More funds soon will be available for some startups.
Michigan Strategic Fund approved $3 million for Michigan Pre-Seed Fund III to assist startup companies throughout the state. The Michigan Economic Development Corporation (MEDC) provided the capital and it will be administrated by the Michigan State University Foundation, a nonprofit research foundation that supports entrepreneurship.
“For the last six years, the MSU Foundation’s venture creation apparatus has been under the radar, using their own financial resources to create a deep bench of individuals and service providers that have resulted in the formation of many promising, high-growth companies,” said Fred Molnar, vice president of entrepreneurship and innovation at the MEDC. “Their mission, track record and relationships across the state is a compelling story, and we’re excited to work with a team so committed to this important work.”
According to Molnar, the funds will be awarded to technology-based startup companies that have moved beyond having a minimal, viable product that has some traction in the industry or consumers that they are trying to serve but have yet to reach the commercialization phase.
“With this award from the MEDC, we’ll work with statewide SmartZones, university tech transfer offices, business acceleration service providers, and incubators and accelerators,” said Jeff Wesley, executive director of MSU Foundation subsidiary entity Red Cedar Ventures, which will oversee Pre-Seed Fund III. “We want to leverage existing relationships to support these startups.”
Along with providing direct capital investment to startup companies, individuals will have access to services, resources and professionals such as mentorships, financial and marketing advisers, industry experts, strategy coaches and entrepreneurs-in-residence, among other personnel who are associated with the MSU Foundation.
“Even beyond the directors who will be working the fund every day, we can tap other people in our school system that might have specific industry experience such as in advanced manufacturing or therapeutics,” Wesley said. “They can bring another level of experience to bear and help us to solve issues or proactively strategizing with these companies to help them further. I think this is one of the things that we have that makes us unique in the state is the amount of experience and the number of people we have on our team to help these organizations.”
There are no limits to the number of startups that can qualify for the funds, but as a result, the funds will be allocated by a certain dollar amount according to the need of the startup and the discretion of MSU Foundation directors.
In some cases, the MSU Foundation, via Red Cedar Ventures, will co-invest alongside the Pre-Seed Fund III and seek support from angel and early stage investors across the state.
This is the third pre-seed fund that the MEDC has provided. The first tech-based pre-seed fund was administrated by Ann Arbor Sparks. Pre-Seed Fund II was administrated by Invest Michigan.
Pre-Seed Fund III should be active by June 1. Wesley said with the recent approval, they are in the process of developing a contract between MEDC and the MSU Foundation.
“Our objective is to contribute to the state of Michigan’s entrepreneurial ecosystem with the goal of creating jobs, attracting and retaining talent and creating value,” said David Washburn, MSU Foundation executive director. “Administering the Pre-Seed Fund III award will enhance our impact and help us extend our reach across the state.”