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Why Michigan Could Become a Startup Powerhouse

The unicorns in Michigan demonstrate a fertile startup ecosystem with unlimited opportunities. A couple weeks ago, StockX became the state’s newest in a quickly-growing cohort of unicorns, which includes two other startups that also earned the elite status this year. In February, OneStream Software announced that it had not only become a unicorn but that it is profitable as well, an achievement…

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The unicorns in Michigan demonstrate a fertile startup ecosystem with unlimited opportunities. A couple weeks ago, StockX became the state’s newest in a quickly-growing cohort of unicorns, which includes two other startups that also earned the elite status this year. In February, OneStream Software announced that it had not only become a unicorn but that it is profitable as well, an achievement that few startups can claim — even by the time they exit. In the same month, electric vehicle startup Rivian also earned a billion-dollar valuation when it received a significant investment from Amazon. The startup secured another large round of funding just two months later from Ford.

Last month, I had the opportunity to visit Ann Arbor during a week-long series of tech events curated by economic development engine Ann Arbor SPARK. This event series brought together people from around the world and afforded me the opportunity to connect with many Ann Arbor and Detroit startup entrepreneurs, investors, and supporters who are strengthening the ecosystem. The startup growth in Michigan has given the entire region palpable momentum and energy. What’s so special about Michigan’s startups isn’t merely its energy, though. Heavily fueled by its decades of cybersecurity software expertise and success — and boasting world-class unicorn companies that span consumer marketplaces, enterprise software, and automotive innovation — Michigan’s ecosystem has evolved in a way that bodes extremely well for the region’s economy, community, and entrepreneurs alike.

The first Michigan unicorn in recent history was Ann Arbor-based cybersecurity startup Duo Security, which claimed the status in 2017. Acquired by Cisco last year for $2.35 billion, Duo is the latest in a long line of successful enterprise cybersecurity startups, whose research and development in Ann Arbor dates back to 1966, when the University of Michigan founded Merit Network, the nation’s longest-running computer network. While they weren’t all unicorns, cybersecurity startup success stories in the city also include Arbor Networks (acquired by NETSCOUT), Deepfield Networks (acquired by Nokia), and up-and-comer Censys (which has already received coastal capital).

Meanwhile, Detroit has become a rising force in consumer brand startups. For example, Michigan’s newest unicorn, sneaker exchange StockX, and the established luxury goods manufacturer Shinola both call Detroit home. The city houses many other direct-to-consumer startups as well, though, including modular but long-lasting furniture maker Floyd, indoor houseplant brand Bloomscape, and curly hair product line Naturalicious. All three of these startups have received funding since 2018, including from coastal investors.

One industry we aren’t surprised to see growing in the nation’s motor capital is, of course, mobility. With deep roots and unique expertise in the automotive industry, Michigan does not just see innovation with electric vehicles like Rivian (one of the unicorns I mentioned above); Ann Arbor-based autonomous vehicle startup May Mobility has gained considerable traction as well. Founded in 2017, May Mobility closed a $22 million Series A round in February of this year. The company has already deployed vehicles in Detroit and Columbus and is using its latest round of funding to expand to other cities. Finally, just last week Ann Arbor-based autonomous delivery robot startup Refraction came out of stealth mode at TechCrunch’s Mobility Session (and did so with venture backing).

Ironically, although entrepreneurship continues to grow in the Ann Arbor-Detroit corridor, one of the key challenges that the region faces is indeed mobility-related. There are extremely limited public transit options between the two cities, which means that one must drive a car between them in order to connect. The ecosystem would arguably see greater collaboration and increased density of resources — which are both critical for scaling — if it were possible for the region’s talent to connect through other mass transit options. Moreover, in a city with the highest car insurance rates in the country, Detroit alone would certainly benefit if startup talent could live there without needing to own a car. This is a key issue that the region will have to solve in order to continue growing successfully.

