Detroit has a robust entrepreneurial ecosystem, and given the right support, the Detroit region can continue to see healthy growth, especially in mobility startups.
This is Driven’s Mobility Moments Podcast where we talk with the people building the mobility ecosystem in the Detroit region. In this episode, my guest is Emily Heintz, founder and managing director of EntryPoint. Emily shared EntryPoint’s groundbreaking research about how innovation thrives in Detroit, what we do well, and what we need more of. Emily also says now is the time for Detroit to set the industry standard for diversity and inclusion in the high-tech ecosystem. I’m your host, Claire Charlton.
Emily, welcome to Driven’s Mobility Moments Podcast. I’m so glad that you could join me today.
Yeah, thanks for having me.
Yeah, absolutely. So you are the founder and managing director of an organization called EntryPoint. And through this organization, you support the entrepreneurial community in the Detroit region, and you focus on inclusion. And I’m wondering if you can describe the work that you do on a day-to-day basis.
Well, I guess probably what everybody says is I definitely don’t think any two days are the same. I like to say that EntryPoint focuses on research and community engagement and where those two things intersect. So we probably spend about half our time doing really comprehensive research reports on the entrepreneurial ecosystem and helping different organizations identify gaps, places that they could create programs to help promote entrepreneurship, or successes that they’ve had that they can then help spread the word about the great things happening in the entrepreneurial ecosystem in the Midwest.
And then on the community engagement side, we help different organizations then apply the things we found in the research to events or programs that they’re running. So I guess right now, we’re more on the community engagement side at this time of year. There’s a lot of things happening in the fall where people are putting together different large scale events. So we run the Accelerate Michigan Innovation Competition as well as the Michigan Venture Capital Association’s Annual Awards Dinner. And so both of those I would say are great events that help the really early stage entrepreneurial ecosystem. And then on the annual awards dinner side is really touting successes that have come out of the ecosystem, the up and coming companies, really large financings we’ve had in the year.
And so both of those are coming up on November 12 and November 13. Both are open to the public. Anybody can go to either acceleratemichigan.org or Michigan Venture Capital Association’s website, which is michiganvca.org, and get tickets to those events. They’re really great ways to get involved in the entrepreneurial ecosystem and are both focused statewide. They’re both in Detroit this year but have been all over the state over the years. So yeah, and then more in the winter time is when we do research because after yearend is a great time to do large scale research projects on the entrepreneurial ecosystem statewide or in various regions.
And so speaking of research, EntryPoint just recently published the Detroit Entrepreneurial Ecosystem Report, so let’s talk about some of the key findings in that report.
Yeah, so this year was the fifth year that we’ve published the report. And over the last five years, Detroit’s really created just a robust entrepreneurial ecosystem, and I think part of the success really is the community that has been built up over time, at least in the high tech entrepreneurial ecosystem. As entrepreneurs are growing their businesses, they have this access to this network of resources. There’s mentors, research institutions, product development and funding. And so there’s a lot of different organizations across Detroit that are really helping to try to pave the way for entrepreneurs.
And a ton of people in Detroit have historically been very entrepreneurial. And especially when the economic downturn happened in 2008, you saw a lot of people that would traditionally go into large industries change paths and start companies. And then on the main street business side even, I mean, Detroit has long been a region where people have side hustles, and side hustles that have side hustles, and everyone in Detroit seems to have five different companies and different jobs. People say, “Detroit hustles harder,” and I think that is true. People find a way and make it work, regardless of whether the economy is taking a downturn. They’re just using that opportunity to tack a different path.
So right now in the high tech entrepreneurial ecosystem side, there’s 37 active venture-backed start-ups in Wayne County. Four of them are outside of the city of Detroit, but we’ve seen that number continually increase. And I think it’s a good metric to use over time to measure the growth of the entrepreneurial community because as you see companies move through bootstrapping or raising money from angel investors and then getting to the point where they’re hiring significant numbers of people and raising venture capital rounds and attracting capital from outside of the state, being able to see the number of venture-backed start-ups grow over time is really encouraging and indicative of sustained momentum.
