Opinion: Michigan entrepreneurs need state-based investors

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Since Michigan became a state, its residents have created some of the most impactful ideas, businesses and cultures that define our modern world.

Those founders fundamentally changed manufacturing, business, art, technology, roads, music — and even pizza.And as long as people across our state have come up with world-changing ideas, other cities, states and countries have been quick to lure them away.

However, something new happened over the last few years. As more Michigan talent is choosing to stay local and start new things here, outside investors are pouring in to fund their ideas. Over the last decade, for every $1 invested in a Michigan startup by a Michigan investor, over $30 of investment was brought in by firms from California and New York, according to data from the Michigan Venture Capital Association.

As a symbol of this trend, when Ann Arbor-based Duo Security was sold to a tech giant for billions of dollars in 2018, only a relatively small percentage of that deal went to Michigan-based investors. As entrepreneurs from the state continue to create groundbreaking innovations, it follows that the rest of the world will invest here in greater numbers.

To be clear, we welcome their investment and collaboration. But, those investment dollars typically arrive later.

Data from Pitchbook shows that startups based in the Midwest take nearly two years longer to secure their first $500,000 of investment capital compared to similar companies on the coasts. Why do entrepreneurs move to California in larger numbers? Because that’s where the money is. The early money. If we want our brightest and bestto build their ideas here in Michigan, we need to fund them earlier.

On an individual level, we should support our Michigan founders in the same way we root for the Lions, Tigers, Pistons, Red Wings and Le Rouge. And we believe the players on our next great team are the undeniable Michiganians starting an idea from scratch, resolute in the face of doubt, pushing forward to create something groundbreaking.

As a way to support our entrepreneurs earlier, we are formally launching Tuebor, an honor commitment to invest in one Michigan business per year. Individually. For the rest of our lives.

There is no minimum dollar amount to make the Tuebor commitment. Someone who takes the Tuebor pledge can invest in a groundbreaking new Michigan technology startup each year or simply buy a single share of a public company headquartered here like Ford, Hagerty or MillerKnoll.

All efforts count toward our goal: to increase the number of Michigan investors backing Michigan businesses.Tuebor is the word found on Michigan’s state flag; in Latin it means “I will defend” and refers to the state’s frontier position at the time we joined the Union. For those making this new commitment, Tuebor is a way to show our allegiance.

California and New York will likely always have more investment dollars than our state, but we have the chance to have more individual investors backing our founders, earlier, than anywhere. Our cheering section is going to be a lot louder.

Reilly P. Brennan is a co-founder and partner at Trucks Venture Capital.

Chris Thomas is co-founder and partner at Assembly Ventures. 

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