Description
Many leaders and institutions across the state of Michigan have dedicated themselves to the renewal and revitalization of the states economy.
1
The Michigan Initiative for Innovation & Entrepreneurship
A consortium of public universities for
transforming practice and culture
Overview
Many leaders and institutions across the state of Michigan have dedicated themselves to the
renewal and revitalization of the state’s economy. Most agree that creating knowledge jobs
and recruiting and retaining knowledge workers are vital strategies for reinventing the regional
economy. Other regions (such as the West Coast and the Northeast) have shown that creating
sustainable knowledge-based economies depends on leveraging the enormous intellectual
capital that exists in local, world-class universities and colleges. A remarkably strong and
competitive higher education infrastructure exists in Michigan. Our fifteen public colleges and
universities collectively draw more than $1.5 billion in R&D funding each year into the state,
creating a large and constantly renewable resource of creativity, innovation, human and
physical infrastructure, and business acumen that stands ready to be leveraged to our state’s
advantage. Each of these great institutions brings thousands of students, strong faculty and
staff, a diversity of strengths, and community-based relationships that can be leveraged in
service to a new economy.
The public universities have united to form a common approach to economic development and
entrepreneurial initiatives. In the past year, the universities have formed a consortium for
recruiting and funding entrepreneurial efforts, enabling new business start-ups, and promoting
innovation and competitiveness in existing businesses.
This consortium – the Michigan Initiative for Innovation and Entrepreneurship(MIIE) – will
work through the coming seven years to: Develop effective and long lasting partnerships
between academia, industry, venture capitalists, and government to leverage existing
infrastructure, resources and expertise; generate risk capital whose purpose is directed
exclusively to founding new ventures within the State of Michigan; make education and
investment in entrepreneurship a priority on campuses and off; develop a sustainable
entrepreneurial environment in the state’s universities and at the policy and investment
levels; and create a culture of innovation in the universities and across Michigan. MIIE’s
members have created a fair, transparent and merit-driven process for recruiting proposals from
among the consortium and for making decisions about MIIE grants.
The ultimate objective of the initiative is to create sustainable and effective means to
rebuild our communities, achieving economic prosperity based on a diverse and
distributed foundation of knowledge-based industries. To accomplish this transformation
of the economic competitiveness of the rust-belt, the MIIE seeks a significant grant. Such a
grant will be allocated through three funds that offer a comprehensive approach to launching
new businesses and creating the much-needed culture of entrepreneurialism among students,
faculty, and industry (as it intersects with them). In total, the universities are committed to
raising $75 million for this statewide, seven-year collaboration to invest those funds in
collaborative, transparent and competitive ways. The programs are organized into three
thematic approaches to changing practice and culture, and investing in a new entrepreneurial
culture within the campuses and their communities.
2
Fact Sheet: The Gap Fund
The Gap Fund will provide substantial resources to move innovative ideas from the
laboratories, studios, and classrooms in our state institutions of higher learning and research
into a phase that can attract substantial and sustaining venture investment for new businesses to
be established in Michigan. The existence of the “critical gap” in existing funding mechanisms
in Michigan is shown below.
TheGap Fund within MIIE will focus on connecting translational research to pre-
seed and seed stages of development and investment. It is aimed at nurturing
invention and ideas through to being venture-ready. Its use of philanthropic dollars
leaves start-ups with the flexibility necessary to attract later-stage venture funding. The
funds are driven by the universities’ business development operations, emanating from
research and technology transfer.
$50 million will be raised and reinvested in collaborative and competitive
processes (see a first set of RFPs, attached).
Requests for proposals (RFPs) and processes for making funding decisions are
based on experiences and models of the MEDC-funded Michigan Universities
Commercialization Initiative (MUCI), which engaged ten of the universities. MUCI
has collaboratively allocated more than $6 million to date, under four MEDC funding
cycles, to more than 110 projects. An evaluation report on the first three cycles of
funding is available.
