software stuff and help out with new product design.”
This desire led him to co-found Flocktag, a universal loyalty card combined with a deals engine. Meant to replace all those “buy 10, get one free” punch cards in your wallet, Flocktag offers customized deals via text and e-mail based on a consumer’s behavior. From point-of-sale machines where customers swipe their Flocktags, the company collects and analyzes more than 20 factors of customer behavior to craft the deals they offer.
Fortino says he learned a lot in the process of raising a combined $15 million in venture capital for the three companies he co-founded. He was curious about investing, and that curiosity, combined with his love of being involved in the earliest stages of startups, spurred a conversation between Fortino and his old friend, Xconomist Mahendra Ramsinghani, managing partner at Detroit’s First Step Fund.
At the time last year when they talked, Ramsinghani had his hands full with 45 companies in the First Step Fund portfolio. Fortino stepped in to help manage the portfolio and was inspired to create a new fund, Detroit Innovate, which will officially launch after its first close at $10 million this fall.
Unlike the First Step Fund, which does industry-agnostic micro-investing in growth companies, Detroit Innovate focuses on enabling tech startups with “fairly heavy intellectual property.”
As part of Detroit Innovate, three entrepreneurs are embedded with local universities and industry to cultivate big-impact technology in the medical, enterprise software, and digital cleantech sectors. The companies Detroit Innovate invests in must be capital efficient, Fortino says, and fairly software heavy, though the fund will eventually consider hardware, especially if it relates to medical technology.
Fortino is happy to be in Detroit. He’s a believer. He says the level of integrity is higher in Michigan, and he thinks business-to-business startups have an easier time growing in Detroit than they do in other cities.
He’s also proud of the work the First Step Fund has done so far, and hopes to replicate it with Detroit Innovate. “We’ve syndicated with 24 VCs for the First Step Fund,” he notes. “We come in before VCs and hand the company off. We’re the institutional fund at the pre-seed level, and we’re often the first commitment the company gets. That’s as risky as it gets.”
Despite that risk, only five of the firm’s 52 portfolio companies have shut down, and a handful have even paid the fund back. “We haven’t had any IPOs or acquisitions yet, but in six months that will probably change,” Fortino adds.
