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Castle closes $2M seed round from Silicon Valley investors

Castle, a property management software startup, hit a big milestone last week, locking down a little more than $2 million in seed capital. Model D recently profiled Castle, just before it announced this seed round.

The Detroit-based company has raised $2.75 million to date over its first two years of business. The startup's seed round was led by Kholsa Ventures out of Silicon Valley. SV Angel, and Point Judith Capital, also participated in the round.

"It's an incredible opportunity," says Max Nussenbaum, co-founder & CEO of Castle. "But it's not a success in and of itself. This is the fuel in the tank, not the end game."

Nussenbaum was part of the inaugural class of the Venture For America, serving his two-year fellowship in Detroit. He co-founded Castle with two other VFA Detroit fellows (Tim Dingman and Scott Lowe) while the trio renovated a tax foreclosed mansion in Virginia Park. Today that house is their home and the headquarters of Castle, but the company is also looking to move into its own offices in the greater downtown Detroit area later this year.

The trio of VFAers also used the experience renovating that house as a compelling story to help get Castle admitted to Y Combinator, arguably the most prestigious startup accelerator in the world, earlier this year.

Castle has developed a software platform that makes property management easy by automating communication between tenants and property managers, rent collection, and repair requests. It currently manages 525 units, almost all of those are single-family homes or small multi-unit buildings. All of the rentals are in Metro Detroit and about 60 percent are in the city of Detroit.

Castle's leadership teams plans to use the seed capital to continue building out its software platform. It's also looking at expanding outside of the Detroit market, potentially opening up a new market early next year. It hasn’t chosen a specific one yet, but among the candidates are Baltimore, Phoenix, Atlanta, and Florida.

"The early markets will be in line with Detroit," Nussenbaum says. "They are the ones that are underserved by our competitors."

Castle currently employs a team of about a dozen people and is still adding staff, including a head of growth in Detroit. The company’s team is currently aiming to double its units under management by the end of the year. Most of its new customers come from word-of-mouth recommendations.

"It's an incredible vote of confidence in us and we are so appreciative of it," Nussebaum says.

Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.

U-M Desai Accelerator announces 2016 cohort of startups

The University of Michigan's Desai Accelerator announced its second cohort of startups> A group of six promising young companies were selected from more than the 80 that applied.

The Desai Accelerator is a joint venture between the University of Michigan's Ross School of Business (Zell-Lurie Institute) and the U-M College of Engineering's Center for Entrepreneurship. Last year it welcomed five startups to its 16-week program, its first cohort.

The startups have to spend at least four of the six weeks working in Ann Arbor, leveraging U-M's network. This is what sets Desai apart from other startup accelerators. The U-M Alumni Association has 540,000 living alumni and tens of thousands of students, making it one of the deepest talent pools in the world.

"These are people we tap for mentors, strategic advisors, investors and partners," says Kelly LaPierre, managing director of the Desai Accelerator. She adds that many U-M students could also serve as potential early employees for these startups.

The six startups chosen for the accelerator’s 2016 cohort are:

Ash & Anvil, an affordable, stylish, everyday clothing provider for shorter men co-founded by Venture for America Detroit fellow Steven Mazur and Eric Huang.

"It's not a traditional tech business like most people are doing," LaPierre says. "But what they are doing is truly innovative."

Clash Audio, a neuroscience-based streaming service that uses human curation, neuroscience research and popular music theory to analyze new music and distill millions of songs into a small, optimized database.

Gaudium, a creator of anime-style mobile games; runner-up of 2016 Michigan Business Challenge.

MySwimPro, a social fitness platform for swimmers and triathletes.

Roomations, an online platform and subscription service that provides homeowners easy access to interior design services online, including 3D room designs, shopping lists, style boards and personal design advice, by crowdsourcing freelancer designers.

Sultant, a cloud-based SaaS platform that acts as a digital financial "advisor" for small businesses by providing quick and meaningful insights, actionable recommendations and intuitive visualizations

Source: Kelly LaPierre, managing director of the Desai Accelerator
Writer: Jon Zemke

Final year of NEI's challenge to grant local businesses a total of $500K

On April 20, the New Economy Initiative (NEI) kicked-off the third and final year of the NEIdeas challenge, "a two-tiered challenge awarding $500,000 to existing small businesses in Detroit, Hamtramck, and Highland Park for their ideas to grow," as described in a press release.