Project examples from MUCI efforts include the following:
o BioPhotonic Solutions Inc, out of MSU, received $53,000 to develop a
prototype, and then received $38,000 for commercialization of a second
technology
o Xoran Technologies, out of UM, has received MUCI funds and has been
named one of “Fifty Companies to Watch in Michigan”
Company
Expansion
Idea/Concept
Marketing
Idea/Concept
Development
Idea/Concept
Validation
Idea/Concept
Discovery
Basic
Research
Investment Banking
Public Markets
Highest Risk,
Lowest
Valuation
Venture Capital
Seed
The Critical Gap
Pre-seed
Lowest
Risk,
Highest
Valuation
3
o SenSound (Wayne State) later received $100,000 Small Business Innovation
Research grant from U S Air Force
o Quartz crystal microbalance (QCM) sensor technology is leading to a device
that can detect whether water is drinkable; this work at Oakland University
received $47,800 from MUCI to engineer a prototype and do market
assessment.
Funds are targeted to support the successful migration of a university-owned
technology out of the institution towards licensing and economic development.
Supported activities can include market research and commercial assessment to
confirm market need and customer/partner/investor interest, product requirements,
plan for competitive advantage (the “value proposition,”), proof of concept studies;
IP enhancement, initial “freedom to practice” analysis, regulatory approval planning
(patent application), prototype development and testing, feasibility studies for
production scale-up, business model development, business plan preparation,
portfolio profiling (analysis of a group of related technologies), and consulting.
The first round of applications to the MIIE program to be funded using a planning grant from
the C. S. Mott Foundation includes a wide range of proposals from all of the 15 public
universities. Given the successes and activities of MUCI, through which $6 million in
investment has seen 27 new businesses launch, we expect that $50 million invested through
this Gap capital, in start-ups and commercialization through MIIE, will result in as many
as 200 new businesses in Michigan.
Additionally, the Gap Fund has match requirements of the institutions and has, like all
licensing from within the universities, a payback provision. This provision is not based on an
equity stake, which would harm the start-up as it seeks venture capital at a later stage, but is
based on repayment of three times the award amount as a small percentage of start-up revenue
in early years. The chart below offers a sense of the long-term payback revenue stream, as
well as the matching funds drawn into the start-ups through the MIIE Gap Fund program.
Gap Funding
0
2
4
6
8
10
12
14
16
2007 2008 2009 2010 2011 2012 2013 2014 2015
Years
Foundation Gap Funds
Matching Funds @ 50%
Payback @ x3
4
Fact Sheet: Industry and Economic Engagement
A second focus of MIIE is on Industry and Economic Engagement to establish a context for
researchers, practitioners and the business community to exchange ideas, and to improve and
start businesses in the state. Fifteen million dollars will be raised and regranted in higher
education collaborations emanating from research operations and regional opportunities.
The purpose of the fund is to help transfer knowledge from universities to Michigan industry,
thereby expanding the economic base of Michigan. Awards will foster collaborations between
universities and Michigan-based enterprises by developing projects or programs that are based
on university knowledge, expertise, specialized facilities, know-how, etc. Characteristics of
appropriate projects include: Access to resources, assets, and services within the university,
such as faculty expertise and technical facilities by private companies. Projects may also
improve access by university personnel to private company resources, assets, and services.
Examples include faculty/student teams working with companies, especially entrepreneurial
ventures; university faculty and student teams working to improve the competitiveness of
Michigan industry; providing common forums for university and industry experts to share
information, etc.
While university intellectual property may not be involved at the time of the initiation of the
project, university IP or joint IP may develop from the project. Projects may also meet a
particular need or a larger, sustainable program or project that will have impact over time.
