As part of its participation in the initiative, ID Ventures will issue high-growth project deals and invest between $25,000 and $250,000 using the SAFE stock mechanism. According to the statement, the funded organization will provide in its early stages business training and other programs.
“ID Ventures is pleased to be a partner in Venture 313,” said Martin Duber, Senior Vice President and Managing Director of ID Ventures, the venture capital team at Invest Detroit. “ID Ventures is committed to removing barriers and helping Detroiters scale their great ideas into venture-backed companies, and appreciates the Gilbert Family Foundation’s support for inclusive entrepreneurship in Detroit.”
ID Ventures’ website shows that the fund has invested $21 million in more than 200 startups, 54 percent of which have diverse founders, and that the fund has achieved 17 exits.
TechTown Detroit, a longtime Detroit small business incubator affiliated with Wayne State University, will invest in small businesses that are primarily looking to evolve from thinking to creating Minimum Viable Products (MVP).
The incubator will provide grants ranging from $500 to $25,000, as well as support and ongoing training for entrepreneurs.
Ned Stabler, vice president of economic development at Wayne State University and president and CEO of TechTown in Detroit said in the statement. “The only way to achieve real and sustainable economic development is by investing in Main Street, and we are excited to join forces with the Gilbert Family Foundation and Venture 313 to support the next generation of Detroit startups.”
Meanwhile, Detroit Development Fund executives are promoting the fund as a venture capital fund for companies that do not traditionally secure such funding. According to its website, the fund has provided money to a variety of Detroit restaurants and other consumer-facing businesses.
The fund provides working capital, lines of credit, and other loans from $25,000 to $250,000.
“As a lender, we look at every aspect of a business when analyzing its potential, but we often prioritize future growth over finances and big ideas over balance sheets,” said Ray Waters, president of the Detroit Development Fund. “We are excited to be a co-founder of Venture 313 and collaborate with organizations such as the Gilbert Family Foundation that, like us, know that dreams are worth investing in.”
The push by 313 Venture Partners to deploy capital into early-stage startups comes during a period when that investment has slowed, at least when compared to record highs last year, according to industry data.
The number of deals and deal values for early-stage companies declined from the first quarter to the second quarter of this year, according to a July report from industry publication Pitchbook and the National Venture Capital Association.
The report notes that investors are increasingly cautious when it comes to allocating capital to untested companies.
“The increasing cost of capital is leading investors to consider whether startups can efficiently manage their path through subsequent milestones,” the report states. “With investors refocusing on business continuity during economic downturns, we expect due diligence efforts to be undertaken to prioritize return on invested capital and free cash flow.”
Capital committed to the Venture 313 initiative is something that is in demand in the market, said Chris Rezik, CEO and fund manager of Ann Arbor-based Renaissance Venture Capital, because few traditional venture capital funds like to play that early in the company’s life cycle. .
“If you have 18 months of revenue, it’s tough,” Rizk said of early stage companies seeking capital.