1. MICHIGAN PRE-
SEED CAPITAL
FUND
A collaborative effort of the
Michigan SmartZones

2. Michigan SmartZones
7
12
1.Ann Arbor SPARK
2.Automation Alley
3.Rochester Hills/Oakland University
Incubator
4.Battle Creek Aviation
5.Detroit/Woodward Technology
Corridor – TechTown
6.Grand Rapids
7.Houghton/Michigan Tech
Enterprise
8.Kalamazoo
9.Lansing Regional 10
10.Mt. Pleasant/Center for Applied
Research & Technology 6
11.Muskegon Lakeshore
11 2
12. Sault Ste Marie 9 3
14
13. Jackson Technology Park 8 4 13 1 5
14. Macomb INCubator
http://www.michiganadvantage.org/Michigan-SmartZone-Network/

3. Michigan Pre-Seed Capital Fund
 The Michigan Pre-Seed Capital Fund supports emerging
high-tech companies by providing access to early-stage
capital investment or micro loans to accelerate company
development, bringing innovative technologies to the
marketplace more quickly. The Michigan Pre-Seed
capital Fund is funded by the Michigan Strategic Fund
and supported by the Michigan Economic Development
Corporation.

4. Funding Amount
The Pre-Seed Fund will invest
$50,000 to $250,000
per company
alongside an investment partner
who will provide a minimum 1:1 match.
New Micro Loan Fund will provide loans
between $10,000 and $50,000
per company.
No match requirement.

5. Pre-Seed Definition
Less than $1 million outside investment
Less than $1 million trailing 12 months sales

6. Criteria/Eligibility for Pre-seed
Companies must meet the following criteria: Investment
 located in or moving to Michigan
 company must have the rights (ownership or license) to innovative technology
 must be a small business (per the SBA)
 cannot be a publicly held company, but may be a spin-out as a new private entity
 have a plan for attracting additional funding or become cash flow positive
 pass the due diligence review of a SmartZone
 submit their match term sheet or grant approval
The match must be new money into the company.
The following do not qualify as matching funds:
 Other State monies
 Anticipated or current company revenues
 In-kind salary deferrals
 Other trade partner exchanges or trades

7. Other Investment Matters
Use of funds could include but are not limited to:
 intellectual property investigation and protection
 partnership relations
 first/next customer attraction
 building out management team
Background checks will be made on founder(s)/CEO paid
by fund administrator.
A company can only be approved for funding once.
A company may reapply once.
A convertible note will be the default investment instrument
for companies with a grant as their match.

8. Application
The submission package must include:
 Business plan (maximum 30 pages counting financial pages)
 Company overview
 Market information
 Operations
 Product description
 Management
 Use of funds – milestones
 Financial history and projections
 5 year proforma
 Cash flow, P&L and Balance sheet forecasts
 List of assumptions
 Financial statements
 Matching source Term Sheet, proposal, grant approval, subscription
agreement
 Certificate of Good Standing with the State of Michigan
http://www.annarborusa.org/business-accelerator/funding-
incentives/pre-seed-fund/due-diligence

9. Investment Review
The Pre-Seed Fund has an Investment Review Board (IRB) made up of
experienced investment professionals from around the state.
The IRB will review deal submissions continuously and provide constructive
feedback to applicants.
The IRB will look for the best opportunity to fund.
 from any community in the state
 no quotas
The review criteria will assess the Company’s potential to be:
 self sustaining
 create jobs in Michigan
 ultimately repay the investment
http://www.annarborusa.org/business-accelerator/funding-
incentives/ann-arborypsilanti-ldfa-microloan-program

10. Deal Acceptance
The Investment Review Board will accept the deal in whole or not at all.
The co-investing organization or angel terms and investment
instrument will be used.
The following information will be required of each successful
company, in addition to any specific milestone information required
by the matching investor:
 Number of new patents, copyrights, trademarks applied for and issued
 Annual sales/revenues
 Number of new jobs, existing jobs, and projected new job growth
 Follow-on investment figures and other metrics to gauge the positive
effect on Michigan's technology economy

11. Timeline
The Pre-Seed Fund will accept applications at any time.
Applications are screened for completeness, then
forwarded to the IRB for review.
Reviews will be concluded and sent to the Fund
Administrator within two months.
The Fund Administrator will summarize the IRB comments
and scores, forwarding to the Smart Zone and company
upon decision.
Documentation execution and funding will be conducted
following clean background check report.

12. Criteria/Eligibility for Micro Loan
Companies must meet the following criteria:
 located in Michigan
 company must have the rights (ownership or license) to innovative
technology
 must be a small business (per the SBA)
 cannot be a publicly held company, but may be a spin-out as a new
private entity
 have a plan for attracting additional funding or become cash flow
positive
 pass the due diligence review of a SmartZone
No match required

13. Other Loan Matters
Use of funds could include but are not limited to:
 intellectual property investigation and protection, but not patent
application
 market and technology assessments
 partnership relations
 first/next customer attraction
 sales and marketing
 hiring key personnel
Background checks will be made on founder(s)/CEO.
A company may reapply once.

14. Loan Terms
Subordinated Note: Subordinate to all other debt holders, current
and future
Interest rate is 12%
Term is 2 years
Default provisions:
 Failure to pay when due
 Violation of any covenant, agreement or condition in the note
 Bankruptcy or dissolution of the company
 Fewer than a majority of employees in Michigan
Reporting for five years
 Quarterly financial statements
 Number of employees and new hires
 Sales
 New IP
 Grants and investments received
http://www.annarborusa.org/business-accelerator/funding-
incentives/ann-arborypsilanti-ldfa-microloan-program

15. Other Loan Matters
Loans may be made in two tranches
Reviewers may recommend a lower amount to loan
Reviewers may recommend the loan be paid per
commercialization step accomplishments
Second tranche payment based on intermediate milestone
achievement, but not guaranteed

16. Application
The submission package must include:
 Business plan (maximum 10 pages counting financial
pages)
 Company overview
 Market information
 Operations
 Product description
 Summary of management talent
 Financial history and projections
 Use of funds
 Entrepreneur Bio or CV
 Letter of support from SmartZone
 Registration Certificate with the State of Michigan

17. Timeline
The Fund will accept applications at any time.
Applications are screened for completeness by the
SmartZone and Administrator, then forwarded to the
reviewers.
Reviews will be concluded and sent to the Fund
Administrator within two months.
The Fund Administrator will forward to the SmartZone and
company with the recommendation plus scoring sheet
with comments.
Loan documentation execution and funding will be
completed following successful background check.

18. Michigan SmartZones
7
12
1.Ann Arbor SPARK
2.Automation Alley
3.Rochester Hills/Oakland University
Incubator
4.Battle Creek Aviation
5.Detroit/Woodward Technology
Corridor – TechTown
6.Grand Rapids
7.Houghton/Michigan Tech
Enterprise
8.Kalamazoo
9.Lansing Regional 10
10.Mt. Pleasant/Center for Applied
Research & Technology 6
11.Muskegon Lakeshore
11 2
12. Sault Ste Marie 9 3
14
13. Jackson Technology Park 8 4 13 1 5
14. Macomb INCubator
http://www.michiganadvantage.org/Michigan-SmartZone-Network/