Wayne State University

Funding resources

What does it take financially to start a company? Where does the money come from? According to the Kauffman Foundation, the majority of start up companies open their doors with less than $50,000 in start up capital. The funds come from a variety of sources including personal assets of the founders, friends, and family. Federal grant programs can fund hundreds of thousands of dollars to advance its commercial interests. The State of Michigan offers financial support for university start ups through a number of programs.  Bank loans account for some start up capital, while formal venture capital funding accounts for small amounts of funding for early stage start ups. Below is information about a number of programs that you might find helpful. If you have questions or do not find the specific information you are looking for contact the Technology Commercialization Office for assistance.

State of Michigan

Loans

  • SBA-Small Business Association
  • Banking Institutions
    •  Receivables financing
    •  Equipment Leasing
    •  Residential Real Estate Loans
    • Commercial Real Estate Loans
    • Asset Based Loans
    • Sale Lease Back
    • Note Financing

Federal grants

The Small Business Innovative Research (SBIR) and Small Business Technology Transfer (STTR) grant programs, sponsored by several United States Government agencies, are excellent sources of funding for start-up companies. For detailed information on these programs, CLICK HERE to go to our web page describing these important programs.

  • SBIR (Small Business Innovative Research Grant) (Read more)
    • Company must apply; US citizenship required for ownership
    • Phase I ($100K for six months): Feasibility research
    • Phase II ($750K or more for two years): Expand Phase I results
    •  Phase III (requires private $): Commercialization
    • Six month approval process; Awarded three times per year (Apr 1; Aug 1; Dec 1); Paid up license to government; Gap (typically 9 months) between Phase I and II funding; PI primary employment is with company; Must identify company controlled research facilities; Money not used for market or literature research; High probability of getting Phase II (30% - 40%); Various government agencies give these grants (NIH, NSF, Defense, etc.); Full audit required for ventures funded above $300K
  • STTR (Small Business Technology Transfer) (Read more)
    • Company must apply (requires partnership with research institution)
    • Phase I ($100K for six months): Feasibility research
    • Phase II ($500K or more for two years): Expand Phase I results
    • Phase III (requires private $): Commercialization
    • Six month approval process; Awarded three times per year (Apr 1; Aug 1; Dec 1); Paid up license to government; Gap (typically 9 months) between Phase I and II funding; PI primary employment is with company; Must identify company controlled research facilities; Money not used for market or literature research; High probability of getting Phase II (30% - 40%); Various government agencies give these grants (NIH, NSF, Defense, etc.); Full audit required for ventures funded above $300K
  • National Institute for Science and Technology (NIST) Advanced Technology Program (ATP)
    • ATP awards are made based upon how the project can benefit the nation. ATP fosters projects with a high payoff for the nation as a whole – in addition to a direct return to the innovators. The ATP has several critical features that set it apart from other government R&D programs.ATP projects focus on the technology needs of American industry, not those of government. Research priorities for the ATP are set by industry, based on their understanding of the marketplace and research opportunities. For-profit companies conceive, propose, co-fund, and execute ATP projects and programs in partnerships with academia, independent research organizations and federal labs.
    • The ATP has strict cost-sharing rules. Joint Ventures (two or more companies working together) must pay at least half of the project costs. Large Fortune-500 companies participating as a single firm must pay at least 60 percent of total project costs. Small and medium-sized companies working on single firm ATP projects must pay a minimum of all indirect costs associated with the project.
    • The ATP does not fund product development. Private industry bears the costs of product development, production, marketing, sales and distribution.
    • The ATP awards are made strictly on the basis of rigorous peer-reviewed competitions. Selection is based on the innovation, the technical risk, potential economic benefits to the nation and the strength of the commercialization plan of the project.
  • National Institutes of Health (NIH) & other Federal Agencies
    • Funds basic research (not applied research)
    • No caps
    • Six to seven month approval processes
    • Paid up license to the government
  • Grant Identification Service (funded by MTTC) provided by Biotechnology Business Consultants
    • Goal of helping to bring more grant money to small biotech companies in Michigan
    • Upon approval of MLSC: pro-bono consulting, up to 8 hours free; extended work fees reduced to $50 per hour 

Angel and venture capital funding

  • Great Lakes Entrepreneur’s Quest
    • Business Plan Competition: 15 separate awards totalling $175,000 awarded annually
    • Business plan training
    • Mentoring
    • Networking Opportunities and exposure to investors  
  • Great Lakes Angels
    • Angel network meets September through June yearly to consider investments in Michigan Companies
  • Michigan Venture Capital Association (MVCA) 
  • Michigan Venture Capital Firms – with MLSC- Seed Stage Investment Funds
    • Arboretum Ventures: $1,550,000 fund 
      • Industry Preference: Medical Device Companies, Life Science opportunities
      • Investment range: $150K - $2M
    • TGap Ventures: $1,550,000 fund
      • Industry Preference: Software, medical devices, IT and specialty Mfg.
      • Investment range: $250K-$750K
    • Apjohn Ventures Fund: $1,550,000 
      • Industry Preference: Biopharmaceuticals
      • Investment range: (3-6 start-ups per year)
    • Seneca Partners: $1,550,000 
      • Industry Preference: Healthcare
      • Investment range: up to $3M
      • Indsutry Preference: IT, MEMS, nanotechnology, advance manufacturing
      • Investment range:

Other resources