What unique advantages do startups have in Detroit?

Guest Blog post by ELP Student Emma Kirst – Economics – Literature, Science, and the Arts – Class of 2020

 

This is a perfectly valid question and frankly, one that I would’ve argued before coming to Detroit for an internship. As somebody who lived abroad for most of her life and hardly seen beyond Ann Arbor in Michigan, I had a significant amount of preconceptions about Detroit. None of them were very positive. I remember an Uber driver driving me into Detroit telling me not to walk anywhere on my own. My family had grave concern after hearing I would be living in Detroit. Generally, people had disappointed looks when I told them I would be working in Detroit. The best I heard before moving into the city was “it’s not that bad.” Not exactly a glowing review. Compared to most college campuses that are near cities, it’s also very rare for students to visit Detroit.

 

I was pleasantly surprised when I moved to downtown Detroit, more so than “not that bad.” Detroit is a lively fun city. And I have a pretty unique perspective on what it means to be a company in Detroit: I’m working for 3 different companies at the same time over the summer!

 

One is a startup company. One is a major corporation. One is a venture capital firm.

 

All three of them have similar goal – revitalize Detroit.

 

All of them had the same idea as to what the next step should be – bring startups to Detroit and create innovation in a city that is figuring out its new identity.

 

Detroit is transitioning from being a manufacturing hub into a world where automation has taken over. The little manufacturing that remains operational has been moved overseas. Detroit is left with a people looking for new opportunities. Over the past 5 years, there’s been significant effort into building out infrastructure that will help build startups within Detroit, and, encourage startups to move into Detroit.

 

 

Advantages for Startups in Detroit:

 

1. Resources: Startups ratio

 

There’s an immense amount of resources and people looking to invest capital in Detroit relative to the actual amount of startups in the city. There’s an abundance of incubators, accelerators, and other entrepreneurial hubs that are actively seeking new startups to help. Whereas in other cities these resources may be strained due to the amount of startups, it’s very easy to take full advantage of all the entrepreneurial resources in Detroit.

 

2. Opportunities for impact

By the same token, it’s very easy to make an impact far earlier-on in Detroit compared to other cities. Detroit is a city that’s eager to see innovation occur and encourages it in every way it can. The lack of oversaturation means that companies can often have a monopoly on the city and immediately solve problems for a large group of people. Many people, when asked what their goal in life is, will say that they want to make a difference or an impact – particularly those that are interested in entrepreneurship. When given the option of working in a major metropolitan area or working in a city that actually needs startups, most will still choose to work in the major city. Instead, create a startup in a city that effectively is a startup. It might have fewer resources as a whole and less structure than a more established alternative. The excitement lies in getting in early and helping it become something much larger.

 

3. Low cost of initial startup

Real estate is extremely affordable in Detroit. The city has a very low cost of living, which means that it does not require a significant amount of startup capital to create a company in Detroit. When bootstrapping a business, costs matter a lot. This is why it makes sense to start in Detroit compared to other startup hubs, especially those with very high cost of living like San Francisco, New York or Boston.

 

4. Government support and policies

Michigan has dedicated itself to becoming more business friendly for startups. The state has lowered taxes for small businesses in order to encourage more people to be entrepreneurial and start businesses. The state places a strong emphasis on entrepreneurship and put several measures in places to encourage small business growth, such as grants for startups focused in renewable energies and technology. Organizations like the Detroit Economic Growth Corporation and Detroit Community Foundation serve as essential government resources for small businesses.

 

Advantages. Revitalization. Creation. Innovation. Detroit.