There isn't much that's small about the work performed by the Michigan Pre-Seed Capital Fund in 2010. The start-up financing fund distributed $2.5 million worth of loans to dozens of companies in Michigan, many of which are in the Ann Arbor area.
The $11.6 million fund has given microloans, about $50,000 each, to 52 start-ups, such as U-M spinoff and Accelerate Michigan winner Armune BioScience. These companies mostly use the cash to help commercialize their first products. These companies employ 285 people and have since attracted another $16.4 million in outside investment.
"These are the companies that aren't bankable in a traditional sense," says Skip Simms, interim CEO of Ann Arbor SPARK and administrator for the Michigan Pre-Seed Capital Fund and the other funds in Michigan Microloan Fund. "There is still a milestone or two they need to achieve before they are investment worthy."
Michigan's 21st Jobs Fund provided the money for the Michigan Pre-Seed Capital Fund. Ann Arbor SPARK ran the Michigan Microloan Fund, which is comprised of the Michigan Pre-Seed Capital Fund and two other smaller funds focused on eastern Washtenaw County and Ann Arbor.
The Michigan Microloan Fund was the first of its kind, proving quite popular with local entrepreneurs battling the investment cash crunch of the financial crisis. The fund inspired several smaller-yet-similar funds across Metro Detroit. These new funds are each worth a few hundred thousand dollars and focused on specific communities while the Michigan Pre-Seed Capital Fund is worth millions of dollars and has the freedom to invest in any Michigan company.
The state hasn't decided yet whether its going to invest more money into the Michigan Pre-Seed Capital Fund. The first microloans from the Michigan Pre-Seed Capital Fund aren't due to be paid back until 2012 so the fund is set to go on hiatus unless the state infuses it with more money.
Source: Skip Simms, interim CEO of Ann Arbor SPARK
Writer: Jon Zemke
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