This episode of Driven’s Startup Spotlight features Charlie Moret, President and CEO of Invest Michigan, an investment fund that invests in early-stage companies that are commercializing technology products or services. Charlie talks with Driven about his background and gives some insight into the mobility startup ecosystem growing in Detroit.
Driven - Startup Spotlight: Charlie Moret, Invest Michigan
Devon/Charlie: 00:05 [Driven Theme]. Hello and welcome to the Startup Spotlight podcast on Driven, the source for news and insight into advancing the future of next generation mobility. I am Devon O'Reilly, director of Entrepreneurship for the Detroit Regional Chamber. And with me today is Charlie Mouret, president and CEO Invest Michigan. Welcome Charlie. Thanks Devon. Great to be here with you and great to have you. So let's get started. The way we kind of usually do on these podcasts. Talk a little bit about kind of your personal background and how did you come to your position here at Invest Michigan? Sure. Well, my bank ground is actually in commercial banking. I started on the international side many, many years ago and after, Oh, I dunno, some 20 years or so, I got totally bored with banking. It just wasn't entrepreneurial enough. It wasn't innovative enough. And so I moved over into an investment fund that was invested in tech startups in Connecticut.
Charlie: 00:59 And so I ran a fund there for a number of years and I ran accelerator programs and I ran some incubators and I really got enamored with startups and with entrepreneurship and early stage companies. And just one of those things led to another. I found an opportunity to come to Detroit. And I was really captivated by the amount of activity that was going on in Connecticut. It wasn't as active. And when I came out and visited and I saw all the startup activities and all the companies and the innovation going on, I said, I gotta be there. And so I came and I joined tech town and I ran their entrepreneurial advisory services for several years and then got the opportunity to start up Invest Michigan, which is totally focused on providing early stage capital to tech startups. And so what year was that that you started an investment?
Charlie: 02:02 That was in 2014. So, we just completed our five years and we've been extremely active, probably the most active early stage investor during the last five years. So we've made 106 investments in 51 companies, so almost 20 a year on a consistent basis. Really exciting companies out there that we see companies and, you know, different aspects of information technology, some in advanced materials, some in healthcare, IT, some in advanced manufacturing. So just a real variety of, of technologies and innovation going on. And, you know, Detroit really coming back, there's so much activity. And there's so much I'd say in terms of some of the talent that has been focused now on an early stage company. So we're, we've been really excited at some of the opportunities that we've invested in.
Devon/Charlie: 03:09 Oh, that's great. So how, you know, you've got kind of a very broad background and, and very kind of entrepreneurial, but like you said, also, you know, started off in banking. How do you think your, your kind of background helped you with this, a role that you, that you have now and essentially created? Sure. Well in banking, one of the – I guess benefits of being in the banking industries. You see all types of companies and you see a variety of them. And so you really get to understand, you work very closely with management. You understand how companies operate, the challenges they face both organizationally, market, technology. And so it gives you a very broad perspective of companies and what works and what doesn't. Since I ran a fund prior to coming to Invest Michigan, I've currently invested in over a hundred companies.
Charlie/Devon: 04:02 And so with that number of companies, after a while you get to see, you know, what works, what doesn't, what are the mistakes? And you know, a lot of times you have to make mistakes to learn. But if we can help some of our clients avoid mistakes, accelerate that much faster in the work that they do, get to market and grow their businesses. You know, we've got businesses that four or five years ago were, you know, a couple people and we have several companies now that are employing 30 people. And so, you could see the growth that happens in early stage and these are higher paid jobs. You know, these are not, these are jobs that require skill sets from technology, from IT, you know, from mathematics and you know, a lot of different types of backgrounds are required. Yeah. I think a lot of times people don't necessarily see with kind of the, the growth and supportive startups, how that's a talent play and how that the jobs play.
Devon/Charlie: 04:59 People don't look at it from the basic economic development kind of jobs, you know, adding new jobs, creating new jobs. But it really does, like you said, it really does, you know, because if the companies start to expand, they're really building new markets, markets of businesses that hadn't quite delivered the products or services that they have. And over time, if they're successful, they grow very rapidly. So, you know, I mean these are not hundreds of jobs yet, but there are clearly companies in, in our portfolio that can very easily turn into hundred type company, you know, a hundred people type companies. And so you mentioned you've invested in, in over a hundred companies since 2014. That's a lot. Do any of them stand out? Are there any that you're kind of particularly proud of or you're really kind of, feel like you saw to, you know, reach kind of a pinnacle or really kind of a help them out?