As an outsider looking in, I see a unique opportunity for Michigan to accelerate its path to ongoing success by uniting the community and building an even more intentional innovation corridor between Ann Arbor and Detroit. By building more collaborative structures across its wide swath of expertise and experience, the state could transform the workforce with new skills, attract investors, and thoughtfully plan to improve life for all citizens — not just those involved in technology.

Organizations in the region are already working hard on helping people transition careers, such as Grand Circus, which helps people transition into tech without going back to college, and Build Institute, which has helped over 1,700 entrepreneurs launch startups (often direct-to-consumer) in the Detroit region. Further collaboration, however, across these cities’ respective non-profits, politicians, investors, and entrepreneurs alike could help the region accelerate its growth path not just in a single vertical or area of expertise but as a broader community.

While the state is not without its challenges, Michigan sees a lot of strong momentum and has the trappings to be a diverse startup powerhouse. This is good news not only for Michiganders but for the broader Midwest ecosystem as well. Helping to rescue the region from its “rust belt” moniker, Michigan is proving that innovation is strong in the Midwest. With further collaboration across cities and industries, Michigan has the opportunity to create a diverse economy that’s poised for greater resilience during times of economic compression. This strength and synergy across Midwestern cities and states will be key as we continue to rise alongside our coastal counterparts.

Originally featured in Forbes.

Source: https://hydeparkangels.com/why-michigan-could-become-a-startup-powerhouse/#utm_source=rss&utm_medium=rss&utm_campaign=why-michigan-could-become-a-startup-powerhouse

Private Equity

Boston startups expand region’s venture capital footprint

This year has shaken up venture capital, turning a hot early start to 2020 into a glacial period permeated with fear during the early days of COVID-19. That ice quickly melted as venture capitalists discovered that demand for software and other services that startups provide was accelerating, pushing many young tech companies back into growth […]

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This year has shaken up venture capital, turning a hot early start to 2020 into a glacial period permeated with fear during the early days of COVID-19. That ice quickly melted as venture capitalists discovered that demand for software and other services that startups provide was accelerating, pushing many young tech companies back into growth mode, and investors back into the check-writing arena.

Boston has been an exemplar of the trend, with early pandemic caution dissolving into rapid-fire dealmaking as summer rolled into fall.

We collated new data that underscores the trend, showing that Boston’s third quarter looks very solid compared to its peer groups, and leads greater New England’s share of American venture capital higher during the three-month period.

For our October look at Boston and its startup scene, let’s get into the data and then understand how a new cohort of founders is cropping up among the city’s educational network.

A strong Q3, a strong 2020

Boston’s third quarter was strong, effectively matching the capital raised in New York City during the three-month period. As we head into the fourth quarter, it appears that the silver medal in American startup ecosystems is up for grabs based on what happens in Q4.

Boston could start 2021 as the number-two place to raise venture capital in the country. Or New York City could pip it at the finish line. Let’s check the numbers.

According to PitchBook data shared with TechCrunch, the metro Boston area raised $4.34 billion in venture capital during the third quarter. New York City and its metro area managed $4.45 billion during the same time period, an effective tie. Los Angeles and its own metro area managed just $3.90 billion.

In 2020 the numbers tilt in Boston’s favor, with the city and surrounding area collecting $12.83 billion in venture capital. New York City came in second through Q3, with $12.30 billion in venture capital. Los Angeles was a distant third at $8.66 billion for the year through Q3.

Source: https://techcrunch.com/2020/10/23/boston-startups-expand-regions-venture-capital-footprint/

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Private Equity

Alternative Investments/Real Estate: Housing Market Demand Is “Insane”

Speaking to CNBC on Power Lunch, Glenn Kelman, CEO of real estate brokerage Redfin (NASDAQ: RDFN), said he expected the current boom conditions in the housing market to last well into next year. He attributed the high demand to affluent professionals looking for remote homes as well as low interest rates. Also, he thinks some sellers will put their properties on the market only after the presidential election.

