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Posted on Thu, Nov 8, 2012 : 5:58 a.m.

Top 4 TechCrunch Takeaways: How Southeast Michigan can realize its startup potential

By Ben Freed

There was palpable excitement at the TechCrunch Meetup event at the Hockeytown Cafe in Detroit on Wednesday evening. Everyone seemed to feel that the region is on the verge of something very special.

“I’m here, and I’m drinking the Kool-aid,” TechCrunch reporter Colleen Taylor said. "This is exciting."


CEOs and co-founders rub elbows with coders and venture capitalists at TechCrunch's Detroit Meetup.

Ben Freed |

But at the same time, nearly everyone felt that there was still something missing.

“It’s very exciting what’s going on here, but we haven’t quite reached that ‘tipping point’ yet where it all clicks,” Josh Diskin, a senior strategist at app development firm Detroit Labs, said.

While just about everyone could agree with those two sentiments, the question of what needs to be done to reach that “tipping point” was another story. I talked to a range of CEOs, programmers, coders, and reporters attending the event, and found a few trends. Here are the top four ways I heard to transform the region’s potential into a full-blown tech success story.

1. Find or attract more capital

While some argued otherwise, I heard multiple times throughout the night that there simply is not a critical mass of venture capital in the Midwest to support the growth of a strong startup culture.

Another TechCrunch reporter, Jordan Crook, explained to me earlier in the day that even in today’s digitally interconnected world, having a close proximity to major venture capital firms is vitally important.

Crook said that the process of attracting venture capital can happen over a period of months and involves a lot of face-to-face interaction. A venture capitalist investing in a company is creating a relationship that goes beyond simply their belief in the scalability of the product.

“I’ve had people tell me that sometimes it comes down to ‘is this someone who I would really want to take their call?’” she said. “That kind of relationship has to be built in person.”

There have been success stories in the region: Cytopherx attracted a $34 million venture capital round early this year and LLamasoft recently closed a $6 million dollar Series A round that included mostly Midwest capital. However, Thiago Olson and Chris Bartenstein, co-founders of pay-system startup protean, said they’ve been told by multiple people in the payment industry that they only way they’ll attract serious venture capital is by moving to the West Coast.

“We want to stay here in Ann Arbor,” Bartenstein, whose office is currently in the TechBrewery, said. “But there are definitely more funding options out West.”

Fellow TechBrewery resident Dug Song, CEO of Duo Security, disagreed. He said that capital raised by his company and others currently housed in the startup incubator proved that successful companies should be able to raise capital no matter where they are located.

2. Have More Meetups

For some, the three most important factors in growing a startup community are culture, culture, and culture. In previous interviews with West Coast CEOs and venture capitalists visiting Ann Arbor I heard about the gatherings of like-minded techies who get together just to have a beer and talk about what they are working on.

I never really understood what they were talking about until I attended this meetup.

There are smaller-scale meetings in Ann Arbor on a regular basis, “Beer Thirty” on Fridays at the TechBrewery, OpenCoffee at Ann Arbor SPARK, and the A2 New Tech Meetup come to mind, but having a major "happy hour" event for people from across the region is rare.

“We have TechCrunch events in New York that could draw 1,000 people,” TechCrunch reporter Romain Dillet said.

“Here, I saw two people that have been working in the same building as each other meeting at this event.”

Now, Southeast Michigan will never be mistaken for New York City; but greater opportunities for people to meet means more networking, which can lead to more collaboration and mentorship, all of which makes the region’s startup culture that much stronger.

3. Close the gender gap

OK, this one wasn’t actually said by anyone at the event, but I believe that one way Southeast Michigan could set itself apart in the race to be the “next Silicon Valley” would be to make the region a leader in supporting opportunities for women in high tech fields.

It would be generous to say there was one woman for every 10 men in attendance at the event; the number was probably closer to one in 15. Granted, women make up a minority of both engineering and business students at the University of Michigan, but those numbers are closer to one in three or four.

I do not subscribe to the opinion that any one gender is more or less suited to be engineers, coders, programmers, or CEOs. That means that some of the top female talent graduating from local universities is either going elsewhere or not getting involved in the startup world.

Going elsewhere seems unlikely because this is not a problem unique to Michigan. Taylor said she actually thought the female turnout at the event, as well as a previous one in Toronto were unusually high.

I do not profess to have the answer as to why such a large segment of talented engineering and business school graduates are so egregiously under-represented in the startup and innovation sector. I do think that if Michigan could find a way to harness that talent, it would give the region a huge boost.

4. Revitalize Detroit

One TechCrunch reporter told me that just from looking at the infrastructure in the city she thought it would be difficult for a dandelion to survive in Detroit, let alone a startup. A CEO said he lives in metro-Detroit, but located his office in Ann Arbor because clients would have “laughed” at a company with a Detroit address.

While at first blush this might seem like it’s somewhat good news for Ann Arbor, these are not two competing markets. If Michigan is going to have a successful startup community, Detroit must be a part of it.

People at the event were optimistic about the city’s future, if not its present. Diskin, who is originally from New York City, compared it to areas of Brooklyn that are just on the verge of becoming the “it” places to be.

“It’s like the Red Hook neighborhood,” he said. “You might not want to be there right now, but you know it’s going to be the next place you’ll want to go. So it can be worth it to get in early.”

TechCrunch reporters agreed that it would take major investment by the private sector to rebuild the city. The process is starting, with Dan Gilbert, billionaire owner of Quicken Loans, repurposing the new M@dison Building that has already drawn attention from Silicon Valley firms.

Baby steps are nice, but for the region to compete for top talent and top dollars, it’s going to need to invest heavily in itself first.

Ben Freed covers business for You can sign up here to receive Business Review updates every week. Reach out to Ben at 734-623-2528 or email him at Follow him on twitter @BFreedinA2


Roger Rayle

Thu, Nov 8, 2012 : 6:02 p.m.

A couple of photos from TechCrunch Detroit ...

Ben Freed

Thu, Nov 8, 2012 : 3:53 p.m.

I'd like to add a caveat to my third point that there have been a number of female executives in Ann Arbor who have been extremely successful. Michelle Crumm at Adaptive Materials, Linda Girard and Catherine Juon at Pure Visibility, and Maria Thompson at T/J Technologies all built or helped build successful startups and they only scratch the surface. The point is not that success stories don't exist, but that they exist in smaller numbers than they (proportionally) should. America has been making efforts for years to help women achieve in STEM (science, technology, engineering, and math) fields. Any ideas for what needs to be done (if anything) for a more proportional showing in the startup sector?