The First Step Fund is an early stage investment fund in partnership with the Invest Detroit Foundation, TechTown, Ann Arbor SPARK and Automation Alley serving emerging and newly-formed high growth, small businesses in southeast Michigan.
The First Step Fund is funded by the New Economy Initiative for Southeast Michigan created by ten national, regional and local foundations to accelerate the transition of metropolitan Detroit to an innovation-based economy that expands opportunity for all.
The fund provides high growth, emerging companies with access to capital, focused mentoring in areas consistent with growing the business, and a network that will work to foster demand and create opportunities. The First Step Fund support is designed to address the deficit of financing in the marketplace and to promote economic development by identifying, nurturing and fostering demand for early stage, commercially viable businesses resulting in job creation and increased tax revenue for the region.
The First Step Fund assists entrepreneurs in the start-up or scale-up of their businesses for the purpose of advancing their business concept to customers. It is assumed that applicants have incorporated a company and are past the concept development and analysis phase, and have very specific needs to achieve commercialization milestones to close initial sales.
While we will fund businesses on a broad range of trajectories, our ideal applicant will initial revenue traction or clearly show a path to revenue generation and business scale-up.
We do not have an industry focus; however at this time we unfortunately are unable to fund real estate, retail, restaurants or casinos.
The proceeds of the investments can be used for, but are not limited to developing prototypes, scaling product manufacturing or testing, and marketing and sales.
All applications must first have the support and sponsorship of one of our partner organizations: Ann Arbor Spark, TechTown, Automation Alley, Bizdom or SBTDC/MEDC. These organizations play a crucial role in supporting businesses at very early stages and help to ensure the consistency and quality of applications to the First Step Fund. Once a business has been sponsored by one of these supporting organizations, they can apply to the First Step Fund on our website here which will include the following requirements:
Please note that we must receive all completed materials before we can review your application. Incomplete applications will not be reviewed and will not receive further communication.
A background check will be performed on founders and key executives with significant investment in the company. A search will be conducted for felony convictions and bankruptcy. Key employees with a poor record will not be considered.
First Step Fund loans are between $10,000 and $50,000. Tranched investments will be made when appropriate.
Our fund has highly flexible terms and each opportunity has a different and specific structure. However, most investments are convertible notes and equity investments.
Brief descriptions of qualified sponsors’ training programs that are a pre-requisite for this type of financing follow:
TechTown’s SmartStart program clients work closely with TechTown staff, and an array of business consultants and service providers to create and execute a detailed strategy for growth.
TechTown’s FastTrac Program, in partnership with the Kauffman Foundation, provides services for entrepreneurs that range from business conception to growth and acceleration.
SPARK’s Entrepreneur Boot Camp Program is two intensive days of learning that compresses the usual three-month learning curve to move a business to the next level.
TechTown and SPARK’S Business Accelerators speed up the development of start-ups in the region with a variety of valuable services designed to shorten the time required to attract capital, customers, or other resources.
TechTown and SPARK both have Regional Incubator Networks which are one of the many vital components in the business acceleration process. Both incubators provide physical space, essential services and business development guidance – at lease rates that are affordable for start-up companies.
TechTown and SPARK’s Wet Lab Incubators boast state-of-the-art life science and biotech research space in a collaborative entrepreneurial environment with established tenant interaction and support.
Bizdom U offers an intensive four month business development program with training and mentorship for individuals that want to start a Detroit-based business.
Automation Alley brings together businesses, educators and government to help entrepreneurs accelerate the commercialization of new technologies and services. With their support and resources, ideas are turned into usable, marketable technology solutions.
To express interest in the First Step Fund, please contact a qualified business incubator / accelerator in the region or e-mail us at: email@example.com
A number of programs exist in the region including Ann Arbor SPARK Micro Loans & Automation Alley. The most significant differences between these loan pools are the stage of the company and its location. These funds are intended for companies near commercialization, which means they are within a year of closing their first or second customer sale, or raising private equity that will provide significant funding to help the company be successful. The state fund loan can be used for companies that are pre-commercialization (pre-revenue and not yet raised private equity) but have a business plan and at least an early prototype. Another differentiator is that the state fund is only available to companies in the four technology sectors identified as state priorities in the 21st Century Jobs Fund legislation. The local loan pools are for any innovative, high-growth potential company. Applicants who have received funding from any of these sources are not restricted from applying to the First Step Fund.
We take applications on a rolling basis and have a 3-step process to review them.
Step 1: Screening. We will initially screen applications based on the quality of the submitted written materials.
Step 2: Due diligence. During due diligence, we will reach out to you for more information that may include a meeting to better understand your company.
Step 3: Investment Committee, where a group of experienced professionals will review, discuss, and review the invest opportunity. Our Investment Committee meets on a monthly basis.
We aim to provide an initial screening decision within 30 days of receiving a completed application. The remainder of the process can take between 6 to 8 weeks. After investment committee approval, it can take 1-3 weeks to close on funding.
In some cases, we will postpone the application until further progress is made, in which case the total time to receive a decision can take longer. Also, please remember that we cannot begin to review your application until we have all of the materials and requirements met.
If you are turned down, you may reapply at any time however you are strongly encouraged to address any concerns indicated in your initial application. In your reapplication you should provide the following documents to be reviewed.
The First Step Fund Investment Committee reviews all applications for funding. The review criteria include key elements such as management team, markets and financials. We will assess the Company’s potential to become a viable, robust, high-growth business that will ultimately have the ability to provide a return on the investment. Funded companies will continue to work with partners for mentoring and business acceleration services. We will continue to provide portfolio companies with hands-on help and direct involvement which will ensure that the deal is actively managed to agreed-upon milestones and thereby enhance the chance for success of each new venture funded.
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We require monthly financials and on a quarterly basis on financial, sales/revenues, number of employees, additional funding, and organizational milestones. This information not only provides us a better position to support companies in our portfolio but it also plays an important accountability and reporting role to the foundations and stakeholders who support the fund.