A report lists The Motor City as the top in the startup ecosystem
Good news from the 2022 Global Startup Ecosystem (GSER) report: Detroit is tops, beating out emerging global communities such as Kuala Lumpur, Hong Kong and Minneapolis.
Regional chamber and economic development chiefs are touting the report as proof of Detroit’s hard work. However, some analysts say it’s also evident that Michigan continues to make strides in diversifying the economy, say the automotive team at Marx Layne & Company.
Fred Molnar, senior vice president at the Michigan Economic Development Corp., says the work will continue to ensure the environment will be dynamic for startups across Michigan.
The GSER, from Startup Genome, ranked Detroit No. 1 with an ecosystem value of $90.6 billion. It scored 10/10 in performance. It also gave the region high marks in:
- Measuring the size and performance of an ecosystem based on accumulated tech startup value created from exits and funding
- Market reach
- Measuring scale-ups and unicorns (companies with a value of over $1 billion) in the ecosystem
- Size of local reach
- IP commercialization
- Talent and experience
Detroit earned an 8/10 score in funding, measuring innovation through early-stage funding and investors’ activity.
So, what does this mean?
The D is a beehive for entrepreneur activity, says Michele Mouyianis, a senior practitioner of Marx Layne’s automotive practice. First, it’s cheaper to live here when compared to other expensive tech areas. Second, Michigan is one of the fastest-growing venture capital investment states. In 2016, VC dollars were $300 million. In 2020: $3.1 billion. Right now, the Michigan Venture Capital Association estimates there are 165 venture-backed startups in the state.
In short, it means Detroit’s robust startup ecosystem brings in more dollars. For every Michigan dollar invested in a startup in the state by a Michigan-based VC firm, another $9.70 in investment comes in from outside of Michigan.
Southeastern Michigan has ‘Unicorn Bliss’
Take, for example, OneStream. It’s a corporate performance management software startup. Tom Shea founded the company in 2010. That startup today has a valuation of over $6 billion. It takes $1 billion to be labeled that mythical horse with a horn coming out of its forehead.
Right now, Michigan has five resident unicorn companies: Duo Security, Llamasoft, Onestream Software, Rivian Automotive, and StockX.
Obviously, a rosier scenario for Michigan’s economy would be herds of unicorns up and down the state. Of course, it helps that Michigan remains the mainstay of successful startups in the automotive industry. Other commerce giants such as Whirlpool, Haworth, and Amway call Michigan home.
The challenges ahead for Detroit’s ecosystem
Yet, a key challenge is attracting and retaining blue-chip computer science engineers and continuing to get support from economic development corporations. It also requires support from the corporations to provide incentives and seed money to keep the ecosystem thriving and healthy.
Interesting Related Article: “Tips for Selecting the Best Data Science Company “