oday there are about 100 technology startups in Detroit, most of them just a few years old. Supported by a billion-dollar-plus makeover that’slargely privately funded
, the city is welcoming startups in the hopes they will help grow and sustain real economic development.
Across the wider region, some 248 new technology companies were started
in Michigan in 2014, and private investment in tech startups totaled $770 million, according to the Michigan Economic Development Commission. While most companies are still located outside of Detroit city limits, for the first time ever there was more venture capital activity in Detroit than Ann Arbor in 2014.
Vjeran PavicDetroit Labs has a beautiful multistory industrial-chic office.
Some local startups predate the ongoing tech-sparked comeback of Detroit, but they are keeping a close eye on the city and figuring out if they can join in.
“Today Detroit is resurging and, hallelujah, I love that — but we started before that happened,” says Jen Baird, CEO of Accio Energy, which is developing a low-cost modular design for generating wind power.
“Detroit is on the move, and I’m hopeful we will have the opportunity to build a manufacturing organization there using existing capacity in the automotive supply chain,” says Baird.
Even with the current wind of change at its back, locating your company in Detroit is still a leap of faith.
Even with the current wind of change at its back, locating your company in Detroit is still a leap of faith. When the founders of FarmLogs moved back to Michigan two years ago after completing the Y Combinator program in California, they picked nearby Ann Arbor.
“Detroit to me was still a little too raw,” says Jesse Vollmar, CEO of the breakout farming software startup FarmLogs, which has already raised $15 million in funding.
But being based in Detroit proper does come with its benefits, among them a tight-knit community and relatively decadent office spaces. It also helps open the door with new clients, according to Shawn Geller, CEO of the text-message marketing startup Quikly.
“On coasts and other places, when brands hear we’re from Detroit, they’re interested to hear what’s going on, so they take the conversation,” Geller says.
Although the focus of this weeklong Re/code series is Detroit and its emerging technology startup scene, we thought it is worth looking more widely across the region to showcase the breadth and range of ideas. Here are 15 young startups to watch, about half of them just outside city limits in Southeastern Michigan.
Vjeran PavicA desk at the Madison Building, where many Detroit startups and investors make their home
CEO: Jeff Epstein
Funding: $375,000 from Techstars and others
Ambassador powers programs like T-Mobile’s deal for customers to earn free mobile data in return for referring their friends. The company, whose competitors include the better-funded Extole, now has a $1.7 million run rate and is profitable. “If you’re a consumer company in Detroit, it’s probably hard,” says Epstein, “but businesses — they may be surprised with the area code when we call — but we can sell six-figure contracts without meeting in person.”
CEO: Jen Baird
Funding: $7.1 million from angels and grants
Accio aims to generate power with an alternative to wind turbines that resembles an enormous car radiator; it runs on wind and charged water mist. In part because her product could be manufactured in existing automotive plants and fit on standard container trucks, CEO Jen Baird thinks Accio can cut the cost of an offshore wind farm by 50 percent and provide energy more cheaply than coal and natural gas. The company is currently raising funds for an offshore demonstration.
College rental search
CEO: Jason Okrasinski
Funding: $750,000 from Huron River Ventures, First Step Fund, Dan Gilbert’s Bizdom accelerator
Cribspot helps college students and landlords find and manage off-campus housing. Launched at 15 schools, it crowdsources listing data to students, helping it get around the specter of Craigslist that hangs over so many apartment aggregators. Okrasinski says he thinks consumer companies in Detroit get a bad rap. “In Michigan, it’s not easy to get people to try it, and it’s not easy to get people to invest in the idea. So that handicaps companies.” But on the flip side, he added, “Your burn is much lower, so you can have time to try things out.”
CEO: Robert Wolfe
Funding: More than $23 million from Union Square Ventures, Spark Capital, Index Ventures, RatPac, CAA Ventures, Bezos Expeditions and others
Crowdrise helps people hold online fundraisers. The platform raised $100 million in 2014, more than doubling the prior year, helped by its irreverent tone (“If you don’t give back no one will like you” is the site’s tagline), simple tools and celebrity users. Crowdrise is the official fundraising partner of the Red Cross, the Boston and New York City marathons, Ironman races, Unicef and many others. But the brands and celebs are the hooks for everyone else — the site has millions of donors and hundreds of thousands of fundraisers.
Mobile app maker
CEO: Paul Glomski
Funding: undisclosed seed funding from Detroit Venture Partners
Detroit Labs is not a typical venture investment with aspirations of world domination — it’s a service business. It makes mobile apps for other companies. But the app maker is perhaps the fastest-growing startup in Detroit proper, with more than 70 employees just four years after founding and customers including Domino’s Pizza and Chevy. Detroit Labs brings in people who have no background in programming to participate in a three-month coding boot camp, from which it has hired some 22 of its employees. “This is a mission-based company,” says co-founder Nathan Hughes. “And our mission is to produce opportunities.”
