$6 million in funding made available to Michigan startups

Last week, $6 million in funding was approved by the Michigan Strategic Fund for startup companies in the state. The $3 million Pre-Seed Fund III granted by the Michigan Economic Development Corporation will be administered by the Michigan State University Foundation and will support early-stage startups. The other half of the total funding ($3 million) as announced by the MEDC and Detroit-based ID Ventures, will support the newly-established Tech Startup Stabilization Fund which will focus on sustaining technology-based startups affected by the COVID-19 outbreak.

The Pre-Seed Fund III will be deployed across Michigan to provide support to entrepreneurs and technology startups as well as offer capital support, coaching, assistance with grant funding, and more. The list of companies eligible for the funding include companies involved in advanced automotive, manufacturing, information, IT, software, and alternative energy.

ID Ventures, which will be administering the Tech Startup Stabilization Fund, will provide direct investments or loans of between $20,000 and $100,000 that can then be converted into equity. According to Fred Molnar, vice president of the entrepreneurship and innovation initiative at the MEDC, the funding for these companies is “a bridge to survival.” In most cases, “they were gaining traction, VCs and angels were trusting them and investing in them and boom, it stops.” He said the MEDC’s “objective is to get them through this period so they can then start where they just stopped and continue on and then hopefully they expand.”  

The financial assistance is critical for many tech startups in this current economic state. “If we can’t get them through this point, then there’s a chance they just fold. And then you’re starting over,” said Molnar.