Proposals from the participating universities to this fund in J une 2008 include creative
approaches such as:
IME: A Partnership Between Tellurex, Corp. and MTU to Engineer Materials for
High Efficiency Thermoelectric Power Generators
Metropolitan Gateway Feasibility Study
West Michigan Medical Device Industry- Creating Proprietary Position for
Profitable Business Growth
Anti-microbial Coatings for Interior Architectural Aluminum Panels
Instant Innovation
Small Business Clinic
Entrepreneurship Academic Program
Imaging the Future: Revitalization of Mid-Michigan Companies Through Deep
Strategic Change.
5
Fact Sheet: Talent Retention and Entrepreneurship Education Fund
A Talent Retention and Entrepreneurship Education Fund is directed at improving the
level of understanding within the state’s educational institutions about how to achieve
commercial success from concept to practice. The universities propose to raise $10 million for
regranting in this category.
Awards from this fund will foster entrepreneurial education faculty development through the
provision of resources and programs. The intent of this fund is to advance knowledge of
entrepreneurial principles and practices among multiple student and faculty constituencies, and
to solidify a culture of technological innovation and entrepreneurship in Michigan.
Examples include entrepreneur-in-residence programs, projects designed to increase the
effectiveness of university tech transfer offices, internships with economic development
agencies, venture capital and other fund managers, development of new courses/curricula and
boot camps, etc.
First round proposals to this fund (J une 2008) include the following:
Techno-Entrepreneurs Simulation
Haworth College of Business Center for Entrepreneurial Studies and Innovation
Development and Turnaround of Michigan CleanTech Companies
Entrepreneurship Education in Flint.
Each set of activities will be enhanced by the local and regional matches that the participating
research institutions provide, and will also draw significantly from other private and public
resources.
Requests for Proposals for all three funds were issued to the universities in May 2008, with a
copy of the invitation attached. Response has been strong – at deadline there were 39
proposals. The processes designed by the universities – and the RFP itself – have achieved
significant buy-in among the universities of the state. The collaborative review committees,
including university representatives, economic developers, venture bankers, and entrepreneurs
will meet in late J une to decide grant allocations, and final decisions will be made in early J uly,
2008.
doc_368459943.pdf
Many leaders and institutions across the state of Michigan have dedicated themselves to the renewal and revitalization of the states economy.
1
The Michigan Initiative for Innovation & Entrepreneurship
A consortium of public universities for
transforming practice and culture
Overview
Many leaders and institutions across the state of Michigan have dedicated themselves to the
renewal and revitalization of the state’s economy. Most agree that creating knowledge jobs
and recruiting and retaining knowledge workers are vital strategies for reinventing the regional
economy. Other regions (such as the West Coast and the Northeast) have shown that creating
sustainable knowledge-based economies depends on leveraging the enormous intellectual
capital that exists in local, world-class universities and colleges. A remarkably strong and
competitive higher education infrastructure exists in Michigan. Our fifteen public colleges and
universities collectively draw more than $1.5 billion in R&D funding each year into the state,
creating a large and constantly renewable resource of creativity, innovation, human and
physical infrastructure, and business acumen that stands ready to be leveraged to our state’s
advantage. Each of these great institutions brings thousands of students, strong faculty and
staff, a diversity of strengths, and community-based relationships that can be leveraged in
service to a new economy.
The public universities have united to form a common approach to economic development and
entrepreneurial initiatives. In the past year, the universities have formed a consortium for
recruiting and funding entrepreneurial efforts, enabling new business start-ups, and promoting
innovation and competitiveness in existing businesses.
This consortium – the Michigan Initiative for Innovation and Entrepreneurship(MIIE) – will
work through the coming seven years to: Develop effective and long lasting partnerships
between academia, industry, venture capitalists, and government to leverage existing
infrastructure, resources and expertise; generate risk capital whose purpose is directed
exclusively to founding new ventures within the State of Michigan; make education and
investment in entrepreneurship a priority on campuses and off; develop a sustainable
entrepreneurial environment in the state’s universities and at the policy and investment
levels; and create a culture of innovation in the universities and across Michigan. MIIE’s
members have created a fair, transparent and merit-driven process for recruiting proposals from
among the consortium and for making decisions about MIIE grants.