CEO: Dug Song
Funding: $19 million from Benchmark, Google Ventures, True Ventures, Radar Partners
At a time when the world is waking up to the serious threat of identity theft, Duo Security helps companies provide secure login experiences to their users. Customers for its two-factor authentication products include Facebook, Etsy, Random House, Paramount Pictures, Box, Toyota, Yelp and Threadless. The company’s core team worked together at the network security company Arbor Networks and the University of Michigan computer science department.
Farm management software
CEO: Jesse Vollmar
Funding: $15 million from investors including Drive Capital, Huron River Ventures, Hyde Park Venture Partners, SV Angel and Sam Altman
With 80 percent accuracy, FarmLogs can figure out the crop history, soil map, 10-year rainfall and boundaries of every field in America, based on analysis of satellite imagery. So when farmers sign up for the free FarmLogs account for the first time, the data is right there to help them make more informed decisions about how to grow more and better corn, soybeans, wheat and other row crops. Three years after founding, 50,000 U.S. row crop farmers (about 20 percent of the total) are using the service. Paid products are set to roll out in the spring.
Sales performance management
CEO: Bob Marsh
Funding: $6.4 million from Detroit Venture Partners, Dallas Angel Network, Tamiami Angels, Hyde Park Venture Partners
LevelEleven helps rally salespeople to perform better and gives sales managers a view into how well their teams are doing. It is companion software to Salesforce.com
and received funding from Salesforce in 2013 — pretty good validation for a product that started as a side project at marketing agency ePrize. LevelEleven customers include Forrester Research, Symantec, ReadyTalk, Akamai, PayPal and about 200 more. This month the growing company expects to graduate from the Madison Building in downtown Detroit to its own nearby office.
Mobile service worker tools
CEO: Sandy Kronenberg
Funding: $2 million
The hassle of looking for electricians, plumbers and notaries in phonebooks, waiting for hours for them to show up and paying for their service with checks might be disappearing, thanks to apps like Locqus, which basically makes local service businesses work like Uber. The 15-person company is only in the earliest stages of rolling out its tools, but it has signed up Samsung and payment processor Moneris as strategic partners, and is also working to partner with local search engines.
Early-stage venture capital
Managing partner: Jonathon Triest
Funding: $16.5 million
“As you can imagine, trying to convince someone to tell Andreessen to cut back $100K to let in Ludlow Ventures, some little pissant in Detroit, is normally not an easy task,” says Jonathon Triest. “It would be a joke to say we can open up more doors than Google Ventures.” But Triest’s charm offensive is unyielding, and from his perch in Detroit he’s been able to break into hot Silicon Valley deals like Navdy, Sprig, Product Hunt, uBeam and AngelList.
CEO: Ann Marie Sastry
Funding: $30 million from Khosla Ventures, Beringea, GM Ventures, Itochu and others
If only electric cars could increase their range and decrease their costs, they’d stand a chance of mass adoption. That’s exactly where Sakti3 wants to help, by producing large solid-state batteries rather than the traditional lithium-ion ones used in cars today. Last August, Sakti3 said it had produced a battery with enough density to double the range of the Tesla Model S to 480 miles, targeting its mass production at $100 per kilowatt hour — less than half of the optimistic estimated cost for Tesla’s batteries. Sakti3 is currently in pilot stage, hoping to start commercialization with consumer electronics.
CEO: Omer Kiyani
Funding: Undisclosed seed funding
With everything from thermostats to watches to dog collars getting smarter, why should something as high stakes as guns be left out? Sentinl is a Detroit startup that aims to attach fingerprint sensors to firearm triggers, so guns would unlock only for authorized users. The company’s Identilock add-on would have a six-month-long standby battery life. Kiyani, himself a childhood victim of gun violence, says he’s not yet ready to talk about launch timing.
CEO: Danny Ellis
Funding: $1.35 million in angel funding and grants
SkySpecs makes a set of sensors and circuits to help modify drones to safely fly over and through wind turbines, bridges, mines and film sets. The company would eventually like to make drones autonomous, but given today’s FAA standards, humans still need to be involved — so instead of autopilot, the SkySpecs product is rather cutely called “WingMan.” SkySpecs, which is bringing test units to its first partners early this year, originated as an undergrad flying robot project at University of Michigan.
Text message marketing
CEO: Shawn Geller
Funding: $2.5 million from Detroit Venture Partners, Ludlow Ventures and others
Want to win a year of free Domino’s Pizza, or Godiva chocolate? Sure you do. Sign up with Quikly to receive a text message, and then reply as fast as you can when you get it. The faster you jump on the text, the better the reward you get. In one Quikly campaign for a fast-food restaurant, 50,000 people responded in 10 minutes. Geller moved to Detroit in 2012 from Philadelphia when he received funding from DVP. Now Quikly has 15 employees.
Internet of Things
CEO: Jake Sigal
Funding: $250,000 in convertible debt
Tome’s first product is a $200 sensor kit that attaches to Humanscale desks to help workers quantify their standing and sitting activities at work. Beyond that, the company is working on additional undisclosed hardware-software integrations. This fall Tome was part of the New York-based StartUp Health accelerator program. “There’s no way to succeed in technology by staying in Detroit all year long,” says Sigal, who previously sold his connected car startup Livio to Ford. “You’ve got to get out, you’ve got to get around.”