The Michigan Pre-Seed Capital Fund companies have attracted more than $18 million in matching grant and equity funds.  In 2011, the Michigan Pre-Seed Capital Fund made 12 investments totaling $2.4 million, matched with more than $2 million in investments and grants.  Combined, the Michigan Pre-Seed Fund investments have helped to create more than 100 jobs in Michigan.

“We continue to receive applications from entrepreneurs around the state who are raising their first round of equity funding for their innovative, technology-based businesses,” said Skip Simms, Ann Arbor SPARK’s senior vice president and administrator of the Michigan Pre-Seed Capital Fund.  “This interest in funding is a clear sign that Michigan’s entrepreneurial spirit is strong.”

The Michigan Pre-Seed Capital Fund supports a start-up’s commercialization efforts.  Specific innovations include:

Detroit-based Clean Emission Fluids, Inc. (CEF) manufactures patent pending clean energy technologies (FAST™ stations) that provide onsite fuels and fluids for commercial truck fleets. CEF currently has six stations deployed with six additional stations planned for delivery by the end of 2011.

“The Michigan Pre-Seed Capital Fund’s support and investment in Clean Emission Fluids is an invaluable resource to help advance our leading-edge and patent-pending FAST Truck Stops in a Box that offer on-demand and on-site blending of any fuel in any proportion,” said Oliver F. Baer, CEF president and co-founder.  “FAST stations track the performance of every gallon, proportion and fuel type dispensed – including biofuels and emission fluids – to optimize vehicle operations and lower prices at the pump. Ann Arbor SPARK and the Michigan Pre-Seed Capital Fund has been vital to our developing success and establishing a solid framework on which to build – while helping boost Michigan’s economy in high return, job creating industries.”

Estrakon employees manufacturing their LED product

Estrakon, based in Ann Arbor, is a technology company that designs, develops and manufactures custom innovative, patented LED Edge-Lit signs and displays that provide a new medium for many broad applications such as premium brand advertising and attractive consumer displays that offer significant return on investment.

“The Michigan Pre-Seed Capital Fund was instrumental in allowing our organization to stay on top of the influx of new business that we were experiencing in mid 2011,” said Matt Shumate, Eskatron founder.  “We have added new equipment, more staff and increased our production space to accommodate the rapid growth.

Ix Innovations, based in Ann Arbor, enhances the usability of electrical test and measurement instrumentation through continual product innovation. Ix’s products are used throughout science and engineering, in diverse fields including low power electronics, energy harvesting, and in teaching labs worldwide.

“The Michigan Pre-Seed Capital Fund financing allows Ix Innovations to fill key management positions,” said Ian Dailey, president of Ix Innovations.  “This funding is critical to fueling research activities and enabling us to bring our next-generation low power measurement instruments to market.”

The Michigan Pre-Seed Capital Fund is an equity fund that invests in technology-based companies to support business formation and acceleration.  Ann Arbor SPARK serves as the Fund’s administrator.

To qualify for the Michigan Pre-Seed Capital Fund, start-up companies must be based on a technology in one of the state’s identified competitive technologies and have the sponsorship of a local SmartZone.  In addition to SmartZone sponsorship, companies must have received grant, angel or venture capital funding as a match with the Michigan Pre-Seed Capital Fund investment.

The Michigan Pre-Seed Capital Fund is an equity investment fund that receives the same returns as the third party investor.  The returns that the Michigan Pre-Seed Capital Fund receives from its investments will be redeployed by the Fund as first round capital to Michigan-based start-ups.

Funds for this initiative were provided by the 21st Century Jobs Fund, a Michigan Strategic Fund program designed to accelerate the growth and diversification of Michigan’s economy.  The Michigan Economic Development Corporation (“MEDC”), a public-private partnership between the state and local communities, provides administrative support for the 21st Century Jobs Fund.  The MEDC markets Michigan and provides the tools and environment to drive job creation and investment. For more information on the 21st Century Jobs Fund initiative, visit www.michiganadvantage.org.