Charlie: 05:53 Yeah, I think they are right now we have, uh, you know, I'd say a dozen that are just accelerating their pace in the market place. They're getting customer adoption, they're getting, you know, repeat sales, they're starting to scale their businesses, their revenue is growing. And ultimately, you know, the first few years was really always challenging because you're trying to lock in revenue and customers. And one of the biggest challenges early on is how do you convince somebody to buy your service or your technology product when you're a fairly new company and you, you're going to be around. So that's a huge hurdle to overcome. But, you know, one of the things I would say we've learned is that when you look at companies, it's really about the people, the team. How they bring complimentary, some of the best executives that we see, the best entrepreneurs…
Charlie: 06:46 They have a way of capturing talent and bringing talent around them that really compliments them. So they don't try to do it all. They really have a team that, you know, there's somebody who's good at finances, somebody who's good at technology. There's somebody who's good at sales, is somebody who's good at marketing. There's somebody who's good at administratively to, to have the infrastructure of the company that you need. Because in order to develop a good company, you really have to build, you know, around a lot of pieces of it. So it's not just two or three people trying to sell a product. You have to have all the things that businesses have to face. So we find that, you know, the most successful are those that bring people on to the, what we call the Cap table, which is the ownership of the company, make them co-owners, and they can also grow, you know, as part of the business and contribute very actively.
Devon: 07:41 Yeah. So we, we hear that so much that, you know, it's really about the team. And that's it. That's so crucial. And so you, you mentioned that, and I am wondering though, how often or have you had to really work with founders because sometimes there's that founder mentality that they're gonna try and do everything. And so have you had to be in a situation where you, you really had to kind of coach that founder or talk with them to understand that they need to be able to delegate and need to understand that they can't do it all and really assembling the right team is one of the most important things for an early stage startup. Well, I would say all too often, usually, but you know, we work collaboratively with our companies, our client companies. And, you know, we try to advise, we try to when you have an investment pool of a hundred companies, there's common things and we can bring some value to the entrepreneur and say, hey, you know, this is what we've seen.
Charlie: 08:41 It's your decision. It's your company, you're managing it. But let me give you this information, which hopefully will be helpful. And some of the most successful entrepreneurs are ones that, you know, they, they, if they just to, to suck information, you know, there's the old saying you never learn by talking. And so some of the best entrepreneurs and CEOs, I mean, you sit down with them, they'll give you where they're going and all that, but they'll be asking you question after question. You could see how they're trying to get more and more information all the time. And even at board meetings, because we're on the boards of many companies, you see the dynamics at those board meetings with the entrepreneurs, you know, they're raising issues and then using the table around them and then the advisors around them to actually try to figure out information that they may not know or that others can help them to understand better so that they can drive and execute on their businesses.
Devon/Charlie: 09:44 So you're headquartered in Detroit and we're, you know, we're happy to say they're going to be moving into the PlanetM Landing Zone at WeWork. Um, speak just more broadly about Detroit itself. Why is it important to be kind of headquartered in Detroit and how that relates to everything that's going on with this city currently? Oh, Detroit's just cool. There's some really cool stuff going on. You've got the rebuilding going on, you've got more companies come in and you've got a lot of early stage and techies in the area. You know, obviously a lot of the large companies have tremendous amount of tech people in them and a lot of those people are working at night and doing different projects or sometimes collaborating with another company and putting in some time to get something off the ground.
Charlie: 10:36 And so Detroit is a, you know, it's just an easy place to get around. It's an easy place to meet people. It's an easy place to access if you need help. You know, talking even on the broader scale beyond Detroit, you know, Michigan has really done a terrific job of late in terms of supporting early stage tech entrepreneurship, you know, around the state. And that's really having a benefit. I mean, I've seen it in the five years that our fund has, has been, uh, active and investing. You know, the quality of the startups that we're starting to see has gone up exponentially. And what you're seeing is you're seeing a lot of talented people now where before sometimes, you know, you had a lot of folks that this is their first time gig, but what you're starting to see is you starting to see executives that have done it and love it so much that they're doing it again and again.
Charlie/Devon: 11:33 And yeah, there's some great companies right here in downtown Detroit and the Detroit metropolitan area that are doing well. And, you know, one of the companies, I guess I could use a name, Passage, Alex Linkbrink who’s here in downtown Detroit. You know, he's got a tremendous event business going on where, you know, his platform is really doing it event ticketing and he's targeted specialty groups. And so he's probably the largest haunted house ticketmaster in the country. And he's working with a major league soccer and he's got all these really cool businesses that he's doing and he's right here in Detroit. That's just once, you know, one simple example, but of the very talented people that exist here working on really cool businesses. Sure. So focusing in kind of on the mobility sector. Obviously that's a big part of, you know, that's what we're focusing on here at the landing zone and the work with MICHauto and PlanetM, creating that hub for mobility innovation here in southeast Michigan, in Detroit.
Devon/Charlie: 12:44 So talk a little bit about kind of Invest Michigan's interest and, thoughts on the mobility startup industry. You know, where have you looked at to where have you looked to make investments, maybe particular technologies and kind of where do you see that going? Yeah, I think mobility is clearly such an important space right now. And as we look out, you know, trying to understand where is the best likelihood of innovation to occur and where the market needs for it to occur in mobility is clearly the place. We had one company that we invested in called Split, which was based in downtown Detroit. They were a Landing Zone member. And so, you know, they did extremely well in a very short period of time. One of the exciting things about us moving to the Landing Zone is that because there are a lot of startup activity, what we'd like to do is, you know, provide some advice and guidance to the companies because again, one of the cool things about Detroit and Michigan is that, I think everybody is really interested in supporting the entrepreneurial ecosystem.
