Partners report strong startup growth locally

Spartan Innovations, Start Garden project continued momentum for Grand Rapids.
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Early-stage entrepreneurs enrolled in the Conquer Accelerator participate in the 10-week Grand Rapids Conquer cohort each fall. Once companies move on from the accelerator, they become part of Red Cedar Ventures’ investment portfolio. Courtesy MSU Foundation and Conquer Accelerator

Michigan State University Foundation’s tech startup resource organization Spartan Innovations recently reported its work in partnership with Start Garden through the Grand Rapids SmartZone is paying remarkable dividends in its early stages.

At the Grand Rapids SmartZone Local Development Finance Authority (LDFA) board meeting on Jan. 12, the MSU Foundation subsidiary said it made “great headway” in the first quarter of fiscal year 2022, which ran October-December, through its partnership with Start Garden to manage the Grand Rapids SmartZone Incubator and related high-tech business support services.

The SmartZone captures increased property tax dollars and reinvests that money back into the entrepreneurial ecosystem in Grand Rapids.

As the Business Journal reported in September, after reviewing Start Garden and Spartan Innovations’ separate proposals, the SmartZone LDFA selected both operators, contingent upon their successful collaboration with each other, to implement the SmartZone LDFA’s goals and objectives using tax capture dollars.

The entities began working collaboratively Sept. 15 to fill the role of incubator operators within the city’s Certified Technology District under a contract that runs through June 30, 2024.

In their first quarter of working together, Spartan Innovations and Start Garden combined had 114 engagements with high-tech/high-growth companies, and 22 companies were created. More than $1.1 million in funds were raised, and venture funding alone totaled $670,000.

Jeff Wesley. Courtesy Spartan Innovations and the MSU Foundation

“2021 was an incredible year of growth, and I couldn’t be prouder of our team and our ongoing citywide partnerships, especially with the LDFA,” said Jeff Wesley, executive director of Spartan Innovations, as well as Michigan Rise and Red Cedar Ventures, also subsidiaries of the MSU Foundation. Michigan Rise supports entrepreneurs and technology startups across Michigan through capital, coaching and assistance with grant funding, and Red Cedar Ventures is a venture fund created to accelerate the commercialization of startups.

“It’s been extraordinary to see the Grand Rapids startup scene surge with unique innovation, winning technology and top-notch talent,” Wesley said. “Our new team now in Grand Rapids is an experienced group of professionals who bring such integral connections to the community, and we look forward to our continued work with Start Garden and the LDFA in the Grand Rapids market.”

Start Garden rounded out the year with 20 tech startups incubating out of its location at 40 Pearl St. NW in downtown Grand Rapids. Fifty-one percent of companies served were underrepresented business owners or founders seeking to solve underrepresented problems, and $100,000 in direct funding was invested in underrepresented entrepreneurs.

The LDFA’s Gateway grant program and the Grand Rapids Business Accelerator Fund (BAF), the latter made possible by the Michigan Small Business Development Center and the MEDC, issued more than $55,000 to support local business accelerators in Michigan’s SmartZone network. Throughout 2021, these early grant funds helped serve Grand Rapids’ high-tech/high-growth startups at a crucial time due to the impact of COVID-19.

Paul Moore. Courtesy Start Garden

“2021 had the strongest and most diverse tech startups come through Start Garden’s platforms that we’ve seen yet,” said Paul Moore, a co-director of Start Garden. “Grand Rapids is an exploding market for investors searching for new deals, and our plans for the year ahead will only help us create a stronger culture of entrepreneurship and invest whatever we can into that culture.”

Also in Q1 2022, Spartan Innovations and Start Garden established an Entrepreneur-In-Residence Program (see related story).

Spartan Innovations did its second Conquer Accelerator cohort in Grand Rapids from September-November, and Start Garden continued its 5×5 monthly pitch competition and its annual 100 Ideas event. The latter generated the strongest cohort of tech startups yet, with 650 submissions narrowed down to 28 tech startup finalists. Four startups were funded, and 12 continue to incubate.