So the 37 venture-backed start-ups have raised an aggregate of $358 million, and we’ve seen a 54% increase in the number of high growth companies in just the last five years. So it is one of the fastest growing entrepreneurial ecosystems in the country. And I think the numbers are still relatively small when you compare it to New York or San Francisco, but I think that that growth rate is really showcasing the opportunity and the great elements that we have in the Detroit region to grow companies and keep people and companies in the region.
And so according to the report, a significant percentage of venture-backed start-ups were advanced manufacturing, IT, or mobility. So let’s zero in a little bit on the mobility start-ups that have launched recently. Can you just talk a little bit about how prominent mobility is in the overall Detroit entrepreneurial scene?
Yeah, so 19% of the 37 companies in Detroit are in the mobility sector. And this is definitely a sector that is emerging. Back maybe five plus years ago, I think mobility hadn’t really been coined as a specific term, so a lot of people may have done investing in mobility related startups, but they would just call them IT startups or hardware startups. And so a couple years ago… Maybe, actually maybe about seven years ago, I started noticing that people were really trying to define mobility as its own sector, that Detroit and Michigan having a great history of makers that they viewed that this was a completely different sector and something very specific that Michigan could capitalize on and had a subject matter expertise in. And so we’re seeing that both the amount invested in the Detroit region as well as statewide in mobility from both investors inside of Michigan as well as outside of Michigan continues to increase year over year as well as the number of companies that are starting up.
So yeah, I would say 19% is this past year is the highest that we’ve seen so far. And I would say that that number will probably continue to increase. Although, I think that seeing the percentage increase isn’t as important as making sure that those companies are getting the things that they need to continue to thrive in Michigan and really seeing that those companies are staying in Michigan. If you see, oh, yeah, the percentage of mobility companies goes up every year, I would say that it’s probably more important that we see the companies that are starting up in Michigan then stay in Michigan and continue to get the things that they need from Michigan versus… And that’s using my economic development hat. Certainly companies are able to thrive anywhere in the country, but I think that if we’re trying to grow an entrepreneurial ecosystem in Michigan, really making sure that all of those elements that are necessary to grow a strong ecosystem are there and that we’re seeing it proven out by companies staying in the region.
So sticking with mobility and economic development, let’s talk about what the Detroit region and Michigan overall is doing well. And let’s talk a little bit also about what we could use a little bit more of to make sure that those mobility companies are getting what they need here in Michigan.
Yeah, so in order to really continue an upward growth trajectory in any entrepreneurial ecosystem, it’s really critical that we see four elements. And this is something I always say is that these four elements can grow and work together, so talent, research, capital, and community. So we need to continue in Detroit, as well as across the Midwest, seeing that we really need experienced competitive entrepreneurs and investors who are willing to take risk. And I think the risk taking in the Midwest in particular is what is the important factor in that. We seem to have a ton of talent coming out of different universities, coming out of large industry. We have a lot of really great subject matter expertise even in the skilled trades, but the risk taking historically has not been something that people in the Midwest love. We’re not particularly risky folks.
As people get into high tech entrepreneurship in this world of venture capital investing and early stage investment and being able to identify companies that are at the early stage have some traction, but not a ton of traction, and they see the opportunity that those companies have to impact an industry and making that investment before they’re sure that that company is already on the path to success, I think that’s something that will really help grease the skids there, if grease the skids is even the right terminology.
Yeah, and then on the research side, we really have amazing research institutions and innovation corridors that are spitting out cutting edge technologies. And I think that’s a basis for building real businesses where you see real research, real design, real innovation happening with these technologies that then people are creating companies around versus just finding something that’s a fad or something that is really catchy for people. And sometimes, that definitely works for people. You see that happen quite a bit on the coast where there’s things that are really just well-timed. But I think in Michigan, since we do have such a history of being a maker community, building these companies that have a real basis of technology and research is really critical.
