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Forget Silicon Valley: Can college students make Michigan a startup hub?

TechArb is a business incubator that encourages University of Michigan students to develop their business ideas.
Univ. of Mich.
TechArb is a business incubator that encourages University of Michigan students to develop their business ideas.

What do you get when you put dozens of college students in the basement of a parking garage with some office furniture, a WiFi connection and free coffee?

Well, it turns out you’ll end up with some pretty innovative ideas - as long as those students all happen to have diverse interests and a passion for entrepreneurship.

That’s the idea behind TechArb, a University of Michigan program that aims to provide student entrepreneurs with the mentoring, workspace and, in a few cases, funding needed to start their own businesses.

Earlier this month, TechArb hosted its “Spring Showcase,” a chance for student startups to present their ideas and accomplishments during the past semester.

The TechArb office, along with a cavernous adjacent space underneath a campus parking structure, was filled with potential investors, mentors and other members of the local entrepreneurial community. Student teams were each given about three minutes and one Powerpoint slide to make their pitch.

Then came a buffet dinner and a lot of networking.

In a region struggling to reinvent itself economically and get back on the path to prosperity, a large part of the battle is attracting talented people and the companies that employ them. And there is no shortage of approaches.

Politicians like Michigan Gov. Rick Snyder are angling to make the Midwest an attractive destination for immigrants, a traditionally entrepreneurial section of the population.

Organizations are retraining workers so their skills will better match the needs of local companies.

State and local governments have created incentives to lure businesses in growing sectors like green energy.

And there are plenty of other business incubators like TechArb looking to foster a community of entrepreneurs in the region.

“Entrepreneurs are encouraged by other entrepreneurs," says Moses K. Lee, the Assistant Director for Student Ventures at the Center for Entrepreneurship at UM’s College of Engineering.

He directs and oversees TechArb. Lee says that beyond simply turning ideas into successful ventures, a major goal for business accelerators like TechArb is to create a “critical mass” of entrepreneurs in an area where they can learn from each other.

“Entrepreneurs who are doing it or have done it should be teaching other...entrepreneurs,” says Lee. And he walks the talk. Aside from overseeing TechArb, Lee has his own startup--an online venue for students or recent grads to showcase their work for employers.

Several of the student entrepreneurs I spoke to agreed that a highlight of participation in TechArb is a sense of community, both internally and with other like-minded organizations---Ann Arbor SPARK, another local accelerator, and Detroit Venture Partners, a capital firm headed by Quicken Loans founder Dan Gilbert, came up a lot.

But there are a few aspects of TechArb that set it apart.

One is that the entrepreneurs it supports are still taking classes, something that could have an effect on where they choose to work in the future.
Alex Schiff is a business student at UM and the co-founder and CEO of Fetchnotes, on online note-taking tool developed at TechArb.

“The number one thing universities need to be doing right now is encouraging people to start companies," says Schiff. "If we can get people to start working on their ventures while they’re in school here, start networking and laying their roots in this area, then they’re going to want to stay. The reason that people go off to Silicon Valley when they graduate is because they don’t have the roots laid down here from a professional standpoint.”

Schiff plans to spend the next year growing his company in TechArb’s basement digs, but he says, unlike a lot of young, business-minded Midwesterners, he won’t be rushing to New York or the Bay Area come graduation.

“I don’t want to move my team. My family is here, My co-founder’s family is here. Might it happen someday down the road? Maybe, but I don’t want to leave Michigan for the sake of leaving Michigan and I think that’s a change that we are starting to see happen,” says Schiff.

Schiff also pointed to another feature that he thinks makes TechArb stand out: the diversity of businesses who share the space. He says that in other startup incubators, you might have a bunch of Web companies---all, their products are a little different, but they’re still all web companies.

Not so at TechArb.

During the showcase, the audience heard pitches from students studying everything from engineering or computer science to medicine or marketing. Projects included a health-food lunch cart, hybrid motors for speedboats, a new device to help EMTs with intubation, and a bike share program hoping to launch in Ann Arbor.

Schiff says it shakes up the way teams approach their work.

“It’s a completely different business perspective...[they’re] able to see the way that our business operates and we’re able to see the way that theirs operates," says Schiff. "It’s totally different but it helps to have that diversity.”

Like with any business venture, there is no guarantee that TechArb projects will succeed, but at the moment, business is booming. Moses Lee, the director of TechArb, says that since it started four years ago, students have managed to collectively raise over $5 million in capital and active companies currently employ about 150 people.

Whether encouraging students to start businesses while they are still in school will really turn the Midwest into an entrepreneurial hub remains to be seen, but perhaps it’s something for more schools to consider.

-John Klein Wilson, Michigan Radio Newsroom

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