Economy
12:42 pm
Fri March 8, 2013

Silicon Valley entrepreneur says go to Ann Arbor to start your company

This photo has been making the rounds on Facebook.

The photo was pushed out on Ann Arbor SPARK's Facebook page - a group dedicated to building business expansion in the area.

Just two years ago, Blank published an article about the venture capital climate in Ann Arbor.

In a post he wrote in 2011, "What's Missing For Entrepreneurs In Ann Arbor, Mich.," he described the climate as the sound of 'one hand clapping.'

He felt there was plenty of talent, but money and a risk-taking culture were missing in the city (below he mentions VCs - 'venture capitalists').

Given the interesting things going on in the engineering labs I visited and the startups I met, one would have thought the school would have been crawling with VC’s fighting over deals. Instead it seems that students who graduate simply pick up a plane ticket with their diploma. (Of course, some do stay. The spin-outs from Center of Entrepreneurship are impressive. Many of those companies are still Ann Arbor, but the ecosystem is a limiting factor.)

While one can’t recreate all the happy accidents that made Silicon Valley, it doesn’t take a rocket scientist to realize that it’s the combination of technology entrepreneurs and risk capital that are two of the essential ingredients in any cluster.

Blank did post this with a few caveats - basically saying he was only in Ann Arbor for a few days, so he doesn't consider himself an expert, but based on what he wrote - he did have some strong impressions of Ann Arbor.

So I wanted to know, what's changed in the city?

Why did he now recommend that entrepreneurs start their companies in Ann Arbor?

I shot him a Tweet and will let you know what he says.

In the meantime, how do you think the business climate in Ann Arbor has changed?

We heard recently on Stateside that the jobs forecast for Michigan isn't so hot, but maybe that's different for A2.

Update 1:15 p.m.

I caught up with Blank on the phone (he was riding in a limo in Austin, TX on his way to SXSW).

Blank told me what's changed in Ann Arbor is that there are venture capitalists and 'angels' in the city who are willing to invest, and who don't have to put up huge amounts of capital to get things going.

Blank said there's an enormous talent pool in Ann Arbor from the University's engineering and medical schools.

"And you don't need a lot of money to get some of these ideas off the ground. You don't need to put up $10 million to get things going. Basically you just need a couple hundred thousand dollars and a laptop," said Blank.

If a company succeeds, he said, Ann Arbor would still run into that problem of 'one hand clapping.'

"I'm shocked, with someone like Gov. Snyder in office, that he hasn't used the bully pulpit to change the investing culture," Blank said.

He said investors in this area don't understand risk capital. The investment culture is still more like a bank here.

Successful companies, he said, would still have to go somewhere like Silicon Valley to find multi-million dollar investments.

"It's a place where people understand risk... and there's a robust ecosystem of investors," he said.

He'd recommend moving a successful company's headquarters to Silicon Valley, but keep the engineering in Ann Arbor because of the talent pool available.

If a tech boom were to happen in A2, perhaps investing in a limo service isn't such a bad idea.

*This post has been updated