And then the capital, I touched on it a little bit earlier. We really do need experienced angel investors that have capital available to invest partnering with these companies as they grow. So you want to see that they’re really early stage investors, the angel pre-seed, seed stage investors that are making very early stage investments and then able to help the companies at critical milestones when they’re at that very early stage. But then you also want to see that they’re able to then help them move to investors that are at later stages, that have different networks, different skillsets, write larger checks, and are able to support the companies as they grow.
Because what we see a lot of times still, because the Midwest and Michigan and Detroit specifically are newer entrepreneurial ecosystems, you see that we might have a good amount of one certain type of capital. And then the company gets a lot of traction, is doing really great, and then when they go out to do their next round of fundraising to expand and to hire more people, they’re not as able to find later stage investors. Or at the particular stage that they’re growing into, they’re not able to find investors at that stage. And so they’re having to travel around the country doing fundraising, which takes the focus away from building their business. So I think really ensuring we have a capital continuum that’s robust across all stages of maturity.
And then the community part is what I think that Detroit really is growing well. We have a lot of mentors and advisors. And now, we’re having more experienced entrepreneurs who have scaled companies that are giving back to the community. You see Dug Song and Jon Oberheide from Duo Security giving back all the time, and I think that’s been a major focus of theirs. Jeff Epstein from Ambassador as well, who have scaled companies and spend a lot of time working with other entrepreneurs or supporting programs and events and initiatives that are then helping people that are coming along behind them, and really helping build those connections between all the different pieces that I just discussed. You want to have community organizations that are bridging the gap between talent and research and capital and these companies and investors, and it’s all working together.
One thing that I definitely think that Detroit needs to improve on or needs to have at the very forefront is the focus on building an inclusive entrepreneurial culture. Because Detroit is predominantly black and the high tech entrepreneurial ecosystem in Michigan and across the country is predominantly white, predominantly male, I think it’s really important that in order to preserve diversity within the city of Detroit that leaders in Detroit, investors, start-up companies, pretty much people all across the board, really need to ensure that existing residents of Detroit are gaining access to the funding and economic opportunities of this emerging high tech economy.
So right now for instance, so of those 37 active venture-backed companies that we were talking about earlier, seven of them are led by someone who’s a racial minority. So if you compare that with the demographics of the actual city of Detroit, there are 538,000 black or African American people in the city of Detroit. That’s 79% of the total population. So if you look at the start-up ecosystem, it’s comprised of just over 80% white men specifically. So it’s not just 80% white people, and it’s not just 80% men. It’s 80% white men intersection. So I think that it really needs to be a major focus.
Particularly, we’re a young entrepreneurial ecosystem still. There are not a lot of long standing things in this community. It’s all being built. This community being the high tech entrepreneurial ecosystem. So there is not a lot of things that are set in stone at this point. And the tech community tends to be very flexible and tries to be very progressive. And so I think that it’s a really good opportunity for people to be really putting these things in place to become a more inclusive community. And you look at San Francisco, where they are an established long standing, high tech, entrepreneurial ecosystem. They have not done those things as they’ve grown, and they are now trying to go back and correct years and years of exclusive building of their entrepreneurial ecosystem.
So I mean, easy things that people can do in order to help be more inclusive would be bridging connections between local organizations and the entrepreneurial community. So leaders of high tech start-ups can partner with local organizations in Detroit to build businesses and engage with the community better. LinkedIn moves to Detroit and rather than start from scratch and build their own things, they work very intentionally, or try to work very intentionally with local organizations that they can then partner with to help build a solid pipeline of how to access the talent and opportunities within the community.
And this is something that when it was first told to me, I was a little bit like, “Wait, is that allowed?” So encouraging people to recommend diverse talent for employment, for speaking opportunities, or for networking opportunities. So specifically saying, “Do you have any black software engineers? Do you have any founders of color that you could recommend that would be good to invite to this event? Do you have any women leading companies that could speak to this topic that we could have on this panel?” And I think that people have shied away from, “Well, I don’t want to discuss race. I don’t want to discuss gender. I don’t want to offend people or seem like I’m trying to cherry pick or something like that.” And I think that really being intentional about asking and trying to be more inclusive is really important.
