BI-NATIONAL TWIN SAULT’S REGIONAL COLLABORATION CONFERENCE

1. BI-NATIONAL TWIN SAULT’S REGIONAL COLLABORATION CONFERENCE October 17, 2014

2. "There is only one thing stronger than all the armies of the world: and that is an idea whose time has come." Victor Hugo

4. “Never feel shame for trying and failing for he who has never failed is he who has never tried.” OgMandino

5. What are the major reasons for small business failure? • Lack of experience • Insufficient capital (money) • Poor location • Poor inventory management • Over-investment in fixed assets • Poor credit arrangement management • Personal use of business funds • Unexpected growth • Competition • Low Sales Small Business Management, Michael Ames and The Do It Yourself Business Book, Gustav Berle

6. I find that the harder I work, the more luck I seem to have. ThomasJefferson

7. Kauffman Foundation, January 2009

8. The best way to predict the future is to create it. Peter Drucker

9. Mission Statement “SPARK will advance the economy of the Ann Arbor region by establishing the area as a desired place for business expansion and location...by identifying and meeting the needs of business at every stage, from those that are established to those working to successfully commercialize innovations.” Collaboration in action at Menlo Innovations, a software company located in Ann Arbor

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11. What we do for Startups With callout 1 • Entrepreneur education & training – SPARK offers free events and programs that educate entrepreneurs about the various aspects of building a company. • Funding – SPARK provides access to financial resources to assist with operational needs and helps navigate the funding and incentive programs. • Incubator network – SPARK offers office and lab space, essential business services, and business development guidance at affordable lease rates. • Business accelerator services – SPARK enables companies to move quickly through their lifecycle – from an initial idea to commercialization. ////

12. "If you can dream it, you can do it." Walt Disney

13. Michigan’s Technology Infrastructure Investigation Proof of concept Business planning Market research Technology analysis IP protection Feasibility Prototype development and testing Development First Customer Marketing Incubation Management Introduction Multiple sales Marketing Manufacturing ramp up Staffing Growth Consistent sales Good cash flow Ongoing R&D New innovation Expanding operations SmartZones SBDC, BBC, GLEQ Univ. Research, Tech Transfer Fraunhofer, CAR, Other University Centers, VAI, CTA NextEnergy, MichBio UTEAMED, MIIE Pre-seed, BRCC MSU Push Pull MI Venture Fund Note: Blue - providers, Grey – funding.

14. Deal Flow Resources MI SmartZones/ Economic development offices Research Universities SBDC Offices

15. Extensive Network • MEDC • Smart Zones • Univ. of Michigan • Michigan State Univ. • Michigan Tech • Kettering • Wayne State • MVCA • Angel Groups • VC Groups • Indiv. Investors • MI-SBTDC • Small Business Assoc. • New Enterprise Forum • GLEQ • BBC • etc.

16. Intellectual Capital • Michigan hosts three of Nation’s top 50 research universities • Two of North America’s top twenty technology transfer universities • Heavy R&D Spending by Corporations • Availability of Technology Workforce *Sources: Milken Institute, Michigan Economic Development Corporation, Expansion Management

17. "The creation of something new is not accomplished by the intellect, but by the play instinct arising from inner necessity. The creative mind plays with the object it loves." Carl Jung

18. COWORKING SPACE Coworking is a style of work that involves a shared working environment, and independent activity. Entrepreneurs coworkingare usually not employed by the same organization. Typically it is attractive to work-at-home professionals, independent contractors, or people who travel frequently who end up working in relative isolation. Coworkingis also the social gathering of a group of people who are still working independently, but who share values,and who are interested in the synergy that can happen from working with like-minded talented people in the same space.[ Grand Circus, Detroit • $250 for a Shared Desk, $400 for Dedicated Desk • Unlimited coffee/tea • Exchange with Grand Rapids and Lansing • Google Startup Pack w/$20,000 credit for Google App Engine • Intro to 2 investors, match-up w/local mentor, access to limited legal and accounting.

