There is a lot of talk these days in post-industrial American cities like Detroit about transforming the “brawn economy” into the brain economy. Detroit Xconomist Mahendra Ramsinghani, who runs Invest Detroit’s First Step Fund, is on the front lines of that battle to economically recalibrate.
“As a community, generation after generation got up and went to work every day for the Fords or General Motors,” Ramsinghani explains. “Now we’re forced to think differently. That’s helping some and hurting others.”
The First Step Fund is a revolving loan pool supported by the Invest Detroit Foundation, TechTown, Ann Arbor SPARK, and Automation Alley. Its mission is to provide microfinancing and mentorship to emerging and newly formed small businesses in southeast Michigan that have successfully completed training programs through qualified business incubators. The fund makes investments of $10,000 to $50,000 in startups and is particularly interested in businesses that are owned by women and minorities. The fund began making investments in 2010, tough times that Ramsinghani says demanded not only swift action but creativity. “We knew we couldn’t do what’s always been done or we wouldn’t make progress,” he says. “We’re looking for passionate, viable companies that are very early stage, a little more mature, and everything in between.”
The mindset of Detroit, Ramsinghani says, has been to build robust products that last a lifetime. Compare that to Silicon Valley, where some of the biggest companies have made their fortunes by building a website, social network, or a mobile app. “That requires a different skill set,” Ramsinghani says. “Our industry here goes in 50- to 100-year cycles. Silicon Valley’s goes in 10-year cycles. It’s not that one is better or worse—each one plays an important part. But we need to understand our DNA and build our ecosystem around what we have.”
What Detroit has, in Ramsinghani’s opinion, are startups like Warren, MI-based Coliant Corporation, which makes the Powerlet products that enable motorcyclists to charge devices like cell phones on the fly. The company was started by a former auto engineer who “refused to accept his fate” of unemployment. Detroit also has startups like First Step loan recipient Wedit, which offers brides and grooms an online approach to capturing and editing their wedding videos. Both companies leveraged local strengths—a region rich in auto suppliers and investors who want to keep young talent in the state after they graduate from college—to make something new. “These are the kinds of rebirthing stories that I find fascinating,” Ramsinghani adds.
Ramsinghani was recently part of a delegation of economists representing local nonprofit foundations and government entities that visited Turin, Italy to learn how that
