Got a business idea for Michigan’s great outdoors? State funding is up for grabs.

By Kyle Kaminski

May 14, 2024

Millions of dollars in state funding is available for new companies that are focused on getting more Michiganders outside of their homes—and into the great outdoors.

MICHIGAN—A new investment fund fueled by the Michigan Economic Development Corp. (MEDC) aims to bolster outdoor recreation opportunities across the state—namely by providing dozens of Michigan-based startups with enough funding to put their business plans into motion.

Applications are now open for the Michigan Outdoor Innovation Fund, a state-funded initiative that launched this year and is set to provide at least $3 million in initial seed funding to dozens of new businesses statewide—all with the goal growing Michigan’s outdoor recreation industry, creating more jobs, and generating more opportunities for people to enjoy more time outside.

“The state realized if we’re not planting seeds, so to speak, then we’re not harvesting fruit,” said Jim Baker, managing director of the Michigan Outdoor Innovation Fund. “We need to be planting more seeds by creating these seed funds that invest in these companies at the earliest stages.”

Here’s the deal:

Michigan’s outdoor recreation and tourism industry—which generated $12.6 billion in annual revenue in 2022—is a rapidly growing driver of the state’s economy. All told, the industry supports at least 7,000 companies that employ at least 119,000 people statewide, who are collectively compensated to the tune of about $5.6 billion annually, according to state officials.

More than 8,000 of Michigan’s outdoor recreation jobs are reportedly tied to outdoor-related manufacturing—including for things like boats, ATVs, RVs, clothing, and other gear. The industry also encompasses plenty of other activities, including fishing, hiking, and winter sports.

“This covers the full spectrum,” Baker said. “It could be in the woods, on the golf course, or even in a park in a more urban environment. It’s really for anything that helps people get outdoors.”

But because many investors and firms are often hesitant to put money into new startups, Michigan’s outdoor recreation industry hasn’t been living up to its true potential, Baker said.

That’s where the Outdoor Innovation Fund, with support from the MEDC, aims to fill the gap.

What’s the Outdoor Recreation Fund?

The Michigan Outdoor Recreation Fund is a new pot of state money that’s been set aside this year to help launch Michigan-based startup companies that work in the “outdoor innovation and recreation technology” industry—including mobility, wearable technology, trail advancements, sporting goods, and, more generally, anything that can enhance outdoor tourism in Michigan.

The fund is managed and administered by InvestUP, a private sector economic development group focused on driving more public and private investment to Michigan’s Upper Peninsula.

And it’s bankrolled entirely by the state through the MEDC’s Innovate Capital Program, which is designed to promote economic development efforts across the state—namely through direct investments in new Michigan-based companies that would otherwise lack access to funding.

How does it work?

Baker said there’s about $3 million in funding available in the fund—but it certainly isn’t free.

Like any other investment firm, the Outdoor Innovation Fund is primarily offering the cash to companies in exchange for an equity stake in their operation—with clear expectations of a return to keep the fund solvent, Baker said. Think Shark Tank, except with far fewer teeth.

“It’s not free. We’re going to take an equity stake in the company in return for our investment. And our hope is that it turns into cash that we can then reinvest into others,” Baker explained. “We’re taking a risk on your business in hopes there’s eventually a clear path to revenue.”

What makes the fund unique is its ability to support companies that many other investors (like Mark Cuban) would otherwise consider “too risky” for their time, Baker explained. In turn, he hopes it will create more recreation opportunities—and jobs—that wouldn’t otherwise exist.

“When an early stage company is created, the first round of investment capital is often the most challenging,” Baker said. “We’re certainly willing to take more risk than a bank can responsibly take, as well as more risk than your average venture fund. But we still vet them. We still do due diligence and we look at whether this is actually going to be able to help move them forward.”

Who can apply?

Only Michigan-based companies that are focused on “outdoor recreation technology” and have been in business seven years or less are eligible for investments through the fund. Their founders and the majority of their full-time employees must also be residents of Michigan.

“The whole goal is to take companies that have interesting technologies, interesting opportunities, and interesting ways to grow the experience of outdoor innovation, and we then look at what these companies need to move forward in the marketplace,” Baker explained.

A preference will be given to companies that have earned less than $1.5 million in revenue and received less than $2.5 million in investments over the last year. And while Baker said he’s looking for applicants willing to sell equity, the fund will also consider loans and royalty-based deals.

Up to $100,000 in initial seed investments are available through the fund, with a maximum of $250,000 invested in (or loaned to) each startup company over multiple rounds of financing.

Baker said applications for the fund only opened a few weeks ago—but already officials are closing in on investment deals with a Detroit-based company that manufacturers electric RVs, as well as a new startup venture that manufactures subscription-based gift boxes for golfers.

Applications are expected to remain open at least for the next two or three years, with the ultimate goal of making enough good investments to keep the fund solvent indefinitely.

“The intention is for this to be evergreen,” Baker added. “So, we reinvest all of the proceeds into more opportunities for more investment. That’s the goal with a nonprofit fund. Job creation is another core goal, but at the end of the day, we really just want to see companies succeed.”

Startup companies are encouraged to fill out an online intake form to receive more details about investment opportunities that are available through the Michigan Outdoor Innovation Fund.

READ MORE: State grants pave way for small Michigan towns to fix their damn roads

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Author

  • Kyle Kaminski

    Kyle Kaminski is an award-winning investigative journalist with more than a decade of experience covering news across Michigan. Prior to joining The ‘Gander, Kyle worked as the managing editor at City Pulse in Lansing and as a reporter for the Traverse City Record-Eagle.

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