The half-a-million dollar sum is divided into two grant tiers. For businesses that gross under $750,000 annually, NEI will award 30 grants worth $10,000. And for businesses that gross between $750,000 and $5 million annually, NEI will award two grants worth $100,000. Applying is as simple as explaining, in 500 words, an idea to expand your business that requires investment and is "impactful, courageous, interesting, achievable, and understandable." The application deadline ends June 1.

A key component of the NEIdeas challenge is that these grants are for existing small businesses -- those three years or older. So much reporting and grant-giving is devoted to new businesses that it's refreshing when a challenge like this rewards established businesses that haven't benefited as much from renewed interest in Detroit entrepreneurship. 

"This is a really special challenge that has had an incredible impact on local businesses and communities," says NEI communications officer Matthew Lewis by email. "In fact, we think NEIdeas is the only philanthropic challenge in the country that directly awards small businesses for their contributions to neighborhoods."

Past winners include Goodwells Natural Foods Market, which invested their reward in growing their inventory and marketing services for new bulk herbal apothecary offerings; The Hub of Detroit, which made improvements to the appearance of its storefront; and many, many more. They also released a fun hype video featuring some of those past winners

NEI will hold a series of informational events throughout May to help applicants. The next one takes place on May 4 at the Matrix Center in Osborne on Detroit's Northeast side. Click here for a complete list of those events.

NEI is a philanthropic effort that supports small businesses and entrepreneurs. It's funded by a host of foundations and institutions, and, since 2009, has awarded over $96 million in grants.

Disclosure: Matthew Lewis is a former managing editor of Model D. 

Automation Alley sinks seed capital into six local startups

Automation Alley is continuing its investment in local startups, sinking seed capital into another six companies in the first quarter of this year.

The most recent startups to receive investments include RazorThreat, Len & Jerry's Modular Components, MEISelectric, The Automation of Things, MagWerks LED and Quipzor. All of these companies have participated in Automation Alley's 7Cs program, which is focused on helping local companies integrate advanced manufacturing methods into their business models.

RazorThreat is a Pontiac-based software firm that specializes in online security. Len & Jerry's Modular Components is a manufacturing company that works in custom tooling in Clinton Township. MEISelectric is based Clawson and works in conceiving and creating prototypes.

The Automation of Things creates software for industrial applications and is based in Sterling Heights. Oxford-based MagWerks LED works in LED light products. Quipzor calls Bloomfield Hills home and helps enable pre-surgical collaboration between hospitals, physicians and surgical device company representatives.

The investment comes from Automation Alley's Pre-Seed Fund. The $9 million fund invest tens of thousands of dollars into each startup, sometimes hundreds of thousands of dollars. It has invested in 54 locally startups since 2004.

Personal tragedy inspires launch of U-M spin-out, Neurable

Making the world a better place is the kind of warm and fuzzy rhetoric tech entrepreneurs use when launching their new startup.

Ramses Alcaide wants to make the world a better place, too, but his inspiration comes from personal experience.

The University of Michigan PhD candidate is dedicated to developing technologies to assist people with physical disabilities because he witnessed first-hand the challenges of living with such disabilities. In particular, the hardships that faced his favorite uncle. That uncle, also a scientist, suffered an accident that immobilized his legs when Alcaide was a young man. His struggles stuck with the U-M grad student.

"I remember seeing him struggle to relearn how to walk with the archaic technology of the time," Alcaide says. "I thought there has to be a better way. But I had no idea what that was."

Those memories served as the inspiration for Alcaide's post doctorate studies and a new startup called Neurable. The University of Michigan spin-out is developing a non-invasive brain-computer interface that allows for real-time control of software and physical objects, allowing people to control wheelchairs, robots and even a car with no training.

Neurable currently has a working prototype of its technology and is working toward commercializing it next year. The startup aims to raise $500,000 in seed capital to make that happen and more.

"We have much bigger dreams," Alcaide says. "We want to make it into a full-fledged company."

