talent in the state, Mendelson warned that it could be tricky. He pointed to a recent National Venture Capital Association study that looked at state-funded startups that were required to be located in the state putting up the cash. They didn’t tend to do very well over time, he said.
When state-backed startups started to fail in Wisconsin, for example, he said the entire innovation ecosystem “cratered,” and that scared him a little bit. Nevertheless, “Don’t let a lack of VC money hold you back. The new breed of VCs go everywhere. If you create great companies, the VCs will eventually get here.”
Mendelson also had some additional advice for startup founders seeking VC support: Don’t go into the meeting acting like you know everything. “I decide who to fund just like I go on a date. I want to fall in love and be inspired,” he said. The average U.S. marriage lasts just over seven years; the average exit for a startup has grown to between nine and 13 years. “I’m spending longer with my CEOs than the average marriage. I’ve been involved with over 400 startups, and only two failed because of the technology. It’s always the people that fail, and the biggest mistake is getting the culture wrong in the beginning by hiring the wrong people.”
So, once Detroit has its startup ecosystem truly humming, how do we sustain it? Mendelson offered this caveat: “Don’t ever get lazy, or you’re done. Look at Boston and Silicon Valley. Boston got arrogant and exclusionary, and it drove entrepreneurs away. With Silicon Valley, everyone moved to San Francisco. Make sure your leaders are continually mentoring younger entrepreneurs.”
