Capital Available for Michigan Start-ups and Early Stage Growth Companies Programs, incentives, grants, loans and investments

1. Capital Available for
Michigan Start-ups and Early
Stage Growth Companies
Programs, incentives, grants, loans and
investments
©2006 Ann Arbor SPARK

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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. • 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