|Why the Rest of the Country is Looking at Michigan's Economic Gardening as a Model for Growth - By Phil Tepley Technology Business Team Coordinator, Michigan Small Business and Technology Development Center|
Michigan does not always receive national headlines about positive impact, but economic developers around the country are learning that Michigan, the state that the recession hit first and hardest, is also the first state with some of the most creative and impactful economic development efforts launched over the previous ten years.
The Michigan Economic Development Corporation (MEDC) is often portrayed as a "hunter," and this may be due to the sizeable press attention given to each successful large company attraction compared to the many, MANY small business successes that each create a handful of jobs but add up to a significant sum. But through its Smart Zone program and the many 21st Century Jobs Fund (21st CJF) programs, the MEDC has demonstrated some of the best economic gardening in the country, and it's making a difference!
Launched in 2000 by the MEDC, the 15 Smart Zones are designed to cluster the activities and assets of universities, industry, research institutions and local communities to accelerate the commercialization of technologies and foster new ventures and job creation. The Smart Zone program facilitated tax capture from Local Development Finance Authorities, who along with state and county governments and the private sector, fund business incubators, business accelerators, networking and educational events, and financing programs. Emerging technology companies receive consulting from industry experts; microloans and pre-seed investments; discounts on specialized equipment or wet lab space; multiple day intensive business training; access to university student projects and internships; connections to potential customers, strategic partners, management, and investors through Smart Zone business accelerators and incubators.
As one example of a Smart Zone business accelerator, over the past year Ann Arbor SPARK provided consulting projects to 64 high growth potential companies, enabling the creation and retention of 185 full time jobs and over $6 million in capital raised. SPARK's business accelerator also trained 28 companies through 2 sessions of its 2 day intensive "Entrepreneurs Boot Camp" and held multiple networking and educational events for hundreds of entrepreneurs each week.
An excellent example of a Smart Zone business incubator is the Southwest Michigan Innovation Center (SMIC) in Kalamazoo. Playing a central role in Kalamazoo's vibrant life sciences economy, 25 companies have been launched in and have graduated from or currently reside at the SMIC. The collaborative strength of the SMIC companies brings international attention and dollars to the region.
Technology focused economic development initiatives require a long-term focus by nature and are not intended to be a quick fix. Even so, five years into the 21st CJF initiative, the results are impressive and making an important contribution to Michigan's recovery. The Foundation for the New Michigan Economy report recently released by the MEDC indicates that the 21st Century Jobs Fund has provided direct support to almost 1,500 companies, enabling them to create and retain 24,407 jobs. 21st CJF programs have been very successful in leveraging third party funds. Over $1.8 billion of third party funding has been leveraged; a rate of more than 4 third party dollars to each state dollar.
The 21st Century Jobs Fund plays an important role in building what just about any entrepreneur will tell you Michigan needs; a stronger financing environment with support available at different stages of a company's development. The initiative addresses this by creating multiple programs, each with a different sweet spot.
Due to the unfortunate reality of the state budget, the 21st Century Jobs Fund appropriations have declined each year since first launched in 2005. The Smart Zone tax capture is not materializing as hoped due to economic conditions. 2011 brings a new Governor and considerable turnover in the legislature. New leadership will bring new ideas, strategies, and tactics which are not only welcomed but necessary. However it's important that our new representatives recognize that the MEDC is much more than a "hunter." It has launched and supported world class programs that build our own entrepreneurial successes, create jobs, and diversify our economy so that job growth can occur exponentially, and so that we not as vulnerable to the business cycle and economic shifts. In order for this to happen, we need to continue to invest in these programs that are providing essential support to Michigan's small businesses and entrepreneurs.