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Pre Seed Fund Presentation Pre Seed Fund Presentation Presentation Transcript

  • MICHIGAN PRE-SEED CAPITALFUNDA collaborative effort of theMichigan SmartZones
  • Michigan SmartZones 7 12 1.Ann Arbor SPARK 2.Automation Alley 3.Rochester Hills/Oakland University Incubator 4.Battle Creek Aviation 5.Detroit/Woodward Technology Corridor – TechTown 6.Grand Rapids 7.Houghton/Michigan Tech Enterprise 8.Kalamazoo 9.Lansing Regional 10 10.Mt. Pleasant/Center for Applied Research & Technology 6 11.Muskegon Lakeshore 11 2 12. Sault Ste Marie 9 3 14 13. Jackson Technology Park 8 4 13 1 5 14. Macomb INCubatorhttp://www.michiganadvantage.org/Michigan-SmartZone-Network/
  • Michigan Pre-Seed Capital Fund The Michigan Pre-Seed Capital Fund supports emerging high-tech companies by providing access to early-stage capital investment or micro loans to accelerate company development, bringing innovative technologies to the marketplace more quickly. The Michigan Pre-Seed capital Fund is funded by the Michigan Strategic Fund and supported by the Michigan Economic Development Corporation.
  • Funding Amount The Pre-Seed Fund will invest $50,000 to $250,000 per company alongside an investment partner who will provide a minimum 1:1 match. New Micro Loan Fund will provide loans between $10,000 and $50,000 per company. No match requirement.
  • Pre-Seed DefinitionLess than $1 million outside investmentLess than $1 million trailing 12 months sales
  • Criteria/Eligibility for Pre-seedCompanies must meet the following criteria: Investment  located in or moving to Michigan  company must have the rights (ownership or license) to innovative technology  must be a small business (per the SBA)  cannot be a publicly held company, but may be a spin-out as a new private entity  have a plan for attracting additional funding or become cash flow positive  pass the due diligence review of a SmartZone  submit their match term sheet or grant approvalThe match must be new money into the company.The following do not qualify as matching funds:  Other State monies  Anticipated or current company revenues  In-kind salary deferrals  Other trade partner exchanges or trades
  • Other Investment MattersUse of funds could include but are not limited to:  intellectual property investigation and protection  partnership relations  first/next customer attraction  building out management teamBackground checks will be made on founder(s)/CEO paid by fund administrator.A company can only be approved for funding once.A company may reapply once.A convertible note will be the default investment instrument for companies with a grant as their match.
  • ApplicationThe submission package must include: Business plan (maximum 30 pages counting financial pages)  Company overview  Market information  Operations  Product description  Management  Use of funds – milestones  Financial history and projections 5 year proforma  Cash flow, P&L and Balance sheet forecasts  List of assumptions  Financial statements Matching source Term Sheet, proposal, grant approval, subscription agreement Certificate of Good Standing with the State of Michiganhttp://www.annarborusa.org/business-accelerator/funding-incentives/pre-seed-fund/due-diligence
  • Investment ReviewThe Pre-Seed Fund has an Investment Review Board (IRB) made up of experienced investment professionals from around the state.The IRB will review deal submissions continuously and provide constructive feedback to applicants.The IRB will look for the best opportunity to fund.  from any community in the state  no quotasThe review criteria will assess the Company’s potential to be:  self sustaining  create jobs in Michigan  ultimately repay the investment http://www.annarborusa.org/business-accelerator/funding- incentives/ann-arborypsilanti-ldfa-microloan-program
  • Deal AcceptanceThe Investment Review Board will accept the deal in whole or not at all.The co-investing organization or angel terms and investment instrument will be used.The following information will be required of each successful company, in addition to any specific milestone information required by the matching investor:  Number of new patents, copyrights, trademarks applied for and issued  Annual sales/revenues  Number of new jobs, existing jobs, and projected new job growth  Follow-on investment figures and other metrics to gauge the positive effect on Michigans technology economy
  • TimelineThe Pre-Seed Fund will accept applications at any time.Applications are screened for completeness, then forwarded to the IRB for review.Reviews will be concluded and sent to the Fund Administrator within two months.The Fund Administrator will summarize the IRB comments and scores, forwarding to the Smart Zone and company upon decision.Documentation execution and funding will be conducted following clean background check report.
  • Criteria/Eligibility for Micro LoanCompanies must meet the following criteria:  located in Michigan  company must have the rights (ownership or license) to innovative technology  must be a small business (per the SBA)  cannot be a publicly held company, but may be a spin-out as a new private entity  have a plan for attracting additional funding or become cash flow positive  pass the due diligence review of a SmartZoneNo match required
  • Other Loan MattersUse of funds could include but are not limited to:  intellectual property investigation and protection, but not patent application  market and technology assessments  partnership relations  first/next customer attraction  sales and marketing  hiring key personnelBackground checks will be made on founder(s)/CEO.A company may reapply once.
  • Loan Terms Subordinated Note: Subordinate to all other debt holders, current and future Interest rate is 12% Term is 2 years Default provisions:  Failure to pay when due  Violation of any covenant, agreement or condition in the note  Bankruptcy or dissolution of the company  Fewer than a majority of employees in Michigan Reporting for five years  Quarterly financial statements  Number of employees and new hires  Sales  New IP  Grants and investments receivedhttp://www.annarborusa.org/business-accelerator/funding-incentives/ann-arborypsilanti-ldfa-microloan-program
  • Other Loan MattersLoans may be made in two tranches Reviewers may recommend a lower amount to loan Reviewers may recommend the loan be paid per commercialization step accomplishments Second tranche payment based on intermediate milestone achievement, but not guaranteed
  • ApplicationThe submission package must include: Business plan (maximum 10 pages counting financial pages)  Company overview  Market information  Operations  Product description  Summary of management talent  Financial history and projections  Use of funds Entrepreneur Bio or CV Letter of support from SmartZone Registration Certificate with the State of Michigan
  • TimelineThe Fund will accept applications at any time.Applications are screened for completeness by the SmartZone and Administrator, then forwarded to the reviewers.Reviews will be concluded and sent to the Fund Administrator within two months.The Fund Administrator will forward to the SmartZone and company with the recommendation plus scoring sheet with comments.Loan documentation execution and funding will be completed following successful background check.
  • Michigan SmartZones 7 12 1.Ann Arbor SPARK 2.Automation Alley 3.Rochester Hills/Oakland University Incubator 4.Battle Creek Aviation 5.Detroit/Woodward Technology Corridor – TechTown 6.Grand Rapids 7.Houghton/Michigan Tech Enterprise 8.Kalamazoo 9.Lansing Regional 10 10.Mt. Pleasant/Center for Applied Research & Technology 6 11.Muskegon Lakeshore 11 2 12. Sault Ste Marie 9 3 14 13. Jackson Technology Park 8 4 13 1 5 14. Macomb INCubatorhttp://www.michiganadvantage.org/Michigan-SmartZone-Network/