Charlie: 13:55 So everybody's very freely, you know, willing to put extra time into help the greater good. And that's something that's very, very strong in Detroit and very, very strong in Michigan. So one of the exciting parts of the Landing Zone for us is that, you know, if we can help some companies giving them some advice and assistance as they go in their journey, direct them to potential resources that they're unaware of because it really growing an early stage company. You know, it's the old adage, you know, it takes a community, truly, to raise a startup. And so the more resources, the more network, you know, the more people that you can touch in surround yourself, the more likely you can drive your success in the future. And so we hope to be, you know, by being at the landing zone. You know, being a part of that equation, you know, one small piece to try help as well.
Devon/Charlie: 14:51 Yeah. And an important one. So you know, there's obviously a wealth of knowledge that you have in your team and Invest Michigan has, but you did mention about you being able to offer startup companies, some of that, some of that intuition and knowledge. Just without going into too, too in depth, you know a lot of startups, one of their biggest concerns or questions is how to just, how to approach, you know, the capital of VCs and how w how to access capital. Do you have any kind of kind of first tips or just kind of broad advice on how to go about approaching potential investors? I think a couple of the basics is, you know, like most entrepreneurs, you know, they're running 110 miles an hour in, they're just trying to knock down walls and, and moving forward in their business.
Devon/Charlie: 15:45 But when it comes to financing, you really don't want to contact a potential capital source too early on. But if you do, you gotta do it the right way because you know, impressions is the beginning of a relationship that could be developed. And if you go in not properly prepared, not understanding who you really talking to and just throwing your technology, technology, technology, you know, that's not gonna, you're gonna burn up a lot of your time. So you have to be very targeted and very strategic when you go looking for an investment capital, you know, there's a lot of sources of capital. The usual is that when you're first starting out, you know, you generally, they call it family and friends. As you know, trying to find money that can help you with some major thing.
Speaker 1: 16:42 Don't think you're going to go out there and raise a ton of money. It's very rare. I mean, you hear the stories of the companies that do that, but those are rare numbers of companies. It's really, you know, piecing together bits of capital throughout a journey. And so family and friends is a good place. There are programs like the business accelerator for fund, the emerging technology fund, you know, a different programs like that that are run through some of the incubators. Try to access as many of those as you possibly can because it gives you capital to accomplish things. And if you compartmentalize kind of your journey and say, okay, what's the next critical thing? If I can get some money to accomplish that, that helps to build some value. And then the next step is you can use that to demonstrate that you're making progress along that continuum of the startup.
Charlie: 17:37 So those are some of the basics is don't go out too early. Be prepared. And also make sure that whoever you are engaging with to find capital that it's someone truly will have an interest or the possibility of seeing you either now or later down the road. Too. Often Times, you know, certain funds specialize in, you know, a particular sector. And so if, if you're not in that sector, you know, they may take the visit, but you're really kind of wasting your time doing that because you, you're never going to get beyond, you know, the introduction. Meanwhile, you spent a couple hours of wasted time. So that's also another one, you know, and you can get a lot of help targeting the right type of company. And then also, you know, I think, you have to decide if you're going to go after investment capital.
Charlie/Devon: 18:30 One of the most important things is recognizing that it's a process, that there's all due diligence involved and that oftentimes, you know, you have to answer quite a bit to, you know, get there and it can take a really long time now of your own energy and doing that. So you want to be prepared for that, you know? Sure. So wrapping up and looking ahead. what are you looking forward to in the next few months with Invest Michigan? Yeah, I think we're, you know, say opportunities continuing to be numerous in the market. You know, we are seeing a lot of new companies coming in. There was a company we just met with today that relocated from Milwaukee, Wisconsin because, you know, they were able to access some resources over at the University of Michigan in Ann Arbor. So they joined.
Charlie/Devon: 19:25 We have a number of other companies coming in over the next couple of weeks. So, you know, as of now it's been a very robust pipeline and you know, looking out, you know, our goal is to continue to be, you know, very active in our investments, continuing to help build companies. And when we invest, we generally take on a client, we make a first investment, but then we look to support those companies over multiple investments as they're making progress so that they continue to get the capital to get to the markets that they're trying to accomplish. Fantastic. [inaudible] That you said that's so important is to supporting those investments as well. Obviously you want to look out for your investments, so it's dually beneficial. Well thanks so much for being here, Charlie. Tt was great to have you. We’re looking forward to having you at the Landing Zone and again, sharing your wealth of knowledge with the startups there. Yeah, I look forward to it and don't forget to have it. Make sure there's some of that cold brew there for me. Yeah, we're going to work on getting cold drew more permanently, so we work location and merchants row. So thanks again for joining us today. You can also find out more about Invest Michigan and the Detroit region's leadership and next generation mobility by visiting www.detroitdriven.us
Theme: 20:47 [Driven Theme]
Devon: 20:53 A special thank you to WeWork for providing the studio to record this podcast. A platform dedicated to businesses of all sizes, providing community space and services to help you thrive. Learn more at wework.com.