It's off to a good start. Neurable, with the help of U-M's Zell-Lurie Institute, took second place in the Rice Business Plan Competition. That gave it $50,000 in seed capital, as well as up to $280,000 for the competition's OWL Investment Prize.

"I really wanted to bring this technology to the next level so I can help as many people as possible," Alcaide says.

Source: Ramses Alcaide, founder & CEO of Neurable
Writer: Jon Zemke

Detroit tech community leads venture capital boom in Michigan

Michigan's venture capital community continues its rise with another year of growth, and Detroit's tech scene is playing a significant role.

With $328 million in 2015, Michigan enjoyed its best year of venture capital investment. That's up from $224 million the year before, and $246 million from the second highest year in 2012, according to a new report from the Michigan Venture Capital Association. In total over the last decade, Michigan has seen a 150 percent increase.

Detroit's rise as a center for tech mirrors that climb. There was little to no venture capital activity downtown 10 years ago. Today, it's home to several venture capital firms that make early stage investments in tech firms, many of which are based in or near Madison Block. One of Michigan's two largest VC funds, the Renaissance Venture Capital Fund, a fund so large it only invests in smaller VCs, is also located downtown.

"Detroit is a big area of focus," says Maureen Miller Brosnan, executive director of the Michigan Venture Capital Association. "Automotive and IT technologies are a great areas of growth."

VC growth is happening at a time when it's on the wane across the U.S. According to the same Michigan Venture Capital Association report, the number of venture capital firms headquartered in Michigan, their total capital under management, and number of venture capital investments made in Michigan, has doubled and in some cases tripled while those numbers have decreased nationally.

That build up has come from a combination of capital from private and public sources. While the Renaissance Venture Capital Fund has accumulated its money from private funds, it's counterpart the Venture Michigan Fund got its backing from government. The Michigan Department of Treasury helped establish local VC infrastructure over the last decade, including the Venture Michigan Fund, by providing investors with up to $450 million of tax-voucher certificates.

Future support from the state of Michigan, however, is not guaranteed. That doesn't mean anyone is deterred. Rather, they're striving for greater self-sufficiency.

"Firms are looking at this and saying we’re going to have to do this on our own," Brosnan says.

Michigan venture capital growth outstrips national averages

Venture capital in Michigan has come a long way over the last 15 years, and a new report from the Michigan Venture Capital Association puts some numbers to that growth.

The Ann Arbor-based non-profit released its annual report this week showing growth with some impressive numbers for the venture capital in the Great Lakes State. Michigan enjoyed its best year for venture capital investment in 2015, clocking $328 million. That's up from $224 million the year before (it's third best year) and $246 in 2012, its second best year. Venture capital in Michigan is up 150 percent over the last decade, according to the report.

Michigan-based venture capital firms have $2.2 billion under management, up 47 percent in the last five years and more capital under management than ever before. Michigan venture investors finance nearly every Michigan venture-funded startup. The report concludes that local venture capital has gone from practically non-existent in Michigan 15 years ago to having firmly taken root and growing steadily.

"There are a lot of factors at play at this point," says Maureen Miller Brosnan, executive director of Michigan Venture Capital Association. "Venture capital has firmly established its role in as an economic driver in Michigan."

Ann Arbor is widely seen as the capital for venture capital activity in Michigan thanks to its proximity to the University of Michigan. There is also a large concentration of local VCs headquartered in Ann Arbor and a number of out-of-state VCs with offices in Tree Town.

The report also shows a rise in angel investing in Michigan. There are currently 128 startups in Michigan that have received funding from a locally based angel group, a 42 percent increase in the last five years. Membership in Michigan’s nine angel groups hit 294 investors, a 59 percent increase in the last five years. Michigan’s Grand Angels was listed among the three most active angel groups in the country, and a new angel group in the Upper Pennisula, Innovation Shore Angel Network, launched last year, according to the report.

"Grand Angels has set the pace for growth of the nine angel groups in the state of Michigan," Miller Brosnan says. "There has been tremendous growth there."

Source: Maureen Miller Brosnan, executive director of Michigan Venture Capital Association
Writer: Jon Zemke

Knight Arts Challenge Detroit accepting submissions now through May 2

For the fourth straight year, the Knight Foundation will be awarding up to $3 million in grants to Detroit artists. The submission period begins today, April 4, and runs through May 2.

