Detroit Venture Partners (DVP), the much-hyped tech fund launched by Quicken Loans founder/Cleveland Cavaliers owner Dan Gilbert, will soon debut its inaugural class of homegrown startups.
DVP currently has six term sheets out and expects to make an announcement on its first investments in 30 days, says CEO and managing partner Josh Linkner.
The fund wants to bankroll Detroit-based startups in software, IT, e-commerce and digital media. Each check will initially be worth between $250,000 and $750,000, but the firm could pump a total of $2 million to $3 million into each company in its portfolio, counting follow-on rounds. Ultimately, DVP wants to deploy $100 million into local startups, Linkner says.
So far, Linkner, whose fund has examined 200 potential deals since last November, likes what he sees.
“I’m actually pleasantly surprised,” he says. “We’re really seeing some amazing things.”
DVP is essentially the financial fuel to Gilbert’s vision of building a corridor of high tech companies along Woodward Avenue—dubbed WEBward Avenue by Gilbert—which runs through the heart of downtown Detroit.
In January, Quicken Loans bought the historic Madison Building, which will offer 2,000 square feet of incubation space to startups, development teams, and VC offices.
To build a tech community in Detroit, the city needs mass, Linkner says.
“We have all of the ingredients here,” Linkner says. “We just need the connective tissue to pull it all together. Right now, everything happens in pockets.”
DVP, though, will face a delicate task of balancing its mission of revitalizing Detroit and making money for its investors, says Jeff Bocan, managing director of Beringea Group, a venture capital and private equity firm based in Farmington Hills, MI.
Bocan is certainly familiar with that dilemma. Initially based in Santa Monica, CA, Bocan moved to Michigan with orders from Beringea to find local startups the firm could bankroll.
Over the past two years, Beringea has invested in a dozen local companies after examining hundreds of potential deals across the state.
DVP’s “job is first and foremost to earn a return for its investors,” Bocan says. “This can’t be about economic development.”
So far, DVP’s only major investor is Gilbert, though the firm is trying to recruit other investors.
If successful, that’s where DVP will really bring value to Detroit, by luring outside capital to a city that desperately needs it, Bocan says.