The ultimate objective of the initiative is to create sustainable and effective means to
rebuild our communities, achieving economic prosperity based on a diverse and
distributed foundation of knowledge-based industries. To accomplish this transformation
of the economic competitiveness of the rust-belt, the MIIE seeks a significant grant. Such a
grant will be allocated through three funds that offer a comprehensive approach to launching
new businesses and creating the much-needed culture of entrepreneurialism among students,
faculty, and industry (as it intersects with them). In total, the universities are committed to
raising $75 million for this statewide, seven-year collaboration to invest those funds in
collaborative, transparent and competitive ways. The programs are organized into three
thematic approaches to changing practice and culture, and investing in a new entrepreneurial
culture within the campuses and their communities.
2
Fact Sheet: The Gap Fund
The Gap Fund will provide substantial resources to move innovative ideas from the
laboratories, studios, and classrooms in our state institutions of higher learning and research
into a phase that can attract substantial and sustaining venture investment for new businesses to
be established in Michigan. The existence of the “critical gap” in existing funding mechanisms
in Michigan is shown below.
TheGap Fund within MIIE will focus on connecting translational research to pre-
seed and seed stages of development and investment. It is aimed at nurturing
invention and ideas through to being venture-ready. Its use of philanthropic dollars
leaves start-ups with the flexibility necessary to attract later-stage venture funding. The
funds are driven by the universities’ business development operations, emanating from
research and technology transfer.
$50 million will be raised and reinvested in collaborative and competitive
processes (see a first set of RFPs, attached).
Requests for proposals (RFPs) and processes for making funding decisions are
based on experiences and models of the MEDC-funded Michigan Universities
Commercialization Initiative (MUCI), which engaged ten of the universities. MUCI
has collaboratively allocated more than $6 million to date, under four MEDC funding
cycles, to more than 110 projects. An evaluation report on the first three cycles of
funding is available.
Project examples from MUCI efforts include the following:
o BioPhotonic Solutions Inc, out of MSU, received $53,000 to develop a
prototype, and then received $38,000 for commercialization of a second
technology
o Xoran Technologies, out of UM, has received MUCI funds and has been
named one of “Fifty Companies to Watch in Michigan”
Company
Expansion
Idea/Concept
Marketing
Idea/Concept
Development
Idea/Concept
Validation
Idea/Concept
Discovery
Basic
Research
Investment Banking
Public Markets
Highest Risk,
Lowest
Valuation
Venture Capital
Seed
The Critical Gap
Pre-seed
Lowest
Risk,
Highest
Valuation
3
o SenSound (Wayne State) later received $100,000 Small Business Innovation
Research grant from U S Air Force
o Quartz crystal microbalance (QCM) sensor technology is leading to a device
that can detect whether water is drinkable; this work at Oakland University
received $47,800 from MUCI to engineer a prototype and do market
assessment.
Funds are targeted to support the successful migration of a university-owned
technology out of the institution towards licensing and economic development.
Supported activities can include market research and commercial assessment to
confirm market need and customer/partner/investor interest, product requirements,
plan for competitive advantage (the “value proposition,”), proof of concept studies;
IP enhancement, initial “freedom to practice” analysis, regulatory approval planning
(patent application), prototype development and testing, feasibility studies for
production scale-up, business model development, business plan preparation,
portfolio profiling (analysis of a group of related technologies), and consulting.
The first round of applications to the MIIE program to be funded using a planning grant from
the C. S. Mott Foundation includes a wide range of proposals from all of the 15 public
universities. Given the successes and activities of MUCI, through which $6 million in
investment has seen 27 new businesses launch, we expect that $50 million invested through
this Gap capital, in start-ups and commercialization through MIIE, will result in as many
as 200 new businesses in Michigan.
