Michigan Angel Collective: Speed of Entrepreneurship vs. Speed of Risk

You don’t have to be in Michigan long to hear it: “We need more early-stage capital.”

It’s repeated like gospel. And on the surface, it sounds like a funding problem. But if you go a layer deeper - as James Feagin has - you realize it’s actually a systems problem.

Feagin isn’t just launching another investment group. The Michigan Angel Collective (MAC), modeled after a proven syndicate structure in Ohio as well as alongside the launch of another group in Kentucky, is trying to fix the “how,” not just the “how much.”

The group is backed by the folks at Vessel, a fund dedicated to early-stage innovation in the Midwest, which operates a platform that includes the United States Angel Collective, of which MAC is now part.

Let’s Talk About the Moat

Feagin has spent the past 10+ years working across the Michigan ecosystem, from advising foundations, corporations, and governments, to building tools like Detroit Demo Day and Venture 313, and now as Managing Partner of his strategy firm, Black Bottom Ventures. 

He sees this project as a natural evolution of his theory of change being put into action.  “I’ve always sought to answer the question, what do founders need next? Capital, mentorship, talent, business model refinement, GTM support, infrastructure. These are constant needs, and startups face particular challenges that can be lost in the sauce of broader ecosystem and economic development activities if you’re not careful and intentional.”

He says he also realized something most never say out loud: venture capital, philanthropy, government dollars; they’re all systems with their own rules, agendas, and timelines. And often, they don’t move at the speed startups need. As you succeed in fostering more activity at one stage of entrepreneurship, you inherently increase demand for support at the next stage.

“Founders are moving at the speed of entrepreneurship,” he adds. “Everyone else is moving at the speed of risk.”

It's a hell of a line. 

Because it explains a truth many Midwestern founders know but can’t always articulate. The gap between having an idea and landing venture capital isn’t just wide, it’s often fortified. When we talk, during a typical hot Detroit summer afternoon, Feagin refers to this gap as a moat. But he’s not using it in the usual startup sense; an advantage that protects a business from its competitors. He’s referring to it as something that keeps some founders outside these fortified walls, and is questioning why it's fortified. 

Michigan Money is Built Different

That moat is another way to explain why the partnership between Feagin’s Black Bottom Ventures and MAC makes good sense. 

The moat these founders need to cross can be insurmountable not only due to access, but also because of how those with the funds created their wealth in the first place.

Historically, wealth in Michigan has been built on things you can touch. Cars. Buildings. Land. Inventory. It’s dollars in, and dollars out. This mindset means that many angels in Michigan (and many other locations in the Midwest for that matter) just want to see a product, a P&L, and a pathway to profitability.

But as he points out, startups often flip that logic on its head.

They burn cash. They bet on velocity. They ask for $500K but the path to profitability may not be clear. That doesn’t compute for an investor who made their money by applying science, working with spreadsheets and supply chains. 

“If you haven’t lived it,” he says, “It does make sense that it’s much harder to write those checks. What really excites me is that now I get to deliver statewide impact, while also expanding the path to more angel participation. Many people who may not have been approached before, or seen themselves fitting the typical angel profile, can feel welcome with what we’re building.”

Building the Onramp

This is where the Michigan Angel Collective comes in. It’s not a fund. It’s not a club. And it’s not interested in adding more friction.

There are no annual fees. If you’re an accredited investor, you can join. If you’re ‘angel-curious’ - a term Feagin throws out on this call and that we are immediately enamored with - you can listen in on an investment call.

MAC pre-vets the deals. Performs diligence. Brings in subject matter experts to assess the business and the founders, and offer their opinions to the group. As Feagin tells it, they then package all of this in a simple investor memo. Then interested investors can hop on a Zoom, and say yes or no to a real startup, in real time.

The idea is to get founders on “one call that raises a meaningful amount of money, not five calls that raise ten grand each” he adds.

Increasing deal velocity is win for everyone

He sees MAC as additive to the current ecosystem. Others can bring deals in, get a fresh diligence perspective, find co-investors, and move faster. It’s a platform designed to make collaboration easier.

As we’ve commented on previously, for all the talk of the Midwest’s economic size, the early-stage capital simply doesn’t reflect it.

Additionally, among the many takeaways from the 2023 Startup Genome report, is that there is a need for more seed stage capital and expertise aimed at the founders and companies in South East Michigan in particular. 

“MAC hopes to be a catalyst in getting more investors off the sidelines, increasing the speed to capital for founders. If we can get that right, most importantly we’ll be helping to increase overall deal velocity, talent demand, and wealth creation in Michigan.”

Right now, Feagin and the Michigan Angel Collective are looking for both investors and startups.

If you’re an investor, you don’t need to commit upfront and yet you’ll see a deal memo, hear a pitch, and make your own decision.

The goal of each call is to raise 100,000-250,000 depending on the deal. You should be post-idea, with something tangible such as an MVP, pilot, or customer and ideally, are raising in the next 90 to 180 days.

One More Time, for the People in the Back

The goal, as he states so passionately, isn’t to replace what already exists. It’s to accelerate things. Because in this part of the world, we’re used to moving slowly, carefully and methodically. 

But that’s not how startups work.

Startups move fast, and if we want to build an ecosystem where they survive and scale, our capital has to move just as fast.