Report Shows 54% Increase in the Number of Venture-Backed Startups Over the Last Five Years
ANN ARBOR, Mich. – August 5, 2019 – EntryPoint, an organization that uses a data-driven approach to advance entrepreneurship, today announced the release of the 2019 Detroit Entrepreneurial Ecosystem Report. The report highlights economic trends over the last five years that are impacting Detroit’s growing startup community. Findings from the report show that there are 37 venture-backed startups, a 54 percent increase in the last five years.
“EntryPoint has diligently surveyed Michigan venture capital firms and entrepreneurs to monitor and analyze Detroit’s entrepreneurial ecosystem for five consecutive years,” said Emily Heintz, founder and managing director of EntryPoint. “We’ve found there are four key contributing factors to its growth: capital, talent, research and community. Detroit has a strong network of resources for entrepreneurs, but as Detroit continues to establish itself as a tech hub, it’s essential we continue to examine the impact the entrepreneurial ecosystem has on long-term residents, so we can ensure that its growth benefits everyone in the community.”
A Snapshot of Detroit’s Growing Entrepreneurial Ecosystem
Venture capital firms in Michigan focus their investment in startup companies in a variety of high-growth industries. Of the 37 venture-backed startups in Wayne County, 41 percent are information technology companies and 19 percent are mobility-related companies with the remaining companies divided among the advanced materials and manufacturing, business services, consumer products, life science/healthcare and other industries. The $358 million of venture capital invested in high-growth companies in Michigan has led to a 54 percent increase in the number of venture-backed companies. The increase in the number of venture-backed startups has resulted in a 26 percent increase in high-tech job growth in the last three years. Additionally, more than 26 percent of Michigan startups are now located in Detroit.
In 2018, 12 Detroit-based startups received more than $109 million in venture capital investment. Of these 12 startups, 50 percent are information technology companies and 25 percent are consumer products companies.
“A community that retains and attracts residents by valuing people and their ideas is a community of opportunity. Southeast Michigan is a community rich in resources to help people with ideas to start and grow businesses. The more people become aware of these resources and the more efficiently they are able to navigate them, the more resilient our region will become,” said Pamela Lewis, director of New Economy Initiative.
Preserving Diversity in Detroit
The Black population makes up 79 percent of the total population of Detroit. However, across Michigan, the startup and venture capital communities are comprised of just over 80 percent white men. In the city of Detroit, there are six active venture-backed startups that are led by a CEO who is a racial minority. These six companies have raised slightly over 19 percent of the total venture capital raised by startups in Wayne County in 2018.
For more information and a look at the complete findings, please click here. To learn more about utilizing data to implement effective programs to support the entrepreneurial ecosystem, please view the EntryPoint Data and Program Development Guide.
EntryPoint is a nonprofit research institution that aims to promote entrepreneurship across the Midwest. The organization believes that the best research takes a holistic approach to data acquisition and analysis, and as such, seeks to build meaningful partnerships with corporations, community foundations, entrepreneurial support organizations, and other groups. Working in tandem with these partners, EntryPoint develops comprehensive research reports that deliver insights on strengths and challenges facing companies, communities, and the broader region. Research findings are used to design and implement effective programs to promote entrepreneurship by fostering an inclusive culture, expanding networks, and facilitating education and advocacy. EntryPoint is a registered 501(c)(3) organization. To learn more, visit www.entrypointmi.com.