Crain's Review: Start Garden builds an ecosystem for startups
When Kirsten Field saw the novelty gifts at the Secret Santa Shop at her children’s elementary school, she was frustrated. She thought, there has to be a better product out there. So she built a business that would offer something better.
Field founded Elf Factory, now Kids Crafts Inc, which makes craft kits that allow parent organizations to run Secret Santa shops in their schools. In 2013, the company caught the attention of Start Garden. Established in 2012 by ArtPrize founder Rick DeVos, grandson of Amway co-founder Richard DeVos, Start Garden began as a $15 million seed fund that gave at least $5,000 a week to two startups. Not only did Elf Factory receive a $5,000 grant, which Field used to launch her business, but she also obtained valuable free services, from legal to SEO advice.
When Field returned to report on the company’s progress a few months later, Elf Factory received another $20,000 in funding.
Like many entrepreneurs, the Holland, Michigan resident started by growing her business from her home. But Field knows she’s in good company. “Western Michigan has this culture of startup businesses and small businesses,” she said.
Michigan has always been known for large, international companies such as Amway, Ford Motor Co. and General Motors Co. Now, business accelerators, state and local governments, corporations and schools are investing more heavily in startups — from biotech firms to craft breweries and artisan makers — that help power the economy.
Stewart Thornhill, executive director of the University of Michigan Zell Lurie Institute for Entrepreneurial Studies, said Michigan has a cost-of-living advantage for startups, compared with those in San Francisco, Austin or Boston.
“That's the kind of thing that can sustain an entrepreneurial ecosystem. If it's a cool place to live, then entrepreneurs will want to stay,” he said.
Some advantages to entrepreneurs are Michigan’s strengthening economy, robust environment for innovation, new technology and access to capital. In a 2016 report, CNBC ranked Michigan in the top 10 for each.
Jim Proppe, managing partner-elect for Southfield-based accounting and consulting firm Plante Moran PLLC, said another reason entrepreneurs are finding success in Michigan is the number organizations that help entrepreneurs get off the ground. For example, Plante Moran works with Ann Arbor Spark, a business development organization, by consulting with business owners, connecting them to capital and acting as a sounding board.
In 2015, Start Garden founded Seamless Coalition and Accelerator, a consortium composed of Steelcase Inc., Amway, Faurecia SA, Meijer Inc., Spectrum Health and Priority Health that invests in and cultivates Internet of Things startups. Participating companies receive business counseling, training, mentoring and the opportunity to rub elbows with CEOs of major companies they might otherwise never meet. Seamless invested more than $2.5 million in seven companies in 2015 and those companies received another $1.5 million from other investors, orders and contracts.
Justin Teitt, CEO at Holland-based touch technology company AlSentis, has said participation in the Seamless program has helped his company land previously unattainable meetings.
Last year, the New Economy Initiative NEIdeas competition gave 30 Michigan companies $10,000 each and two companies $100,000 each to help grow their ideas.
And Motor City Match, a Detroit Economic Growth Corp. program, awarded 15 entrepreneurs a total of $600,000 earlier this year.
“Access to capital is huge. Without the startup capital and the ability to have cash early on, these startups, even if they are profitable, will find it very difficult to grow. They need money to keep going,” Proppe said.
While Elf Factory doesn’t have the name recognition of a new micro-distillery or the venture capital backing some Internet of Things companies have received, its growth has been solid. In fact, Paul Moore, chief marketing officer at Start Garden, said Elf Factory paid back the $20,000 Start Garden convertible debt.
Elf Factory grew from working with six schools in 2015 to 50 in 2016, and 75 in 2017. They are creating a one stop shop for teachers and moms to get quality crafts kits at a reasonable price.
Their kits are perfect for Holiday classroom parties, Valentine Grams, Muffins with Moms events, Breakfast with Santa, After School programs, birthday parties and as a replacement for Candy Grams, the list goes on and on.