The Knight Arts Challenge has a broad concept, and is "open to anyone with an idea for engaging and enriching Detroit through the arts." The application is also simple. All you need to do is distill your project idea into 150 words and follow these three guidelines: 1) The idea must be about the arts. 2) The project must take place in or benefit Detroit. 3) The grant recipients must find funds to match Knight’s commitment.

Two of the 170 prior winners include Hardcore Detroit, which explored the ‘70s Detroit dance craze in a documentary, and Detroit Fiber Works, a gallery and learning space that claims to be the only fiber arts studio in Detroit. 

“Almost everywhere you go in Detroit, you see Knight Arts Challenge winners inspiring and engaging our city,” said Katy Locker, Detroit program director for Knight Foundation, in a press release. “What’s next? We can’t wait to see what Detroit comes up with.”

The Knight Foundation will host two free community events on April 11 at the MOCAD and April 15 at the Charles H. Wright Museum of African American History. The events are meant to support potential applicants, with past challenge winners and Knight Foundation arts program director Bahia Ramos in attendance. 

To submit your application to the challenge, click here

Tech startup aims to raise $1M for visual content platform

This is the year tech startup TernPro expects to take off.

They believe its visual content software platform, Slope, will gain traction with customers and hit some significant milestones. The biggest one TernPro is closing a $1 million seed round later this spring. It's also looking to bring its platform, which is currently in private Beta, online to the public.

"This year it's really about product development and customers," says Brian Bosche, co-founder & CEO of TernPro. "Once we close this round we want to perfect the product and get it out in the field."

Bosche is a member of the inaugural 2012 class of Venture for America, a two-year program that pairs talented college grads with startups in economically challenged cities like Detroit. He worked with the leadership team at the Bizdom startup accelerator in downtown Detroit during his fellowship, helping many of the startups in the incubator tell their stories through short videos.

Bosche and fellow VFAer Dan Bloom launched TernPro in downtown Detroit two years ago, primarily as a full-service digital video agency. Not long after they started developing Slope, a software platform that enables novice digital media users to design, store, produce, and collaborate on creating visual content.

TernPro was accepted to the Microsoft Ventures Accelerator last year, a program that helps startups build their technology and scale their products. The TernPro team was attracted to it because of Microsoft's expertise in developing enterprise software, and opened an office in Seattle after completing the accelerator.

"We still work very closely with them," Bosche says. "It's been a great relationship."

TernPro has a team of eight people after hiring three in UIX design and software development in the last year. The company recently moved to the Elevator Building overlooking the Detroit Riverfront.

The company released Slope in private Beta in late 2015, and plans to make it public later this year to start building out its customer base.

"It's a fully functioning product but we are still building it out," Bosche says. "We even got our first paying customer."

PreDxion Bio's tech helps tailor treatments to patient's immune system

The team at PreDxion Bio isn't just trying to come up with new technology to help sick people. It's trying to help really really sick people. The University of Michigan spinoff is in the early stages of developing a diagnostic device to help create custom diagnosis. The technology is coming from U-M's Pediatric Critical Care Precision Laboratory.

"One of the main thrusts of our lab is to develop new diagnostic tools to treat these really sick patients," says Walker McHugh, co-founder of PreDxion Bio and a biomedical engineering graduate student at the University of Michigan. He is launching the startup with Dr. Timothy Cornell, a physician at U-M, and Caroline Landau, an MBA student at U-M's Ross School of Business.

PreDxion Bio's technology is a patent-pending diagnostic device that gives doctors the information they need to precisely tailor treatments to a specific patient's immune response. The idea is to make precision care more available to people in intensive care.

The team has created a prototype and is currently entering it into a variety of high-profile business plan competitions. It is one of two U-M startups to make it to the Rice Business Plan Competition next week where it will compete for $1 million in prizes.

The company plans to use any winnings from business plan competitions and any seed capital it can raise to develop a next generation version of its technology that will be manufacturing grade. It hopes to then submit it for clinical trials that will eventually lead to FDA approval in 3-5 years. In the meantime PreDxion Bio's team is looking for interested parties to help it get to the next step.

"We're talking with strategic partners," McHugh says.

