A few years ago, leaders from 10 different philanthropic foundations looked at southeast Michigan and said “We’ve got to do something about the economy.”

Pooling some of their resources, the foundations created a $100 million fund in 2008 – the New Economy Initiative for Southeast Michigan (NEI) to make grants over eight years to organizations that serve entrepreneurs in southeast Michigan. The idea was to first learn what was needed and then fund some of the initiatives to help revitalize the regional economy through both supporting business and creating a culture change related to how jobs, economic growth and an economic vision are viewed.

David Egner

Moving from the automotive-centric to a more diversified economy, supporting smaller companies and individual entrepreneurs instead of focusing on large corporations and preparing an educated workforce were all part of NEI’s early goals. Today NEI is funding dozens of programs, projects and organizations that seek to help the region’s entrepreneurs start, expand and attract investment across a range of industries. 

During the last year, this newspaper and the four others that make up New Michigan Media (NMM) have been running articles showcasing entrepreneurial talent and success in the community. That work has been funded, in part, by the New Economy Initiative.

“These newspaper articles not only highlight individuals’ successes but also help tell the story of the communities, creating greater awareness of the entrepreneurial successes that can redefine the positive potential of this region ” said Hayg Oshagan, NMM’s executive director. “We need to remake the narrative of Detroit to one of opportunity and growth, realizing that a good deal of it comes from minority communities.”

Oshagan recently met with NEI’s Executive Director David Egner to talk about NEI’s work across the region. Here is an edited version of their conversation.

Egner: In the early portion of NEI’s life, there was a lot of learning. Eighteen months into the program we had only made seven grants. We were on a perpetual learning curve. What it ended up meaning 24 months after we started was it was really about reclaiming the region as an innovation hub that was globally recognized and provided opportunities for anyone who wanted to work and own a business to be able to start a business. Any kind of business, we’re not sector-specific. We think it’s about opportunities. We’ve always been focused on creating an infrastructure that would serve all people.

Egner: Studying the assets of the region that provide comparative advantage. Detroit is a region that tends to define itself by its deficits, not its assets. Part of that is the culture of the automotive industry and the dependency on large employers but the reality is 70 years ago, 100 years ago, this was the equivalent of Silicon Valley. It was one of, if not the, most innovative areas on the planet. All of the assets that existed then still exist. 

Egner: I’ll list them. The most crossed border in North America. The most sophisticated logistics system is here because the autos built it. A huge population of the creative class from auto engineers to fashion designers that has not been fully taken advantage of. Three Tier I research universities within 80 miles of each other that all have a presence in the city of Detroit as well as their own campuses. Combined they have over $2 billion a year in public research. Idea generators like health care systems: Beaumont, Henry Ford Health System , the Detroit Medical Center. Also places like Next Energy where they are playing in a new industry. A very large and growing ethnic population that can be galvanized around the issues of the region and around issues of entrepreneurship. I can keep on going.

Egner: Another area we’ve looked at is the regional workforce: how to do our best to improve workforce training and create an employable workforce. We strategically looked at the community colleges and the workforce boards and helped them come together to form a Workforce Intelligence Network. WIN is a real-time data program focused on where jobs exist instead of using U.S. Department of Labor data which is 18 months to two years old. For example, the Department of Labor says we have way too many engineers, we’re in a down cycle. WIN says we have one qualified engineer for every five openings. The Department of Labor data says we really don’t need any more IT professionals but the WIN data would show we’ve got a 6,000-8000 person gap in IT professionals. The next trick for WIN is we’re working with the community colleges and workforce boards to develop curriculum and make connections in that space. 

Egner: This is where we found the real sweet spot, working on the entrepreneurial ecosystem with programs, training and initiatives that promote entrepreneurship. The first grant was made in Spring 2009. We’ve made about $36 million in grants in the entrepreneurial ecosystem, and we’re about to make about $30 million more. 

Egner: Because it’s messy. It’s not a neat system. You can’t look at an entrepreneur and say you need two tablespoons of this ingredient and three cups of that. It changes. A biological ecosystem is messy and it’s very organic with lots of collisions and lots of interesting relationships, dependencies. It’s a far better metaphor than anything else I can come up with.

Egner: In the first grants we’ve seen 417 company starts, just under 7,000 new jobs and another 1,500 temporary jobs. Our $36 million has resulted in almost $400 million of match funds as $230 million directly to the entrepreneurs and about $170 million to the organizations working on entrepreneurial support. We couldn’t be more pleased with those outcomes.

Egner: Everywhere from the federal government to venture capital firms. Obviously in the companies it was equity and capital. In the entrepreneurial organizations it was state and federal funding and other private funding.

Egner: If you really look at the driving forces around the entrepreneurial activity of the last 30 to 40 years, it’s been in the ethnic communities. It’s not been recognized as that because we often only talk about the higher tech industries and not focused on the neighborhood and lifestyle-related businesses. 

Egner: Let’s talk about it from the standpoint of marketplace. We have ignored big chunks of the market in Detroit because we have not embraced the ethnic communities in a cohesive and aggressive way. There are whole markets we have left behind particularly when you look at the entrepreneurial ecosystem, those organizations that serve entrepreneurs. We were taking whoever walked in the front door and doing nothing to be actively engaged in communities and neighborhoods. We were leaving behind large percentages of the marketplace. 

Egner: The investment that follows. We continually talk about foreign investment. The best way to get at foreign investment is to embrace ethnic communities, and yet as a system we’ve not done that very well.

Egner: The reason we engaged with New Michigan Media was trying to help push a culture change message. We thought, “Wouldn’t it be great if we could start pushing entrepreneurial stories out and more importantly, ethnic entrepreneur stories that were culturally relevant, so we could start to address that issue as well?” It’s been incredibly important to us on trying to change the perceptions and culture of this region towards innovation, investment and success, especially from minority communities.

Egner: Ultimately the goal is to return Detroit and southeast Michigan to a place that is innovative and attracting others who are inventive and innovative. It’s going to take time but all the infrastructure is here and more importantly there is great talent here in the ethnic communities, and the high growth spaces of the health care systems and the universities. There is no reason why we can’t return to the high economic outputs of the last century.  

For more information on NEI, please visit their website: