Winning at the
Accelerate Michigan Innovation Competition doesn't necessarily mean a startup has arrived. Sometimes it's more about "been there, done that."
Michigan's premiere business-plan competition has turned into a kind of a farm system for the new economy startups making their way in the Great Lakes State. Many of its recent winners have either participated or competed in previous years, including two of the last three grand prize winners.
The annual event normally makes headlines for spreading hundreds of thousands of dollars in seed capital among local startups. The grand prize winners walk away with $500,000 each year. While Accelerate Michigan started in Ann Arbor before moving to downtown Detroit, Ann Arbor-based startups still
dominate the winner circles each year. Organizers like to promote the annual event as a great
networking opportunity between entrepreneurs and investors.
However, where the event is really starting to carve out its long-term niche is developing entrepreneurs and the startups they are building. This year's winner,
SkySpecs, competed for three straight years.
TurtleCell placed twice in each of the last two years. Both Ann Arbor-based companies were University of Michigan student-led startups that matured into venture- or angel-backed firms poised for big growth spurts in 2015.
"When you talk about local successful serial entrepreneurs there are a lot of the usual suspects," says Lauren Bigelow, executive director of Accelerate Michigan. "I would like to expand that group."
Sky is the limit
There are three distinctive stages behind SkySpecs' development, and all three revolve around Accelerate Michigan.
The company got its start as a student project at the University of Michigan working on drone technology. The three co-founders joined
TechArb, a startup incubator for U-M students, to commercialize their work. Later that year, SkySpecs enrolled in the
student portion of Accelerate Michigan.
"Our jaws basically hit the floor when we watched the companies pitch," says Danny Ellis, co-founder & CEO of
SkySpecs. "We thought that is where we want to be when we pitch."
That was stage one. The stage Ellis readily admits where SkySpecs was "definitely a student project." The technology was rough-but-promising, and the team was raw-but-talented. It was still good enough for third place. Not long after that, SkySpecs made its first pivot to using drones as an inspection tool for wind turbine blades. The move won the
Michigan Clean Energy Venture Challenge in February 2013.
"We went from no money to $50,000," Ellis says. "We felt like we were on top of the world."
That's about the time SkySpecs entered its second stage. The startup wanted to become a real business. It entered Accelerate Michigan's main competition and made the semifinals in the fall of 2013. Ellis admits the company was too focused on the business and not the technology.
SkySpecs pivoted again, shifting its focus to its technology and entering stage three. Instead of building drones, it developed a sensor technology called Guardian that enables drones to avoid hitting stationary and dynamic objects. Check out a video of it
here.
SkySpecs won a
Small Business Innovation Research grant to develop it earlier this year. Not long after that it won admittance to the prestigious
Techstars incubator in New York City where it plans to work on commercializing the technology for a few months before coming back to Michigan. And then SkySpecs
won the grand prize at this fall's Accelerate Michigan.
"We looked around and knew most of the people in the auditorium," Ellis says. "We have been around long enough to make friends with everybody in the place."
Accelerating Michigan
This year was Hugo Braun's third serving as a judge at Accelerate Michigan. The partner at
North Coast Technology Investors has a number of significant exits under his belt, including a $525 million acquisition of
Virtela Technology Services earlier this year and Ford's addition of Ferndale-based
Livio last fall. The Ann Arbor-based venture capital firm is also invested in last year's Accelerate Michigan winner,
Varsity News Network.
Braun has been working in venture capital for 28 years, including a five-year tour in Silicon Valley and the last 15 years running
North Coast Technology Investors. He has been around long enough to know startups need time to ripen. That could mean waiting for the market to catch up with new technology or investing the time to develop the technology and team. He points out that both of those things have been happening more and more often at Accelerate Michigan in recent years.
"The bigger picture is we are developing an ecosystem that can nurture these startups through the difficult times," Braun says. "It's very rare for a startup to launch with a market-ready product."
Bigelow agrees, pointing out that many of the startups coming through Accelerate Michigan have more longevity because they are often based off technology innovations spinning out of research universities. Thus is makes more sense to be patient with Michigan-based startups.
"I really believe the
difference between a Silicon Valley and a Michigan company is that part," Bigelow says. "Michigan companies can get the practice and get the feedback."
TurtleCell cuts the cord
That was the case with
TurtleCell. The startup got its start when a couple of University of Michigan students got tired of untangling the earbuds for their smartphones. They came up with an idea of creating an iPhone case with retractable earbuds. It's a popular idea. The startup has
won Accelerate Michigan's People's Choice Award for the last two years.
"They won by a landslide both years," Bigelow says.
The three-person team of 20 somethings freely admits they didn't have much of an idea of what they were doing when they first signed up. They were young men working day jobs trying to live the entrepreneurial dream by building TurtleCell on the side.
However, they knew enough to win a place in the spotlight in 2013. That led to their introduction to
Digital Treasurers. The Auburn Hills-based firm specializes in distributing accessories for mobile electronics, like smartphones and tablets. TurtleCell and Digital Treasures are now partnering to start selling TurtleCell's iPhone case next year, expecting to sell as many as 500,000 units.
"Accelerate Michigan really led to our partnership," Lindlbauer says. "That led to us getting our financing, building a team, and becoming a legitimate company. We're moving a lot faster now."
Bigelow points out the partnership opened the doors for TurtleCell to land angel investor capital because even though investors liked the idea they needed to know a production partner was onboard. The angel investor cash came primarily because of TurtleCell's success at Accelerate Michigan and work at local startup incubators like TechArb and
Ann Arbor SPARK.
"It's all about networking," Lindlbauer says. "That is one of the biggest things for us. We're all 23-24-25 years old and our network is reflective of that. Accelerate Michigan's network is more reflective of someone in their 30s."
The longterm play
The
Business Accelerator Network (which is made up local business accelerators like Ann Arbor SPARK) and the
New Economy Initiative (a conglomerate of local foundations focused on reinventing Michigan's economy through entrepreneurship) launched Accelerate Michigan with a $3 million grant.
The initial idea was for it to serve as a main cog in developing Michigan's entrepreneurial ecosystem through making connections, attracting more investment activity, and highlighting what's going on. The overall concept is starting to really gain traction.
SkySpecs is fielding a lot of interest from its fellow startups in New York. Most of them considered Michigan nothing more than a flyover state until they heard about the depth of support and the size of the seed capital purse SkySpecs captured at Accelerate Michigan.
"It made everybody look up and take notice what is going on in Michigan," Ellis says.
Those sorts of stories energize Bigelow and her staff when they are organizing and fundraising for Accelerate Michigan. But what excites them is the prospect of these entrepreneurs coming back to Accelerate Michigan in a few years with their next startup.
"I am excited to see what they bring in another five years," Bigelow says. "That would be great."
Jon Zemke is the Innovation & Job News Editor for Concentrate and its sister publications, Metromode and Model D. He is also the Managing Editor of SEMichiganStartup. He has covered each and every Accelerate Michigan competition.
All photos by Doug Coombe except where noted.