Tom Stewart. Courtesy Conquer Accelerator and the MSU Foundation

Tom Stewart, program director for Conquer Accelerator and assistant director of venture acceleration for Spartan Innovations, said after running two cohorts of Conquer Accelerator in Grand Rapids, he continues to be impressed by the ideas, talent and skill of the entrepreneurs in the region.

Up to five startups are chosen to participate in the 10-week Grand Rapids Conquer cohort each fall. Conquer supports participants by providing $20,000 in funding, mentorship, access to follow-on funding and other resources. Once companies move on from the accelerator, they become part of Red Cedar Ventures’ investment portfolio.

“It’s been exciting to see all the good deal flow coming out of (Grand Rapids),” Stewart said. “It’s a good sign when you’re looking over applications and it’s hard to figure out which ones are going to make it to the top five. There are so many good things happening and so many good ideas bubbling up to the top, it really speaks volumes to the type of opportunity there is in Grand Rapids in the tech ecosystem.”

Conquer Accelerator, which began five years ago with an East Lansing cohort, still has ongoing East Lansing cohorts that run in the summer and are open to any Michigan startup, whereas the Grand Rapids cohort is geographically limited.

Wesley said Conquer Accelerator and the SmartZone management partnership, in combination with the BAF, the Gateway and other funding opportunities in West Michigan to take startups from early to later stage, give entrepreneurs in the city of Grand Rapids a greater chance than ever before of succeeding on their path to commercialization. He said by comparison, other cities in Michigan tend to operate in silos and are less partnership-oriented, which makes it hard for startups to access resources in an integrated way.

“What’s really great about our model and the partnerships we have is we try to touch every one of those companies that apply (to Conquer),” Wesley said. “We either can connect them with other resources if they’re at an earlier stage, we can connect them with the SBDC services, or if there’s others that, for whatever reason, aren’t in direct alignment, we have somebody they can connect with, or we have other people on our team that might make sense to support them in different ways.”

Jeremiah Gracia, director of economic development for the city of Grand Rapids, said the Start Garden/Spartan Innovations partnership results in Q1 2022 are “notable.”

“Company engagements and assistance continue to grow, with a focus on increasing the number of underrepresented/underserved high-tech business founders,” he said. “This is an important contribution to the city’s Equitable Economic Development and Mobility Strategic Plan.”

Spartan Innovations set the following goals for its involvement in the BAF program for the next 12 months:

  • Accelerate economic impact: Grow investments and coordinate with the Grand Rapids community for the benefit of the city.
  • Extend support services to Grand Rapids companies: Support companies with other resources and services through Michigan State University, Red Cedar Ventures and more.
  • Elevate peer-to-peer relationships: Continue to examine all BAF SmartZones in partnership with the MEDC for opportunities to improve and ensure best practices are in place.
  • Ramp up marketing and communications: Expand outreach, grow this division and share success stories of Grand Rapids startups in partnership with the MSU Foundation.
  • Expand the partnership with Start Garden: Build on programs in place and partner on upcoming community events.

From a real estate perspective, Spartan Innovations, in collaboration with the MSU College of Human Medicine, will open the planned incubator in Douglas Meijer Medical Innovation Building to the Grand Rapids market in Q2 2022. Spanning 18,000 square feet, this new incubator will provide support and programming for startups, including space for Spartan Innovations.

The building includes private industry and health care teams focused on cancer research, neurodevelopmental and neurodegenerative disorders, artificial intelligence, and medical device development. The new space will drive innovation in public-private partnerships by encouraging relationships across tenants and is expected to bring new discoveries to market.

As a final key milestone, Spartan Innovations recently hired new team members, including three new Grand Rapids-based professionals focused on health care innovation, BAF and Gateway, and program management.

More information on Spartan Innovations is available at spartaninnovations.org, and more information on Start Garden is available at startgarden.com.

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