When outsiders think of Detroit, it is difficult for them to imagine it as a prosperous and profitable city like it once was, and seeing the city as an emerging startup scene is worthy of an eyebrow raise.
However, this city is slowly attracting more talent with an increasing number of success stories. TechCrunch recently released an article showcasing the best startup cities in the Midwest, and despite negative economic stereotypes associated with the Motor City, Detroit came out as one of the top locations for new startups.
One specific finding from the article brought to light an interesting fact. Despite having a population that’s 30 percent smaller and comparatively less well-off than the area around Minneapolis and Saint Paul, MN, the Detroit metro area saw roughly the same number of startups starting up as Minneapolis.
A notable benefit for Detroit as a base is the city’s living costs. The cost of living and doing business in Detroit is much lower than in coastal hubs like San Francisco and New York. Jason Okrasinski, the CEO of Detroit-based startup Cribspot, a College rental search site, stated, “Your burn is much lower, so you can have time to try things out.”
This low cost of living gives young startups the freedom to take more risks and explore more options when opening a new business. An opportunity that might not be available with other city’s sky high prices.
While some may be drawn to California due to its large economy, Detroit is actually a part of something much larger, giving startups access to a relatively undiscovered economy.
According to Drive Capital’s Chris Olson via VentureBeat, in five years, the Midwest will have more startups than Silicon Valley. While this may not be Detroit-focused, it certainly signifies the growing importance of its surroundings.
As previously mentioned, thanks to the city’s vibrant startup scene, a number of business have achieved incredible results here, such as CrowdRise. Much like GoFundMe, CrowdRise helps people hold online fundraisers and is the official fundraising partner of the Red Cross, the Boston and New York City marathons, Ironman races, Unicef and many others. It is estimated the site raised a total of $31.5 million before being acquired by GoFundMe at the beginning of 2017.
Ambassador, a Detroit-based startup that rewards customers for promoting brands throughout their social networks, remains as one of the cities greatest startup gems. The company, which was founded in 2010 has managed to raise a total of $5.17M in investment and an impressive client base which contains companies such as HP, Spotify and Hulu.
While Silicon Valley becomes increasingly more crowded, entrepreneurs will continue to look for alternative locations to foster their bright ideas. Considering Detroit now has 50% more venture-backed startups than it did three years ago, it appears this once great industrial city could be the perfect backdrop for startups looking to get a head start.