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.

There are two significant changes affecting distribution of this new money.  One is the match for an investment is lowered to one-half to one.  In other words to ask for a $200,000 investment from the fund a company only needs $100,000 of matching investment from others. 

The other big change is that a portion of the fund will go toward a newly created micro loan program.  About $1 million will be available in loans ranging in size from $10,000 to $50,000 for companies not quite in the pre-seed stage.  No match is required. 

Details about the fund and the new loan program will be presented at a meeting tomorrow (Tuesday, May 5) at noon at SPARK Central (330 E. Liberty, Ann Arbor).  Skip Simms, Manager of the fund, and Tom Anderson with Automation Alley, one of two collaborators reviewing loan applications, will make the presentation.  Information about the fund is also available on-line at www.annarborusa.org/start-ups/pre-seed-fund/ .

The Michigan Pre-Seed Capital Fund has made three more investments. They are:
Creative Byline of Holland
SenSound in Detroit
Biotectix in Ann Arbor

These investments are 29, 30 and 31 for the fund. It’s pretty impressive this little fund can make 31 investments in two years.
Yes there is still capital that can be deployed. More than $1million. There are currently 7 companies under review. Demand is not decreasing. Ann Arbor SPARK is applying for several million dollars more. Let us know if you want to give us a letter of support.

Biotectix web site
Company overview

SenSound web site
Business description

Pre-Seed Fund Press Release
Announcement of these 3 investments

What they did discuss was how to handle the available $6.7 million that isn’t getting claimed from the most recent round of competition. Two more companies, Avidimer Therapeutics and Accuri Cytometers joined Cielo Med Solutions in not agreeing or unable to take the loans awarded. So the next two companies that had a tie score that just missed the cut are now eligible to step up and accept an award. Fisher Coach and Incept Biosystems are now going through due diligence and will probably sign notes totaling $3.875 million.
So what to do with the remaining $2,849,916. They can’t go to the companies with the next best scores. There are four of them and their combined ask is over $7 million. There was concensus that dividing the dollars up evenly among the four was not a good idea. What they did was ask the MEDC staff to do some investigation of the circumstances of those four companies today versus when they originally applied, nearly nine months ago.

One other action item on the agenda was the approval of the RFP for a $6.8 million award to a pre-seed fund. Applications will be due in February and the award in April.

Hopefully there will be a 2009 competition and it will come soon. Stay tuned.

SEIC Board and 21CJF Competition
Minutes and meeting dates for SEIC and info about 21CJF

Accuri Cytometers
website for Accuri

Ciello Med Solutions
web site for Cielo

Fisher Coachworks
website for Fisher Coachworks

Avidimer Therapeutics
website for Avidimer

Incept Biosystems
website for Incept Bio