Cost of Living Isn’t the Only Thing Attracting Startups to Detroit

July 10, 2017

12:35 pm

Detroit has seen a rejuvenation in their entrepreneurial community since the recession and has become an attractive place for startups to build their business. While Detroit's primary industry is automotive, the city is surrounded by innovation changing the transportation, music and fashion industry, and more.

Today the Michigan Venture Capital Association unveiled the findings of its 2017 Detroit Entrepreneurial Study, a comprehensive analysis of Detroit’s entrepreneurial and investment community. The study includes commentary from leading entrepreneurs and investors from Waymark, Quikly, and Lunar Labs. The analysis details the amount of capital startups have raised and breaks down the sectors and growth stages of Detroit-based companies.

Lunar Team

Cost of Living

Ask any founder and every penny that can be saved, will go back into the business. For startups, if you can save on the essentials, such a living expenses, gas, commute time, etc., then the extra money can go towards building the product. Some of the attractive qualities of the Detroit ecosystem include a 27 percent lower cost of living, cheaper homes, a low turnover rate at companies, and more.

A New Detroit

During our coverage of the Detroit Startup Week, we reported that JP Morgan Chase has pledged $150 million to invest in Detroit’s economic recovery and the ecosystem is going through a huge rebranding effort. In an interview with Hajj Fleming, he talks about project Rebrand Detroit that is focused on helping bridge the digital gap with small businesses.

Venture Capital

There were a number of notable highlights from the study. Check them out below:

  • In the last year, 14 startups in Detroit received more than $62,000,000 from venture capital firms.
  • Currently, 43 percent of the startup companies that have received venture capital funding in Detroit are information technology companies, while 23 percent are life science companies.
  • 25 percent of venture-backed startups in Michigan are emerging from the Detroit area. Over half these startups are in the startup/early stage, indicating the companies are earning revenue from operations and are approaching cash flow positive.
  • There are currently 35 active venture-backed startups in Detroit. Venture-backed startups in Detroit represent 25 percent of the startup companies growing in Michigan.
  • There are five venture firms headquartered or with an office in the Detroit area. These venture firms represent 15 percent of the firms in Michigan.

Waymark Team

The study also indicated that for Detroit ecosystem to continue to thrive, access to capital to fund startups entering their next stage of growth will be a critical component.

“The 2017 Detroit Entrepreneurial Study shows the incredible momentum occurring in the city’s entrepreneurial community,” said MVCA Executive Director, Maureen Miller Brosnan. “Detroit has long been at the forefront of innovation, and it is becoming the ideal place to build a business. Our goal is to connect entrepreneurs with investors to open the door for greater economic opportunities for all members of the community.”

Read all about the Detroit ecosystem at TechCo

Photos courtesy of MVCA


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Tishin is a technology journalist and correspondent. She has written for TechCrunch, Demand Studios and Fitness, and has regular network segments on local Phoenix affiliate stations. She holds a Master's degree in Clinical and Sport psychology, and has covered many areas of technology ranging from 3D printing and game development to neurotech and funding for over 15 years.