke desperately thirst for. With the escalating focus on green industry, sustainability, and long-term cost factors, Holyoke is a premier location for the Northeast IT sector. The beloved Queen of Industrial Cities as it was called at turn of the century, fell off her throne many decades ago, but is now back with a new purpose. Thanks to the forward-thinking powers at hand, Holyoke will be given a new identity as a coveted destination for high tech.

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