Nonprofit research institution EntryPoint recently announced the release of its 2021 Detroit Entrepreneurial Ecosystem Report, which shows a 333% increase in capital attracted to the Detroit, Michigan, region, due to the growth of the local tech community.
Chicago has been minting unicorn companies, or startups valued at over $1 billion, at a brisk rate in 2021. New unicorn G2 is the fifth of the year. The B2B enterprise software marketplace and review platform startup just raised $157 million in a Series D round led by Permira, a London-based private equity firm. So far, G2 has raised over $250 million in total.
The 2021 MVCA Research Report has just been released, with more details available than our recent interview with Executive Director Ara Topouzian. The 2021 MVCA Research Report shows that 88 Michigan startups received more than $257 million in venture capital investment in 2020. The report estimates that an additional $1.2 billion of venture capital will be required to adequately fund the growth of Michigan’s 165 startup companies in the next two years.
Michigan is emerging like every other state from the haze of the COVID-19 pandemic. As companies and individuals chart a course forward, Cronicle wanted to check on the base of the tech startup pipeline: funding. Patti Glaza and Ara Topouzian have front-row seats to VC funding in Detroit, and in Michigan overall, and were gracious enough to spend an hour talking with us about what they’re seeing in the tech startup space after 2020. We hope that whether you are tech talent, a VC investigating Michigan’s startup space, or a startup founder looking for funding, our conversations with the folks in the venture capital scene help you connect with resources that help you also chart a course forward as the pandemic winds down.
Michigan’s economy has had a “K shaped recovery” as the COVID-19 pandemic had a disproportionate effect on restaurant, retail, and Main Street businesses that still have not recovered. What many people have been wondering is how businesses are faring who were able to function remotely or support businesses in that endeavor. Has Michigan hit yet another “once in a lifetime” financial crisis? The answer is a bit complicated, but there is a lot of good news for businesses like tech and life science companies that could pivot to remote work structures. We reached out to a few VC and angel investors in the Ann Arbor-Detroit startup space to get their perspective on what’s happening at the very base of the startup pipeline: funding. As everyone in the startup space knows, Michigan has always dragged a bit behind on having enough funding for the great startups that come out of this region, so we were concerned that if the funding dropped, the ecosystem might lag. Fortunately, we found the behind the scenes reality is quite the opposite, and many investors were happy to share their tips on how businesses can get in the loop on what’s going on in Michigan startup funding in 2021.
Asalyxa Bio, Inc., a biopharmaceutical startup developing nano-engineered, immune cell-targeted therapeutics, just announced the closing of an over-subscribed seed financing round totaling more than $2 million. The funding was led by Research Bridge Partners, co-led by ID Ventures, and included Michigan Rise Pre-Seed Fund III, BRCC of Western Michigan University, Ann Arbor Spark, Woodward Angels and other undisclosed investors. The funding will be used to move Asalyxa Bio’s lead development candidate, ASX-100, toward first-in-human clinical trials. We previously highlighted Asalyxa Bio’s early work on Cronicle as the company, led by Asalyxa Bio and holding company OrangeGrove Bio CEO Marc Appel, applied their technology to addressing Acute Respiratory Distress Syndrome caused by COVID-19 and other diseases.
Three Michigan startups from mid-Michigan have just been named to a Michigan list of 25 top startups to watch, the Renaissance VC Fund list. Ann Arbor-Detroit and Traverse City aren’t the only Michigan cities creating welcoming communities for new tech startups. According to incubator Lansing LEAP, which supports new ventures in the Mid-Michigan region, “The Lansing area grew by 5% in 25 critical high-tech occupations from 2015-2020 and projects an additional 4% growth from 2020-2025, outpacing the national average.” Lansing is not known as one of the bigger emerging tech hubs in the Midwest, but its network of advanced manufacturing, seat of state government, and growing funding make it a critical and growing part of the Midwest’s long-standing effort to recover and diversify the economy and provide new businesses with a healthier climate to operate with a much lower operating cost than on the coasts.
How does someone build a career in successful startup exits 5 companies deep in a smaller and still emerging tech hub like Ann Arbor? Ask Jim Simpson, who has done just that in the burgeoning security startup scene in Ann Arbor with startups including Duo Security and Arbor Networks. Now new security startup Blumira, whose alumni include people from Duo Security, Censys, Groundspeed, Deepfield by Nokia and the NSA, has just hired Ann Arbor security startup veteran Jim Simpson as VP of Product as the company heads into its next building phase. Blumira has closed on $2.6 million in funding in the last year and recently doubled its team of about a dozen to two dozen, hoping to double that again in the next year to 50. We chatted with Simpson this week about the company’s rapid growth and how Blumira is working with the dynamics created by COVID-19 instead of against it to build success.
Pinball Pete’s is a favorite arcade of both Ann Arborites and Lansing residents who have fun memories of gathering with friends around the venue’s classic arcade games for the last 44 years. The first Pinball Pete’s was founded in Lansing, Michigan, by creator Tim Arnold, in 1976. The Ann Arbor Pinball Pete’s is a downtown mainstay, and one of the few gathering places for young people in the city that isn’t a nightclub.
Another security startup has joined the growing ranks of cybersecurity companies in Southeast Michigan, emerging from the Duo exit. This one, AaDya, targets mid-size companies that need a general security service. Founder Raffaele Mautone says this was intentional, as many security startups have novel ideas but “only solve one problem.” AaDya is located in Detroit, not nearby Ann Arbor, because Mautone says he grew up in Detroit and had “seen how the city has evolved the last 5 years. I’ve been seeing startups and founders reposition themselves in the market to overcome challenges.” Mautone says he also likes the culture and the startup ecosystem, “which is small enough to help each other.”