Source: Walker McHugh and Caroline Landau, co-founders of PreDxion Bio
Writer: Jon Zemke

Inmatech expects breakout year for its battery tech

Inmatech has some grand ambitions for its battery technology in 2016. The Ann Arbor-based firm is looking to close on a couple of partnerships, bring its platform to market, and hire a lot of people along the way.

The University of Michigan spinout is developing advanced battery technology that greatly improves the performance of super capacitors for electronics. These super capacitors enable the batteries to improve the delivery of energy and increase energy density.

"We would be able to charge and recharge faster," says Les Alexander, CEO of Inmatech. "Our energy density is two-to-three times that of the other super capacitors on the market today."

The Inmatech team of eight people has been working on the technology for five years, mainly out of the University of Michigan's Venture Accelerator in the university's North Campus Research Complex. It made significant strides forward in 2015, hiring six people. The new hires range from technicians to executive leadership, including promoting Alexander from COO to CEO.

Inmatech expects to hire even more this year, a move that it will force it to find its own office space. First it needs to land some investment in order to make the commercialization of its battery technology possible.

However, Inmatech isn't going the traditional venture capital route. It is working to broker joint development agreements with two corporate partners. One would put Inmatech's technology in automotive applications.

"It’s a huge step forward for us," Alexander says. "It puts us on the path toward commercialization."

Inmatech is currently proving its battery technology through prototypes. It is currently at the later end of that process, which has helped the company land on Michigan’s 50 Companies to Watch list.

Source: Les Alexander, CEO of Inmatech
Writer: Jon Zemke

Detroiter invents cooker that makes diabetic-friendly rice


Swad Komanduri isn't trying to reinvent the wheel with his first startup. He's just trying to reinvent the rice cooker.

Komanduri came up with the idea after his father was a diagnosed with diabetes. His father is a vegetarian who eats Indian dishes composed mainly of rice, which his doctor suggested he cut from his diet.

The Komanduri family had a better idea. Instead of preparing the rice in traditional cookers, they started cooking the rice al dente, so it's still slightly firm. The end result is a significant reduction in its glycemic index -- as much as 30 percent. Within a few months, Komanduri's father returned to pre-diabetic health levels.

"It immediately improved my dad’s health," says Komanduri.

But cooking rice in a pot requires some maintenance. Given his family's proclivity for the grain, that added up to a couple of hours each day of watching rice cook.

"You can't just put it on the oven and go to the gym," he says.

So Komanduri, who worked in robotics in high school and got an engineering degree, started to tinker.

He is also a fellow with the 2014 class of Venture for America in Detroit. The nonprofit pairs promising college graduates with startups in economically challenged areas like Detroit in search of talent. Komanduri has spent the last two years working for NextEnergy and is nearing the end of his fellowship. He had been weighing different opportunities to launch his own company, and then the rice cooker idea popped into the center of his family’s life.

Komanduri launched a crowd-funding campaign to produce the initial prototypes with an eye on commercializing them within the next year. He hopes to raise $5,000.

Source: Swad Komanduri, founder of Simple Kitchen
Writer: Jon Zemke

Seat Side Service expands smartphone software to pay for event concessions

Growth at Seat Side Service isn't just about offering the best mobile concession services at events. It's about giving people more options. "The product has expanded tremendously," says Barak Leibovitz, founder & CEO of Seat Side Service.

The Ann Arbor-based startup got its start four years ago developing a mobile concession software. The platform enables spectators at athletic events to order and pay for food and beverages through their smartphone. Their order is delivered from a centralized kitchen, enabling vendors to only have to carry the food ordered.

Seat Side Service got its first start working with the Toledo Mud Hens, the AAA affiliate for the Detroit Tigers. It developed its original idea over a couple of minor league baseball seasons, but has expanded how it does business over the last year. Users can now place an order on the system and go pick up the food and the system can be used by cashiers at a venue.

"We're more of a full-service, point-of-sale system for entertainment venues," Leibovitz says. "The utility of the product has grown tremendously along with the applications for it."

That has allowed Seat Side Service to add more types of clients, such as concert venues, golf courses, and amplitheaters. Seat Side Service has also closed a six-figure seed capital round late last year and is in the midst of leveraging it to grow its footprint across North America.