“MEDC support for Ann Arbor SPARK’s East incubator extends and enhances opportunities for start-ups throughout the region,” said Paul Krutko, president and CEO, Ann Arbor SPARK. “Business incubators play an important role in our economy: The start-ups that receive assistance through SPARK East attract investment, retain talent and create jobs here in the region. Ann Arbor SPARK business incubators provide the critical support that start-ups need to become drivers of economic success.”

Ann Arbor SPARK was awarded $500,000 for the SPARK East business incubator, located in Ypsilanti, Mich. The funding will enable Ann Arbor SPARK to offer additional business incubator scholarships and business acceleration programming. The funding will also support new services developed specifically for students, including entrepreneur education.

To date, 42 start-ups have been assisted through programs and support offered at the SPARK East business incubator.

When we last reported on this there was still about $2.8 million available to award but dropping down the list of next eligible winners by score found four were tied and they had a combined ask of more than $7 million. What to do?  Since so many months had passed since the applications were made and the awards were announced it was decided the MEDC staff needed to get an update on the four companies.  

Since then another company, Meditrina, has not been able to close on their match and had to forfeit their award.  That increased the amount of available funds to nearly $6 million.  One of the four new companies  eligible for funding has since gone away.  So the SEIC Board at their meeting last week approved $1,828,980 to each of the remaining three companies.  This awards the entire $30 million originally available to 18 companies.  The companies receiving the newly approved loans are: 

Venomix in Kalamazoo 

Danotek Motion Technologies in Plymouth 

NephRx in Kalamazoo 

Where does that leave the 21CJF competition program?  In limbo at the moment.  There will not likely be a 2009 competition.  There is no money available.  They, the MEDC and SEIC, are trying to find more money for the program but the possibility is slim.  We’ll keep you posted.

Here are the winners of the competition:

Accuri Cytometers, Inc.
Fulcrum Composites Inc
AI Medical Devices, Inc.
Critical Signal Technologies, Inc.
Solidica, Inc.
NeuroNexus Technologies, Inc.
Compendia Bioscience, Inc.
Hybra-Drive Systems, LLC
Nephrion, Inc.
Cielo MedSolutions LLC
Tolera Therapeutics, Inc.
Metabolic Solutions Development
Meditrina Pharmaceuticals, Inc.
Avidimer Therapeutics, Inc.
Arbor Photonics
Nanocerox, Inc.
Pixel Velocity Incorporated

Hybra-Drive received the largest amount $3.352mm.  Fulcrum Composite asked for the smallest amount.  Both companies received investment from the Michigan Pre-Seed Capital Fund last year.

11 of the companies are in Ann Arbor.

Congratulations to the companies and the teams helping those companies prepare their applications.  Next round will probably start in January.

21CJF Website
Official website for all things 21st Century Jobs Fund

Applicants for this round of the 21st Century Jobs Fund competition were notified yesterday that they were approved to move forward to the written review phase.  About 90 companies are moving forward.  We haven’t heard yet what the 26 companies were told who didn’t move forward.

This phase of the competition will take another two weeks.  NCMS will recommend to the SEIC on Aug. 20 which of these companies should go forward to the interview stage.  This phase will take place between Sept. 2 and Sept. 20.  The message companies received yesterday said that they will not have a choice on when to appear.  They will be given a date and they have to be there or forfeit.  So don’t plan on being out of town in September if you are under consideration.

The MEDC did provide as they said at the beginning of the competition, two forms of note.  This was always a question but we are delighted to see they were able to follow through.  There may be some room for negotiation on some fine points like milestones, but if the terms of either note are unacceptable as presented you should probably notify them now and drop out.  Save everyone, including yourself, time and trouble.

So it seems the competition is moving along smoothly.  Good luck to all that applied and are still competing.

The SEIC met last week to approve the list of companies that met the requirements for eligibility for the 21st Century Jobs Fund competition.  26 companies were rejected from the 117 that applied leaving 91 companies to be reviewed.  Those 26 should have received word by now but we haven’t heard any rumblings yet.

David Haviland with Shepherd Advisors attended the meeting and did his usual great job recapping the results in his blog.

As you know by now NCMS is the reviewing organization.  They have 75 reviewers lined up to start the process.  The written reviews are underway.  Half the reviewers are VCs or other technology start-up experts.

