The Michigan Economic Development Corp. plans to distribute a portion of its funds directly to the state’s existing network of economic development groups as part of a broader plan to boost the economy, MEDC CEO Michael Finney said tonight in Ann Arbor.

Finney said MEDC would “commit a significant amount of money that can be used by the SmartZone network to help companies" grow and add jobs.

Michigan Economic Development Corp. CEO Michael Finney

Melanie Maxwell | AnnArbor.com

The state’s 15 SmartZones, including Ann Arbor SPARK, are regional economic development organizations that focus on helping companies grow and training entrepreneurs.

“The idea behind this is that the money will follow the company instead of the company having to chase the money,” Finney told a crowd of 1,000 entrepreneurs and business leaders at the 11th Annual Collaboration for Entrepreneurship event at Skyline High School in Ann Arbor.

The announcement comes as Finney, at the direction of Gov. Rick Snyder, is planning a wholesale reconfiguration of the state’s economic development strategy to focus more on developing grassroots services and providing small-scale funding opportunities to help existing Michigan companies.

Finney didn’t provide specifics of how the funding distribution would work but said it would be spread among “the entire business accelerator network throughout the state.”

MEDC has already indicated that it plans to collocate some of its employees at economic development groups throughout the state in an effort to reduce bureaucracy and streamline economic development activity.

“The goal is to find creative ways of helping existing companies in their growth,” he said.

SPARK, for example, has existing funding resources including the Michigan Microloan Fund, a program through which SPARK distributes small amounts of cash in low-cost loans to businesses that don’t have access to traditional bank financing.

The organization also manages the Michigan Pre-Seed Capital Fund, which distributes investments of up to $250,000 to startup companies that have secured a funding match from outside investors. Most of the Michigan Pre-Seed Capital Fund’s money came from MEDC.

Regional economic development groups typically rely on a diverse revenue base that usually includes tax dollars and contributions from businesses and nonprofit groups. For example, SPARK gets more than one-third of its $3 million operating budget from the Ann Arbor/Ypsilanti Local Development Financing Authority and counts local universities and businesses among its other funding sources.

Finney also briefly outlined a general plan of restructuring the state’s economic development strategy, an outline that mirrors what Snyder proposed Jan. 19 in his State of the State.

Finney said the MEDC’s new strategy would focus primarily on providing grassroots services for existing Michigan companies and entrepreneurs and strategically trying to attract some outside companies to come to Michigan. The business attraction strategy, however, is unlikely to rely on a pile of tax incentives the MEDC distributed under former Gov. Jennifer Granholm. Snyder has said much of MEDC's incentives are too costly and should be eliminated.

Among the new possible economic development strategies Finney mentioned is pushing state government agencies to contract with Michigan companies for services and products.

Gerry Roston, chairman of the Annual Collaboration for Entrepreneurship event, said in a recent interview that entrepreneurs are looking for consistency in the state’s startup funding efforts.

“I want to see a commitment from the state that these programs, which have been proven to be extraordinarily valuable, are going to be there year after year,” Roston said.

Contact AnnArbor.com's Nathan Bomey at (734) 623-2587 or nathanbomey@annarbor.com. You can also follow him on Twitter or subscribe to AnnArbor.com's newsletters.