19. Incubators/accelerators • TechStars, Boulder, LA, Austin, Seattle, New York, soon in Detroit • $100,000 upon acceptance • Only 1% of applicants are accepted • A three month mentorship-driven accelerator program with a massive interconnected network — with over 3,000 founders, mentors, investors, and corporate partners – that you’re part of for life. • Cool House Labs, Harbor Springs • 12 Weeks of free housing, lab space and perks • $25,000 for 6% equity • 65+ mentors

20. Incubators/accelerators • Y-Combinator, San Francisco • $120,000 to large number of start-ups (68 last class) • 3 months, during which we work intensively with them to get the company into the best possible shape and refine their pitch to investors. • Start Garden, Grand Rapids • $15,000,000 fund, giving $5,000/wk for best idea, $20,000 for ideas that stick after 2 months, $50,000- 100,00 investment • Free events and drop in incubators • Bizdom, Detroit and Cleveland • 3-6 month accelerator • $25,000 in seed funding for 8% and $100,000 in convertible note investment

21. SPARK Regional Incubator Network The Business Incubator at SPARK Central – an array of business facilities, tools and programs located in downtown Ann Arbor SPARK East Business Incubator – a comprehensive accelerator facility based in Ypsilanti’s new Eastside Innovation Campus The Michigan Life Science and Innovation Center – over 57,000 square feet of premier lab and office space in Plymouth

22. Being defeated is often a temporary condition. Giving up is what makes it permanent. Marilyn vos Savant

24. University Gap Funds • Translational Research Programs  • Commercialization Grants • University Student Funds • ETF - Emerging Technology Fund • SmartZone BA - Business Accelerator • PSF - Michigan Pre-seed Capital Fund • TCC - Technology Collaboration Tax Credit • MSDF - Michigan Supplier Diversification Fund • MLPP - Michigan Loan Participation Program http://www.michigan.gov/business/0,1607,7-255-52647---,00.html

25. Types of Crowdfunding • Donations and Rewards • JOBS Act (still not live) • Intrastate • Accredited Investor • Peer-to-peer lending

26. Donations and Rewards • The donation model is self-explanatory • Rewards model is the most widely used • Examples included Kickstarter, Indiegogo and others • No expectation of financial gain, but either a good or service in return • Pre-sales are very common

27. JOBS Act • Title III of the JOBS Act is equity crowdfunding • $1,000,000 cap • Investor caps • Must use a portal or a broker/dealer • Portals have strict rules and must file with FINRA

28. Intrastate • First in Kansas and Georgia, by rule change • Done through legislation in Wisconsin, Indiana, Alabama, Maine and several others • On the ballot in many states • Companies based in a state, with investors only from that state • SEC Rule 147

29. Accredited Investor • Angel’s List, Funder’s Club and others • Very successful in real estate • Also being used by bigger investors to find deals and then pull them offline • Also touched by JOBS Act Title II

30. Peer-to-peer Lending • Micro-lending • Still risky, but getting more common • Has been around for a while • Prosper, Lending Club, Funding Circle

31. Michigan’s MILE Act • Michigan Invests Locally Act • $1,000,000 for a business without audited financials, $2,000,000 for a business with audited financial • Non-accredited can invest up to $10,000, accredited unlimited • Escrow issues • https://localstake.com/

32. Nothing much happens without a dream. For something really great to happen, it takes a really great dream. Robert K. Greenleaf

33. Angels: Majority of US Startup Funding Angel Investors 2010 Venture Capital 2010 • US $21.97 billion • ~2,750 deals • 8% seed/startup/ 24% early stage • 68% later/expansion capital • 462 firms active • US $20.10 billion • ~61,900 deals • 31% seed/startup • 67% early/expansion stage • 265,400 individuals Center for Venture Research and PwC MoneyTree

34. Investment in MI Companies on the Rise • $120 million from VCs was invested in 40 companies in Michigan, an increase of 111 percent over the last five years. • $9.9 million from Angels was invested in 36 companies, and more than $50 million raised from leveraged sources. • There are today 104 active venture-backed companies, a 66 percent increase over the last five years • Michigan has 116 active angel-backed companies, an increase of 137 percent over the last 5 years. MVCA 2013 Annual Report

35. Investment in MI Companies on the Rise • Michigan-based venture capital firms had $1.6 billion dollars in capital under management, an increase of 45 percent in the last 5 years. • 33 venture capital firms either headquartered or with an office in Michigan, an increase of 50 percent in the last five years. • 9 Angel groups • Ann Arbor, Detroit (2), Grand Rapids, Lansing, Midland, Muskegon, Traverse City • Since 2007, approximately $60 million in angel and pre-seed funding has been invested in Michigan start-ups. MVCA 2013 Annual Report

36. Sectors of Investment Venture Capital Angels 25% IT 35% Life Science 30% Advanced Materials & Manufacturing, Alternative Energy 10% Consumer Products and Other 40% IT 37% Life Science 16% Advanced Materials & Manufacturing, Alternative Energy 7% Consumer Products and Other

37. “To find joy in work is to discover the fountain of youth.” Pearl S. Buck

38. “Consult not your fears but your hopes and your dreams. Think not about your frustrations, but about your unfulfilled potential. Concern yourself not with what you tried and failed in, but with what it is still possible for you to do.” Pope John XXIII