Big Changes Coming to Bizdom’s Detroit Accelerator

I was at a gathering last week when I first heard the rumors: Bizdom, Quicken Loans founder Dan Gilbert’s startup accelerator in downtown Detroit, was supposedly closing its doors. Details were scarce among partygoers, but more than one journalist I talked to said the incubator was going to wind down operations, a plan seemingly confirmed by an internal e-mail that Crain’s Detroit Business got a hold of last week.

On Thursday, Crain’s reported, a Bizdom official sent an e-mail to stakeholders that said, “When Bizdom was launched in 2007, there was a clear lack of resources for technology startups operating in Detroit and Cleveland. Now, however, there are over 15 such organizations in the Detroit and Cleveland areas. Given this positive growth, Bizdom will move away from an accelerator model and begin serving as a platform for connecting entrepreneurs to resources within the Rock Ventures Family of Companies,” as well as outside nonprofits.

What that meant wasn’t clear. Gilbert’s public relations machine swung into gear, and by Friday afternoon, a press release was sent to reporters (including me) outlining the upcoming changes to Bizdom’s programming. In the press release, the pivot was reframed as an expansion of services rather than an ending. “Brick-and-mortar, neighborhood businesses are foundational to the growth of every corner of these two cities,” the press release read, “and thus increasing support in the neighborhoods is the next logical step in Bizdom’s evolution.”

Bizdom, the release continued, will engage individually with interested entrepreneurs to “identify capital opportunities and connections within the Family of Companies and its network of non-profit partners.” Bizdom will also continue to invest capital, offer entrepreneurial classes, and sponsor events, the press release said.

The timing of the announcement is somewhat curious. Many in the local startup community have been critical of Bizdom for not doing more to recruit entrepreneurs from the parts of the city outside of Gilbert’s downtown redevelopment zone or circle of associates. Though the criticism isn’t entirely fair—Bizdom has participated in a number of programs and initiatives meant to coach and nurture entrepreneurs from the community at large, including the Detroit Technology Exchange—the optics weren’t great. After all, TechTown Detroit, the business incubator associated with Wayne State University, started broadening its services to “the neighborhoods”—the colloquial term many Detroiters use to describe everything outside of the city’s central core—in 2013.

Whatever is happening in Detroit, things in Cleveland seem even more fraught. According to a report in Crain’s Cleveland on Friday, the Bizdom incubator there will vacate its current location in January, with no word on where its new location might be. The guy in charge of Bizdom Cleveland, Ethan Cohen, directed press questions to the Detroit office, and Bizdom refused to comment on whether Cohen still has a job. A $6 million venture capital fund there announced last year never came to fruition, with Bizdom claiming it wasn’t built to deploy the state money that made up part of the capital fund. According to Crain’s, Bizdom Cleveland also sent a letter to stakeholders this week “stating that the accelerator program would close. It mentioned that Bizdom would continue helping entrepreneurs, but it mentioned nothing about the focus on traditional brick-and-mortar businesses mentioned in the news release.”

So what, exactly, is going on with Bizdom?

Josh McManus is now overseeing the Bizdom program for Rock Ventures, the umbrella company that manages Gilbert’s various endeavors. McManus has a long history in Detroit’s startup ecosystem. A serial entrepreneur, he founded D:Hive in 2012 and went on to spend five months as the Knight Foundation’s man on the ground in Akron, OH, before being lured back to Detroit in January by Rock Ventures.

“It was an internal e-mail taken out of context that got shared as news,” he said of this week’s events.

Detroit’s startup ecosystem has matured, he added, and Bizdom’s evolution is based on the changing needs of the local market. Bizdom’s programming and mission is changing, he said—though he declined to offer specifics on what the new programming will look like—but the organization will continue to incubate tech startups while expanding its focus to small, brick-and-mortar business entrepreneurs. What he does know about the new programming, he said, is that it will involve “entrepreneurs serving entrepreneurs” and startups getting the opportunity to plug into Rock Ventures’ family of 119 companies.

“We’re spending time with each portfolio company to find out what ways we’re uniquely positioned to be helpful,” he said. “The programming will be dependent on the needs of the group as well as individual startups.” (There are 25 companies currently in the Bizdom portfolio, about half of them based in Detroit.) He said Bizdom will take the same approach to the services it plans to offer brick-and-mortar businesses, offering a “set of tools best attuned to what we’re good at.”

Bizdom will continue to invest in tech startups, he said, and said there will soon be a wider variety of funding offered, “a continuum of seed funding through growth equity.” McManus is also a big believer in “leveraging collective knowledge” and getting groups of like-minded people together, so entrepreneurial classes will also remain.

“We want to make sure those things continue with an emphasis on scale,” he said. “We have high ambitions for working with a large number of entrepreneurs through classes and cohorts.”

Above all, McManus said, “our intent is to be seamless and inclusive. We understand that downtown and the neighborhoods go hand in hand. With new data, we’ve realized how linked we are to the neighborhoods—our team members live in these neighborhoods. We need services in both areas. We have the ability to accomplish things with the Bizdom business model, and the demand is to do more.”

The accelerator model, McManus added, is frustratingly finite, as programs like Bizdom have a set number of startups to incubate or amount of capital to deploy within each cohort. “With the way we’re expanding—and I see our commitment as an expansion and not a retraction—we should be able to interact with way more entrepreneurs.”

McManus said information on Bizdom’s new programs for brick-and-mortar businesses will be posted on its website once it’s available.

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

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