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Alternative Investments/Real Estate: Housing Market Demand Is “Insane”

https://platodata.net/wp-content/uploads/2020/10/alternative-investments-real-estate-housing-market-demand-is-insane.jpg

Redfin CEO Glenn Kelman says the boom could last into next year.

Speaking to CNBC on Power Lunch, Glenn Kelman, CEO of real estate brokerage Redfin (NASDAQ: RDFN), said he expected the current boom conditions in the housing market to last well into next year. He attributed the high demand to affluent professionals looking for remote homes as well as low interest rates. Also, he thinks some sellers will put their properties on the market only after the presidential election. (CNBC)

Kelman: Too good to last forever

“This level of demand is absolutely insane. I would expect it to last into 2021, at least,” Kelman said.

Recent data from the National Association of Realtors shows up the strength in the housing market.

Existing home sales shot up 9.4% in September beating expectations. Even though the median purchase price of a home rose approximately 15% year over year, there is just a 2.7-month supply of for-sale homes, showing tight market inventory conditions.

The 30-year fixed-rate mortgage averaged 2.80% for the week ending Oct. 22, down from 2.81% in the previous week and 3.75% a year ago, according to the Freddie Mac Primary Mortgage Market Survey. Therefore, mortgage rates crept even lower in the latest week.

However, “there’s no way it can last forever,” Kelman warned of the bullish conditions.

Canada: Off the charts

Meanwhile, at the northern neighbor, home sales activity in September is described as “off-the-charts.”

Housing data released by the Canadian Real Estate Association (CREA) last week showed a nationwide year-over-year increase in sales of 45.6%.

This was a new all-time monthly record for the third month in a row.

“This is starting to sound like a broken record (about records being broken), but Canadian home sales and prices set records once again in September … as they did in July and August,” said Shaun Cathcart, senior economist at CREA, in a statement.

Real Estate ETFs in the U.S.

The year-to-date performance of some real estate ETFs is shown below:

iShares U.S. Home Construction ETF (ITB)              +24.61%

SPDR S&P Homebuilders ETF (XHB)                          +20.83%

Vanguard Real Estate Index Fund ETF                      -13.91%

It may be noted that despite the boom conditions in housing, real estate ETFs and stocks have declined in recent days.

According to Barron’s, this may be due to yields on the 10-year and 30-year Treasuries moving higher in recent weeks.

Other reasons could be fears of inflation ticking up in the future amidst an improving economic situation.

Nevertheless, the view is that interest rates are likely to remain low for longer. So demand may remain strong.

“Part of what is fueling this boom is that the economy has just split into two and rich people are able to access capital almost for free, so, of course, they’re going to use that money to buy homes,” said Redfin’s Kelman.

Related Story:   Mortgage Rates Set Another Record Low; Real Estate ETFs Could Benefit

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Source: https://dailyalts.com/alternative-investments-real-estate-housing-market-demand-is-insane/

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Private Equity

Asda’s new owner EG Group seeks new leadership ahead of IPO – report

EG Group is owned by the billionaire Issa brothers and the private equity firm TDR Capital, who teamed up for a £6.8 billion takeover of Asda last month

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UK grocer Asda Group’s new owner EG Group is looking for a new chairman and independent directors as it prepares for a £10bn initial public offering, The Timesreports.

EG Group is owned by the billionaire Issa brothers and the private equity firm TDR Capital, who teamed up for a £6.8 billion takeover of Asda last month.

The move comes after Deloitte resigned last week as the company’s auditor because of concerns over the group’s governance and lack of internal controls, according to the publication.

A decision on candidates will be taken before the end of this year, although roles haven’t been finalised yet as the company is in the process of deciding whether to float in the UK or the US, The Times reports.

Write to Barcelona editors at barcelonaeditors@dowjones.com

From Dow Jones Newswires

Source: https://www.penews.com/articles/asdas-new-owner-eg-group-seeks-new-leadership-ahead-of-ipo-reports-20201023

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