And then even performing an audit of your digital presence to ensure your organization’s communicating an inclusive culture. If you have an inclusive culture, really make sure that your website reflects that. You really want to showcase that you have diverse employees. If you have a panel that there were women being promoted as leaders within the company on the panel that you’re posting on social media or things like that, that really can help people to envision actually being able to work there so that you’re an attractive workplace to diverse people. Women can see themselves moving up the ranks. People of color can see themselves moving up the ranks. And so I think that’s something really important and easy for people to do.
It sounds like what you’re saying is that because Detroit is relatively young in this process, the time is right to set the standard for intentionally displaying an inclusive environment so that people of all different races and colors and genders and ages can see themselves as being part of the ecosystem and can see a suitable place for their own participation.
Yeah, and I think that’s exactly right. And as the job market generally becomes more high tech, you really need to be building those pathways for opportunity for all people in Detroit because they’re all people. There’s such a significant black population in Detroit. That is really imperative to making sure that everybody has the same opportunities.
And it’s not just because it’s the right thing to do. It’s because also the mobility ecosystem specifically will and the high tech ecosystem will benefit, will be a stronger, more profitable environment because of diversity. Am I right?
Yeah, exactly. So there have been numerous studies done that talk about the having diverse thought leadership and having diverse opinions and different ways of looking at things and different ways of solving problems. In design, it’s a big thing that people talk about. You design a product, and then you totally exclude a large portion of people from being able to access your product because it just won’t work for them. So having a lot of diverse thoughts, and that’s diversity of ability, diversity of age, diversity of race, of gender, because people are able to look at things from their unique background and their unique worldview, really helps you to build a better company and access opportunities that you wouldn’t be able to otherwise.
I know McKinsey has a really great Delivering Through Diversity study. They typically publish a study every couple of years on building diverse and inclusive networks and how that impacts business performance. Harvard Business Review also has had a number of studies around how diversity can drive innovation, why diverse teams are smarter, and then there’s also how broadening your network can help increase business opportunity for your company. So broadening your network is when you become more diverse, you have access to significantly more subject matter experts, significantly more people to work at your company, people to invest in your company. So it’s all of these things that when you have a diverse network, you’re opening yourself up to so much more opportunity.
The research is there, yeah.
Also I would just mention we have on our entrypointmi.com, we have a resource section where you can access diversity and inclusion research. So if people are helping to build a case for a particular initiative or a particular program that they’re applying for grant funding for or something like that, they can look on our website for those types of research.
Absolutely. Emily, is there anything else that you’d like to say?
I would say that people should definitely check out the Michigan Venture Capital Association Annual Awards Dinner and the Accelerate Michigan Innovation Competition this year, both really great ways to get involved in the entrepreneurial ecosystem in Michigan. Those are both on November 12 and November 13. And then be on the lookout. EntryPoint is getting into research season, so be on the lookout for some new upcoming entrepreneurial ecosystem research from us in the next couple months and as well as a couple, research, very specific, regional studies that we’re doing next summer that I’m really excited about on Ann Arbor and West Michigan and then continuing our Detroit study.
Excellent. Thank you so much, Emily, for being my guest today on Mobility Moments. I’ve really enjoyed talking with you.
Yeah. Thank you so much for having me on, and I am sure I will talk to you soon.
Thanks for listening to this episode of Driven’s Mobility Moments Podcast. Learn more about how the Detroit region leads in next generation mobility at Driven, www.detroitdriven.us. Listen to our podcasts and read our features and articles about how mobility works in the Detroit region. Subscribe to our newsletter and have it all come straight to you.
I’m Claire Charlton. See you again soon.
Events to look out for:
Michigan Venture Capital Association Annual Awards Dinner
Accelerate Michigan Innovation Competition
Photo courtesy of Emily Heintz, EntryPoint.