5 Detroit-based Startups That Emerged This Century

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By Greg DePersio | Updated January 12, 2016


For most of the 20th century, Detroit was the antithesis of a city whose economy was propelled by startups and small businesses. Huge corporations, most notably the Big Three automakers, General Motors, Ford and Chrysler, dominated the city. They provided, in one way or another, the majority of Detroit’s jobs and drove most of its growth throughout the century.

During the later decades of the 1900s, however, out-of-control labor costs, increased competition from foreign automakers and other factors sent the Big Three reeling. Jobs were lost, profits dwindled and Detroit took it on the chin, suffering more than any other U.S. city as a result of the American auto industry’s decline. Residents fled, businesses boarded up and decay took hold of the city’s core. During the depths of the Great Recession of 2007-2009, newspapers featured stories of houses listed for sale in some of Detroit’s blighted neighborhoods for as little as $1, and sitting on the market for months with nary an offer.

Decades of financial decline in Detroit culminated in a July 2013 bankruptcy filing. It was the largest municipal bankruptcy in U.S. history, with total debt listed at between $18 and $20 billion.

While the 21st century has been unkind, to say the least, to the Motor City, signs of revitalization, as of 2015, are beginning to appear all over town. Unemployment is creeping downward. New businesses are appearing in long-vacant spaces. Hipsters are invading downtown, transforming decayed city blocks into trendy enclaves.

The Big Three’s comeback, fueled by government bailouts except for Ford, has driven part of Detroit’s renaissance. Much of the credit, however, belongs to small businesses, not huge corporations. Citing a low cost of living and bargain-priced real estate, young people, the kind who once flocked to places such as Austin and San Jose until overpopulation and high housing costs began to drive them away, are descending on Detroit in droves. Many are entrepreneurs. As a result, Detroit’s startup scene is fast becoming one of America’s hottest. The following are the top five startups emerging from Detroit. (For more, see Tech Startups Can Save Detroit, Here is Why.)

Ambassador is a Detroit tech startup that helps businesses automate their customer referral and incentive programs. The company launched with $375,000 in investment money, much of which it procured from the Austin-based tech-centric crowdfunding company Techstars.

The company made good use of its initial capital. It has expanded its client list rapidly and has customers in several industries, including enterprise, e-commerce and software-as-a-service (SaaS. Its largest and most well-known customers are T-Mobile, Volusion and Stratos.

Ambassador conducts much of its business through telephone and video conferencing. Its CEO, Jeff Epstein, admits a Detroit location might still pose challenges for businesses that rely on face-to-face relationship building. While he jokes that many customers and prospective customers first act surprised by the Detroit area code, he ultimately considers the city an asset. It offers lower overhead than just about anywhere while not hampering the company’s ability to generate revenue.
Cribspot’s CEO, Jason Okrasinski, was a University of Michigan undergraduate when he observed that college students wanting off-campus housing had few places to search for it. Most were relegated to using Craigslist. While the massive online classified site has a lot to offer, it also poses many frustrations. Ads are often ghosted, meaning they never appear in listings after being posted, and the reason is often arbitrary. Moreover, in many cities, scam artists descend like vultures on Craigslist, posting fake rentals that look like good deals but are lures to extract renters’ financial information. College students, many of whom are naive and living on their own for the first time, make ideal prey for these scams.

Okrasinski filled the vacuum by starting his company with $750,000 from a handful of venture capitalists and angel investors. Cribspot serves as a middleman that links together prospective landlords and tenants. By focusing exclusively on college students and people looking to rent to them, the company finds it easier to preemptively contain many of the issues that plague larger sites such as Craigslist. As of 2015, a total of 15 colleges use Cribspot.

The red-hot app-based company Uber solved the frustration urbanites all over America have long experienced with cab companies. Instead of calling for a taxi, waiting way too long for a driver to show up, and then praying the car is clean and the driver not excessively scary, a ride-seeker simply opens a smartphone app that pinpoints his location and pings the nearest available driver. While he waits, usually not for very long, the ride-seeker can assuage any apprehension by reading reviews on his specific driver.

Locqus works the same way. The only difference: rather than connecting customers with drivers, it connects them with local service businesses, such as plumbers and electricians. The company grabbed $2 million in seed funding right off the bat. As of 2015, Locqus has already formed partnerships with Samsung, for app distribution, and Moneris, for payment processing.

While the gun issue in America is characterized by interminable debate, few people disagree with common-sense safety measures, particularly those measures proven to save lives without infringing in any way on Second Amendment sensibilities.

For example, what if firearm triggers could be retrofitted with fingerprint sensors so they only fired for authorized users? This is the specific technology being developed by Sentinl, whose CEO was himself a victim of gun violence as a child.

Though the company’s startup capital and launch date are undisclosed, investors and consumers are keeping a close watch on Sentinl. The company’s technology, if developed and distributed to its full potential, could change the nature of the gun control debate in America.

While text message marketing has been hot for most of the 2010s, Quikly added a wrinkle to the idea that created enough of a stir to attract over $2.5 million in venture capital investment.

With Quikly text message marketing, consumers not only receive text messages from local businesses alerting them of deals and specials, the faster they respond, the better the deal they receive. This creates a level of customer engagement few marketing programs can duplicate.

The company did a test run with a fast food restaurant. It received over 50,000 responses to a single text message, all in under 10 minutes.
Read more: 5 Detroit-based Startups That Emerged This Century | Investopedia http://www.investopedia.com/articles/personal-finance/011416/5-detroitbased-startups-emerged-century.asp#ixzz3yAx8GDnY
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Investopedia, January 12, 2016