Additionally, the Gap Fund has match requirements of the institutions and has, like all
licensing from within the universities, a payback provision. This provision is not based on an
equity stake, which would harm the start-up as it seeks venture capital at a later stage, but is
based on repayment of three times the award amount as a small percentage of start-up revenue
in early years. The chart below offers a sense of the long-term payback revenue stream, as
well as the matching funds drawn into the start-ups through the MIIE Gap Fund program.
Gap Funding
0
2
4
6
8
10
12
14
16
2007 2008 2009 2010 2011 2012 2013 2014 2015
Years
Foundation Gap Funds
Matching Funds @ 50%
Payback @ x3
4
Fact Sheet: Industry and Economic Engagement
A second focus of MIIE is on Industry and Economic Engagement to establish a context for
researchers, practitioners and the business community to exchange ideas, and to improve and
start businesses in the state. Fifteen million dollars will be raised and regranted in higher
education collaborations emanating from research operations and regional opportunities.
The purpose of the fund is to help transfer knowledge from universities to Michigan industry,
thereby expanding the economic base of Michigan. Awards will foster collaborations between
universities and Michigan-based enterprises by developing projects or programs that are based
on university knowledge, expertise, specialized facilities, know-how, etc. Characteristics of
appropriate projects include: Access to resources, assets, and services within the university,
such as faculty expertise and technical facilities by private companies. Projects may also
improve access by university personnel to private company resources, assets, and services.
Examples include faculty/student teams working with companies, especially entrepreneurial
ventures; university faculty and student teams working to improve the competitiveness of
Michigan industry; providing common forums for university and industry experts to share
information, etc.
While university intellectual property may not be involved at the time of the initiation of the
project, university IP or joint IP may develop from the project. Projects may also meet a
particular need or a larger, sustainable program or project that will have impact over time.
Proposals from the participating universities to this fund in J une 2008 include creative
approaches such as:
IME: A Partnership Between Tellurex, Corp. and MTU to Engineer Materials for
High Efficiency Thermoelectric Power Generators
Metropolitan Gateway Feasibility Study
West Michigan Medical Device Industry- Creating Proprietary Position for
Profitable Business Growth
Anti-microbial Coatings for Interior Architectural Aluminum Panels
Instant Innovation
Small Business Clinic
Entrepreneurship Academic Program
Imaging the Future: Revitalization of Mid-Michigan Companies Through Deep
Strategic Change.
5
Fact Sheet: Talent Retention and Entrepreneurship Education Fund
A Talent Retention and Entrepreneurship Education Fund is directed at improving the
level of understanding within the state’s educational institutions about how to achieve
commercial success from concept to practice. The universities propose to raise $10 million for
regranting in this category.
Awards from this fund will foster entrepreneurial education faculty development through the
provision of resources and programs. The intent of this fund is to advance knowledge of
entrepreneurial principles and practices among multiple student and faculty constituencies, and
to solidify a culture of technological innovation and entrepreneurship in Michigan.
Examples include entrepreneur-in-residence programs, projects designed to increase the
effectiveness of university tech transfer offices, internships with economic development
agencies, venture capital and other fund managers, development of new courses/curricula and
boot camps, etc.
First round proposals to this fund (J une 2008) include the following:
Techno-Entrepreneurs Simulation
Haworth College of Business Center for Entrepreneurial Studies and Innovation
Development and Turnaround of Michigan CleanTech Companies
Entrepreneurship Education in Flint.
Each set of activities will be enhanced by the local and regional matches that the participating
research institutions provide, and will also draw significantly from other private and public
resources.
Requests for Proposals for all three funds were issued to the universities in May 2008, with a
copy of the invitation attached. Response has been strong – at deadline there were 39
proposals. The processes designed by the universities – and the RFP itself – have achieved
significant buy-in among the universities of the state. The collaborative review committees,
including university representatives, economic developers, venture bankers, and entrepreneurs
will meet in late J une to decide grant allocations, and final decisions will be made in early J uly,
2008.
doc_368459943.pdf