Help is coming for Detroit’s high-growth, high-impact entrepreneurs, whether they are in technology or the trades.
The global nonprofit Endeavor is launching an affiliate here to help firms that are on the cusp of extraordinary growth.
“The entrepreneurial talent in Detroit and the broader region is impressive,” said Endeavor co-founder and CEO Linda Rottenberg. “We’re excited to support these companies to scale, stay and multiply their impact by investing, mentoring and inspiring the next generation of local high-impact entrepreneurs.”
Historically, the New York City-based organization has worked in global emerging markets, such as Chile, Mexico, Saudi Arabia and South Africa, bringing mentoring, talent and access to investors to dozens of companies.
It has shied away from the United States because the support for entrepreneurs is strong here; however Endeavor realized that a few U.S. cities face similar challenges to those global emerging markets. So, in 2013, it opened a Miami affiliate and now will make Detroit its second U.S. location.
Endeavor made its way to Detroit through Dave Egner and the New Economy Initiative, which receives some of its funding from the Miami-based John S. and James L. Knight Foundation.
“Alberto (Ibargüen), the CEO of Knight, says, ‘You have to see this program we’re bringing into Miami,’” said Egner, executive director of the New Economy Initiative and president and CEO of the Hudson-Webber Foundation. “He tells me, ‘I’m finding self-made entrepreneurs who are taking leadership positions in our community and I don’t know them — and I pride myself on knowing.’ “
So Egner and others started talking with Endeavor brass and were impressed by what they saw — and the results. In 2013, Endeavor-supported companies generated $6.8 billion in revenue; firms grow by an average of 68 percent after their first year, and 400,000 jobs have been created since 1997.
As a result, NEI invested $1 million to bring the program to Detroit, and the Grand Rapids-based Dick and Betsy DeVos Family Foundation invested another $500,000.
“Nobody is filling this gap in the market,” Egner said. “We’re doing startup work and corporate support very well in the state, but nobody is focused on high-growth potential, those $10 million to $15 million gross revenue companies that can blow it out to $200 million. If we get this right, the job growth will come on quickly.”
And, in fact, Endeavor’s research shows that the average high-growth company employs eight times as many people as the average non-high-growth firm and 35 times as many as the average startup.
To launch the program, Endeavor hired a local director: Antonio Luck, the former director of business acceleration at the Michigan Economic Development Corp. It also formed a local board of directors. Cindy Pasky, founder, president and CEO of Strategic Staffing Solutions, will serve as chairman.
Joining her on the board, in addition to Egner, are:
Gerard Anderson, chairman and CEO, DTE Energy, and board member of Downtown Detroit Partnership, The Henry Ford, Business Leaders for Michigan
Thomas Groos, partner, New York City-based City Light Capital, and board member of Endeavor Detroit and Marysville, Mich.-based Heartland Automation
Nate Lowery, co-founder and CEO, Royal Oak-based TM3 Systems Inc., and board member of the DeVos Family Foundation
Raj Vattikuti, founder, Southfield-based Altimetrik and the Vattikuti Foundation
Steven White, chairman and CEO, Detroit Renewable Energy, and board member of DDP
One of the key challenges the board faces in metro Detroit is a scale-up gap. The number of high-growth firms — those at least 3 years old with at least 20 percent annual employment growth over the past three years — declined by 50 percent between 2007 and 2012, according to Endeavor research.
To lose half of these types of firms in five years is critical for a city where the December unemployment rate was 12.2 percent, the metro area’s was 7.5 percent and the state came in 6.3 percent. The nationwide rate was 5.6 percent.
Still, Endeavor has identified a strong pool of potential participant businesses. It is looking at firms that are least 3 years old and typically have $2 million to $5 million in annual revenue. They can be in any industry, but must be poised for high growth and at a point where mentoring and training can make an impact.
“Lifestyle businesses are important, but they are not what Endeavor is looking for,” said Joanna Harries, Endeavor vice president for U.S. and Canada. “We want firms where growing their company is really a mission for them. We want people who light up at being able to make their business huge.”
Interested firms will go through a screening process and then advance through local and global selection panels and interviews.
“Imagine a cross between ‘Shark Tank’ and ’12 Angry Men,’ “ said Harries.
Endeavor expects to select six to eight firms for the first year. Each will have an advisory board to help with growth challenges and a custom-designed program.
“There is no formula or cookie cutter,” Egner said. “I see Endeavor as the ultimate connector. If a firm is an immediate export candidate and they need to connect into a country, the can use Endeavor network to find a company. They have capital connections. It is very much based on finding the best-in-class talent to connect with these companies so they can grow as fast as possible.”
Pasky also sees Endeavor as an opportunity to grow her leadership team and that of other area businesses. She may mentor some Endeavor firms when appropriate, but she is more excited to give her team a chance to become mentors.
“It’s a really good time for us to help them grow,” she said. “Strategic Staffing has this great young leadership team, so what better way to help them mature and grow to the next level than by having them mentor a company?”
And once a company leaves the program, it is expected to participate in mentoring the new cohort.
To find out more about Endeavor Detroit, email Detroit@endeavor.org.