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State Capital Programs for Start-ups

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Capital Available for Michigan Start-ups and Early Stage Growth Companies

Programs, incentives, grants, loans and investments

Published in: Economy & Finance, Business
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State Capital Programs for Start-ups

  1. 1. Capital Available for Michigan Start-ups and Early Stage Growth Companies Programs, incentives, grants, loans and investments ©2006 Ann Arbor SPARK
  2. 2. • University Gap Funds • Translational Research Programs • Commercialization Grants • MIIE - Michigan Initiative for Innovation and Entrepreneurship • FCF - Frankel Commercialization Fund • ETF - Emerging Technology Fund • SmartZone BA - Business Accelerator • PSF - Michigan Pre-seed Capital Fund o Equity match o Micro loan • TCC - Technology Collaboration Tax Credit • MSDF - Michigan Supplier Diversification Fund • MLPP - Michigan Loan Participation Program ©2006 Ann Arbor SPARK http://www.michigan.gov/business/0,1607,7-255-52647---,00.html
  3. 3. University Gap Funds Open only to university projects - Amounts vary by institution – U of M spends about $2M per year from various sources - Some programs (such as MIIE) are open to all public universities in the state, others are institution specific - Contact your institution’s tech transfer office to see what is available ©2006 Ann Arbor SPARK asmccolm@umich.edu
  4. 4. MIIE - Michigan Initiative for Innovation and Entrepreneurship MIIE is a consortium of all fifteen Michigan Public Universities acting together strategically to foster a new Michigan knowledge economy based on entrepreneurship and innovation MIIE will accept proposals to three funds: o Technology Commercialization o Industry Engagement o Talent Retention & Entrepreneurship Education Proposals should: • Help foster a culture of innovation and responsible risk tolerance at member universities that encourages faculty and students to pursue their entrepreneurial interests in Michigan • Encourage and support new collaborations and partnerships that produce economic development outcomes Next round or funding tentatively scheduled for September ©2006 Ann Arbor SPARK http://resfacil.msu.edu/groups/RFP_Opportunities/weblog/83339/
  5. 5. FCF - Frankel Commercialization Fund The Frankel Commercialization Fund (FCF) is a pre-seed investment fund established to identify and accelerate the commercialization of ideas generated within the University of Michigan community and the surrounding area Each Frankel team may invest up to $100,000 per investment (in multiple installments) to entrepreneurial ideas with great potential and a vision for the future The goals of the FCF are to: • Identify and enable the commercialization of research and ideas originating within the University of Michigan community. • Create a financially self-sustainable process of research commercialization, by which exits from past investments fund future investments. • Enable an action-based educational experience for Ross MBA students ©2006 Ann Arbor SPARK http://www.zli.bus.umich.edu/vc_pe/frankel_fund.asp
  6. 6. ETF - Emerging Technology Fund Matching dollars for SBIR/STTR projects • 25% for phase I awards up to $25,000 ($5,000) • 25% of phase II awards up to $125,000 (1:1) • Must leverage 'third party' cash source of funding $1.6 million already disbursed or committed. $800,000 still available. Award is a grant upon proof of a successful federal award Must submit an electronic application form at mietf.org Must be in the 21CJF technology sectors Program administered by SBTDC - Small Business & Technology Development Center SBIR/STTR application assistance subsidized with BBC - Biotechnology Business Consultants ©2006 Ann Arbor SPARK www.sbir.org
  7. 7. SmartZone BA - Business Accelerator Business Accelerator does exactly what the name implies: it speeds up the  development of start-ups in the region with a variety of valuable services.  Program resources include: • Connections to executive and technical talent • Entrepreneurial education programs • Business networking opportunities • Intellectual property advice • Assistance in locating potential financing sources • Referrals to qualified service providers • Management Coaching • Business plan development assistance • Access to the SPARK Regional Incubator Network Entrepreneur Boot Camp - Cantillon ©2006 Ann Arbor SPARK www.annarborusa.org/start-ups