Source: Barak Leibovitz, founder & CEO of Seat Side Service
Writer: Jon Zemke

Motor City Match seeks business and commercial property owners for third round of grants

Detroit entrepreneurs and commercial property owners are once again being encouraged to apply for the city's Motor City Match program. Applications are open for submission March 1-April 1. It's the third round of the program intended to stimulate Detroit's commercial corridors.

There are four major award categories for which business and property owners can apply for a share of $500,000 in grant funding. Each category is designed for business and property owners at different levels of building a business.

The first category is for business plans, which Motor City Match will help entrepreneurs develop. 

The second category seeks to match commercial property owners with business tenants. Buildings must be in good shape and entrepreneurs must have quality business plans or successful track records.

The third category will award architectural design assistance, construction documents, and priority permitting to business and building owners with recently signed leases.

The fourth and final category is for those with signed leases, quality business plans, and bids for building out the space, but who still have to bridge a financial gap. This category awards cash to such applicants.

Motor City Match was launched by Mayor Mike Duggan and the Detroit Economic Growth Corporation in 2015. Roderick Miller, CEO of the DEGC, says in a statement, "After two rounds of Motor City Match awardees, it's clear this program is making an impact in Detroit. From restaurants and retail establishments to service companies and even manufacturing, Motor City Match is growing neighborhood small businesses across the city."

According to officials, the Motor City Mach program has invested $1 million in 20 businesses to date, leveraging an additional $6 million in public and private investment. Motor City Match also points out that 70 percent of the 196 businesses and property owners that have received support are minority owned. Furthermore, two-thirds are from Detroit and half are minority woman-owned businesses.

Visit motorcitymatch.com for details on how to apply.

Disclosure: Model D receives support from Motor City Match to tell stories of small business development in the city's neighborhoods.

LLamasoft moves into Google space shows best value comes from local firms

Drive through downtown Ann Arbor and it's hard to miss the giant Google sign atop one of the city's premier office buildings. For years it has been one of the corporate names locals like to point to with pride. Now it's coming down as the tech giant plans to build its own office on the city's outskirts.

And that's a good thing.

LLamasoft, an Ann Arbor-based supply chain software firm, is taking up the lions share of prime downtown office space Google is leaving behind. The move is necessary to accommodate the firm’s rapid growth. Yes, rapid growth is a term thrown around much too often in today's media but LLamasoft is the real deal.

The 13-year-old company has raised tens of millions of dollars in seed capital, including $50 million from Goldman, Sachs & Co to fund its growth. It has hired nearly 100 people in the last year, rounding its staff out to 400 folks around the world. The bulk of them, 220 people, are in Ann Arbor. Its downtown offices are so cramped the company’s leadership doesn’t know where it’s going to put its new hires between now and when it moves into the new space later this summer.

"The 6-month wait we have is painful," says Toby Brzoznowski, co-founder & executive vice president of LLamasoft. "I am looking at ways to give up my office so 2-3 more people can cram into it so we can make it work until we move."

LLamasoft will take up the second and third floors of the McKinley Towne Centre, at 401 E. Liberty. That’s 60,000 square feet in one central location. Today, LLamasoft’s downtown Ann Arbor headquarters is split between several floors of the 201 S Main St building. Brzoznowski expects the new headquarters will give it the headroom the company needs to grow.

"There is absolutely room for growth," Brzoznowski says. "We have averaged 50 percent growth every year."

Betting against LLamasoft growth is not where the smart money is going these days. The company is one of the handful of tech darlings that is surpassing its big expectations. Google's AdWords office in downtown Ann Arbor never really lived up to its expectations. Where people expected a growth leader of a company that would be the center of the local tech scene turned into a side note in elevator pitches.

Yes, Ann Arborites are happy Google is here and prefer it in Tree Town, homegrown startups like LLamasoft are the real future. LLamasoft's executives are the ones who will create gobs of jobs and serve as one of the main leaders in the local entrepreneurial ecosystem.

Homegrown companies like LLamasoft are the ones that deserve to have their names in big lights atop Ann Arbor's skyline.

Source: Toby Brzoznowski, co-founder & executive vice president of LLamasoft
Writer: Jon Zemke
454 Angel Funding Articles | Page: | Show All
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