A New Spirit is Fueling Detroit’s Rebirth

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Three years after Detroit emerged from bankruptcy, local entrepreneurs are bullish on the city’s economic future — and they have ideas for how to make it even better.

For most of the 20th century the name Detroit was synonymous with a specific brand of American industriousness. The city’s can-do spirit gave birth to an iconic auto industry that includes some of the world’s largest and most profitable companies. That same spirit made Detroit a hub of innovation, from scaling up large companies to revolutionizing the manufacturing process.

When the city declared bankruptcy in 2013, a perception arose that Detroit was, perhaps, a failed city. But since emerging from Chapter 9 a mere 16 months later, the Motor City has embraced a new spirit: entrepreneurism.

Whether young or old, black or white, Detroit’s entrepreneur class is having a profound impact on the city’s renaissance. That’s a chief finding in the 2017 “Detroit Reinvestment Index,” a report issued by The Kresge Foundation that reflects the thinking of 300 national business leaders and 300 metro-area entrepreneurs about living, working and starting a business in Detroit.

A remarkable 93 percent of the survey respondents agree: Entrepreneurship and small businesses (as well as the stabilization of the auto industry) have been at the core of the revitalization of Detroit.

“We’ve been very fortunate,” said Anthony Hatinger, a Detroit area entrepreneur who shared his thoughts at a May 2017 conference at the Brookings Institute that unveiled the report. He is the founder of Detroit Ento, a small Ag-Tech firm.

“There are a lot of folks here that believe in [our] idea and want us to succeed.”

What is Hatinger’s idea? To turn locally-sourced insects into food products for people, livestock and pharmaceuticals.

Talk about can-do spirit.

Publicizing the City’s Rebirth

This is the second year The Kresge Foundation has issued the Detroit Reinvestment Index. The first report appeared last year following the Foundation’s engagement of FTI Consulting to better understand Detroit’s business climate in the aftermath of the city’s exit from bankruptcy.

FTI Consulting found that just 24% of surveyed respondents — senior business leaders of large and mid-sized companies with at least 250 employees — knew that Detroit was out of bankruptcy and open for business. The 2016 Detroit Reinvestment Index helped publicize the city’s rebirth.

The Kresge Foundation, founded in 1924, works to expand opportunities in American cities by investing in a variety of sectors. These include arts and culture, education, environment, health, human services and community development in Detroit and other cities. The Foundation played a major role in crafting a bankruptcy recovery plan for Detroit, and contributed $100 million to help settle the city’s $366 million pension obligations which was one of the final stumbling block to exiting Chapter 9.

The Survey Expands

While the 2016 report featured senior business leaders only, this year it widened to include entrepreneurs. Word has gotten out about the city’s various incentives to attract more small businesses and the participation of entrepreneurs provides a first-hand impression of those on the ground. Across the board their outlook and impressions about Detroit’s revitalization exceeded those of their survey counterparts.

For instance, the report showed that 84 percent of business leaders believe Detroit can recover and become “a great American city once again.” Among the entrepreneurs that number reached 92 percent.

Some 72 percent of national business leaders rated Detroit as an excellent or good investment opportunity. The entrepreneurs were again more bullish, with 83 percent expressing the same opinion.

In a further indicator of their faith, 88 percent of the entrepreneurs also said they are likely to recommend opening and operating a small business in Detroit.

Both the business leaders and entrepreneurs said that the city of Detroit offers much of what they say businesses need to succeed. They referred to Detroit as “a place looking to attract new investment,” “a city where it’s possible for companies to make a difference,” and “a city with potential.”

Room for Improvement

Beyond measuring confidence levels, the survey also sought to uncover potential enhancements the city can work towards. The entrepreneurs responded with a wish list of key focus areas. The list was perhaps not so different from one that might appear in other entrepreneurial cities. Some of those enhancements include (in order of importance):

  • Skilled workers to fill open positions
  • Improving the pace of revitalizing and rehabilitating neighborhoods and communities
  • Opportunities to network with potential partners and customers
  • Strengthened infrastructure like buses, trains, and roads and working streetlights
  • Direct access to services that provide resources such as business planning and real-estate assistance
  • Access to marketing and advertising resources
  • Less government red-tape and bureaucracy

Investment Paying Dividends

While the city of Detroit continues to work towards checking the items off the list, the small business owners are reaping reward from another local source of funding. The New Economy Initiative (NEI), an economic development initiative in southeast Michigan begun in 2008, has invested about $92 million to build an entrepreneurial support system. It has helped bring about the launch of more than 1,600 companies, created 17,490 jobs and generated nearly $3 billion in economic output.

The funding and encouragement of organizations like NEI and The Kresge Foundation have helped lay the groundwork for Detroit’s rebirth. As the auto industry hums along and entrepreneurs take the personal and financial risks to create new businesses, small business owners like Anthony Hatinger operate with the simple philosophy that echoes the sentiment that made Detroit a hub of innovation: “Necessity is driving invention,” Hatinger says.

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