  8. 8. PSF - Michigan Pre-seed Capital Fund - Equity Match The fund targets companies throughout the state that are creating the newest technologies in the following competitive areas: • Advanced automotive, manufacturing, and materials • Alternative energy • Homeland security and defense • Life sciences Apply through local SmartZone Business plan, 5 yr financial forecast, & investor presentation required Requires 1:2 match of cash from a grant or private investor One time investment range of $50 - $250,000 May reapply if first application is rejected ©2006 Ann Arbor SPARK http://www.annarborusa.org/start-ups/pre-seed-fund/
  9. 9. PSF - Michigan Pre-seed Capital Fund - Micro loan Loans will range from $10,000 to $50,000. Companies must meet the following criteria before applying for funding: • Be located in Michigan • Have the rights (ownership or license) to innovative technology, or be seeking a strong IP position • Meet the definition of a small business (per the SBA) • Funding is to be used for the development of a business that is focused on the commercialization of technology of interest to the 21st Century Jobs Fund • Loans may not be made into a publicly held company, but may be utilized to spin technology out of a public company and establish a new private entity. • Have potential for rapid growth with majority of future sales revenue outside the state Companies can only be brought to the Fund by a sponsoring SmartZone  Loan is a subordinated note No match required ©2006 Ann Arbor SPARK http://www.annarborusa.org/start-ups/pre-seed-fund/
  10. 10. TCC - Technology Collaboration Tax Credit Strategic partnerships between emerging technology companies and larger, established businesses by providing an incentive for the larger companies to invest in the smaller companies It is a tax credit against the Michigan Business Tax Available for 3 year period from 2008-2010 Large company funds, supports and collaborates in R&D with small Michigan company Only one credit per year to qualified taxpayer who provides a minimum of $350,000 Credit is 30% of value of contribution up to $300,000 Contact MEDC business development manager or Vince Nystrom with Ann Arbor SPARK ©2006 Ann Arbor SPARK http://www.michiganadvantage.org/
  11. 11. MSDF - Michigan Supplier Diversification Fund •Cash Flow Problem  Michigan Loan Participation Program •Cash flow enhancements •Little to no interest payments for specified time •Collateral Shortfall  Michigan Collateral Support Program •Supply cash collateral accounts to lending institutions, which will cover collateral shortfall in case of default •Strengthens borrower’s collateral position ©2006 Ann Arbor SPARK http://themedc.org/Products-Services/A-Z-Programs/Default.aspx
  12. 12. MLPP - Michigan Loan Participation Program Participate with lenders to finance diversification projects when faced with borrowers whose projected cash flows are considered speculative by the lender. MLPP will purchase a portion of a loan and provide up to a 3 year grace period on the program's portion. Companies that qualify for a MEGA tax credit and qualify for a commercial loan for a diversification project are eligible. Interest is 1-4% of lending bank rate. Borrower or lead bank applies to the program. Maximum participation is $500,000. http://ref.michiganadvantage.org/cm/attach/7EBEE373-6CFA-4392-B68B-8A ©2006 Ann Arbor SPARK
  13. 13. MCSP - Michigan Collateral Support Program Provide cash collateral to lenders to finance diversification projects when faced with borrowers whose collateral coverage is considered insufficient by the lender. MCSP collects credit analysis, borrower financial statements, risk rating justification, cash flows, etc. to determine that: –Opportunity meets the Program’s economic development criteria –Bank performed sufficient and acceptable analysis of project and financial condition Companies that qualify for a MEGA tax credit and qualify for a commercial loan for a diversification project are eligible. Borrower or lead bank applies to the program. Maximum participation is $500,000. http://ref.michiganadvantage.org/cm/attach/7EBEE373-6CFA-4392-B68B-8A ©2006 Ann Arbor SPARK
  14. 14. • University Gap Funds • Translational Research Programs • Commercialization Grants • MIIE - Michigan Initiative for Innovation and Entrepreneurship • FCF - Frankel Commercialization Fund • ETF - Emerging Technology Fund • SmartZone BA - Business Accelerator • PSF - Michigan Pre-seed Capital Fund o Equity match o Micro loan • TCC - Technology Collaboration Tax Credit • MSDF - Michigan Supplier Diversification Fund • MLPP - Michigan Loan Participation Program ©2006 Ann Arbor SPARK http://www.michigan.gov/business/0,1607,7-255-52647---,00.html

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