The SEIC meets again on August 20.  That’s the next time we will hear anything official about the competition.  We will learn at that time what companies will be asked to make personal presentations to reviewers in Lansing.

I have no doubt the deadlines will be met.  Same as you, we are anxious to see how many companies at the end of the day will be funded and at what levels.  We did learn something new last week from an insider.  There will not be just one loan document afterall.  There will be two, one a straight loan with warrants and the second a convertible note.  And both will be negotiable.

Good luck to all that applied and let the best plans win.

7/22/08 SEIC Board meeting summary

National Center for Manufacturing Sciences
web site

The numbers are in.  109 companies applied for funding in this round of the 21st Century Jobs Fund competition.  An astounding total of $451 million is being asked for in total.

Here’s a breakdown of the applicants:

49 Life Science companies asked for $178,666,184

This exceeded the expectations of most people we know.  Clearly some of the applicants didn’t pay attention to the fact there is only $30 million available. Green Earth Technologies from Stamford, CT is asking for $81,870,500.  Ten other companies asked for more than $10 million each.

See the entire list for yourself at http://ref.themedc.org/cm/attach/18EFD0C7-95D3-4A2F-89E4-CAE672D8ECD2/2008_21CJF_Application_Summary.pdf

In addition to Green Earth mentioned above it is interesting to note 7 other companies applying are from out of state.

Next phase is validation that all the applicants met the minimum criteria for application then they go to the NCMS for peer review.

Good luck to all.

21CJF Applicants
List of all 109 applicants for a piece of the $30 mm 21CJF pool available

The SEIC Board met last Wednesday and recommended the National Center for Manufaturing Sciences (NCMS) be the organization to conduct the peer review process for this round of the 21st Century Jobs Fund competition.

The MEDC http://www.themedc.org/21cbizplan/ also talked about the loan to be used for the awarding of the money to recommended companies.  Rather than two loans they are zeroing in on one.  It would be subordinate, have an interest rate based on prime at the time, and it would include a warrant for 3% of common.  We assume the interest and warrant coverage is negotiable.  There was no mention of collatoral although it is safe to assume they will stick with the original answer in the FAQ http://ref.themedc.org/cm/attach/18efd0c7-95d3-4a2f-89e4-cae672d8ecd2/FAQs_24_June_2008.pdf which says whatever is acquired with this loan will be the collatoral if applicable.

Nearly 100 companies have registered so far.  You must register to get access to the application.  Allow 2 days for a turnaround. If you haven’t registered yet it’s almost too late. As of last week about 60 companies started filling out their application.  That’s not much competition for the $30 million available. We know of several companies asking for a lot less than $1 million.

Our friend David Haviland was at the meeting of the SEIC Board http://www.themedc.org/Boards-Committees/SEIC-Board/Default.aspx and has posted his report at http://mi21cjf.proboards100.com/index.cgi?action=display&board=306news&thread=47.

Deadline for applications is Monday at 5:00 pm.  Don’t procrastinate.  Good luck.

David Haviland blog on SEIC Meeting
Report on 6/18 SEIC Board meeting

Have you thought about applying for the 21st Century Jobs Fund pool of $30 million and decided not to?  THINK AGAIN.

Only 30 companies have registered so far for the competition.  That’s not much competition.  The word is, apply even if you don’t think you meet all the criteria to the tee.  Sell your business and make your case.  You may (or may not) lose a few points on your score for not meeting one of the criteria points, but you could still end up with enough to convince the SEIC Board to fund your company.

Bottom line: Go For It if you have a compelling story.

The SEIC Board has not yet selected a peer review organization for the 21CJF competition.  Their next meeting to make that decision is in mid-June, after the original June 4 deadline.  Therefore they had to push out the date.

It is actually a good thing in that it gives companies more time to raise their matching investments and/or commitments.

Have you registered?  No cost to register or obligation to apply so do it and get that step off your plate. Then go in and look at the actual application.  Doing so will probably generate some questions.  Submit those questions via the FAQ link.  The MEDC has been responsive in getting answers posted quickly.

We’re trying to stay up on the process so check back with us from time to time or feel free to call.