July 10, 2024 - 12:06 pm

Funding Options for Startups: Two bills aim to fill gaps in current capital market

By 20Fathoms

This article was written by Cameron Young, Manager of Startup Capital at 20Fathoms. It originally appeared in the Traverse City Business News.

Michigan has long been celebrated for its industrial strengths, having served as a cornerstone to our nation’s economic development through its automotive manufacturing roots. In recent years the state has also become a burgeoning hub for entrepreneurial activity, with an increasing focus on its more rural regions. A growing number of venture capital firms, nonprofit organizations, and governmental entities dedicated to fostering innovation and economic growth throughout the state has helped propel this transformation.

At the end of the day, startups need funding to launch and scale. No matter where you start your business – Silicon Valley, Chicago, Traverse City – availability of capital is often the single biggest hurdle for startups and small businesses. In the last 18 months, a significant reduction in acquisitions and exits has significantly slowed capital circulation in the startup environment, sparking uncertainty and hesitation from entrepreneurs. However, entrepreneurs should know that Michigan has a number of startup capital options currently available – and a couple of new opportunities on the horizon.  

The Michigan Economic Development Corporation (MEDC) offers a variety of funding programs for startups and small businesses including:

  • SBIR/STTR Assistance Program: Training and proposal development services are available to help startups successfully obtain highly competitive Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) grants which fund early-stage research and development.
  • Business Accelerator Fund: Startups can use these funds to engage a third-party specialist in areas like market research or website development to help advance their path to commercialization, company success, and economic impact.
  • Michigan Emerging Technologies Fund: Providing matching dollars to those participating in the SBIR/STTR program, this fund supports those businesses contributing to federal research and development.
  • ID Ventures First Capital Fund: This early-stage development fund provides capital to Michigan-based startups. Participating companies also benefit from coaching and mentorship that helps them develop and reach significant milestones.
  • Michigan Rise: Similarly, Michigan Rise provides business milestone-focused funding, mentorship, and coaching to those in the tech development space.

 In Traverse City, we also have some great funding options for early-stage startups:

  • Venture North: Providing affordable loans with friendly terms for both new businesses and existing small businesses.
  • Northern Michigan Angels: A group of local investors providing angel funding for scalable entrepreneurial companies.
  • Boomerang Catapult: A venture capital firm investing in companies that create high value through intellectually intensive effort and export to the world.

There may soon be even more opportunities to bolster startup funding in Michigan. Currently, two pieces of legislation are making their way to the table, aiming to fill the gaps in the current capital market.

  • Split into four separate bills, House Bills 546356515652, and 5653 are amendments to the Michigan Strategic Fund Act that intend to establish the Center for Microenterprise Development and Michigan Early-Stage Venture Investment Corporation. Through these programs, state funds could be used to match money invested by community members into venture capital funds to increase the total available capital for investing, or funds could be used to create and maintain accelerator programs – often seen as foundational support for small businesses.
  • Additionally, House Bill 4116 (2021) provides incentives for individual community members to support small businesses by way of an income tax credit equal to 50% of the investment made.

For those looking to support entrepreneurs or entities that provide resources to them, understanding legislation such as these can be critical to a thriving ecosystem. Visit to learn more about these bills and the state’s efforts to add support to the startup ecosystem.

While funding is available for startups in Michigan – and more may be on the way – it’s not always easy to access it. You first need to identify the right funding source for your business based on your industry, stage, and needs, and then go through comprehensive application processes.

As northwest Michigan’s hub for entrepreneurship, 20Fathoms is the region’s advocate and access point for all programs offered by the MEDC. We also serve as a connection point for introductions to other funding providers. Our team provides free services to entrepreneurs, including coaching and education related to accessing capital.

If you’re an entrepreneur, growing business, or startup enthusiast it’s important to stay informed on the new developments with access to capital. Community support, both from the individual level and organizational level, is critical in sustaining growth in northwest Michigan as we become a premier destination for innovators and business leaders.