West Michigan’s political, financial, and social environments are seen by many as conservative and slow moving. Shedding light on the intricacies of doing business in the region and the difficulties entrepreneurs face while navigating this business environment, John Kerschen, Managing Director of the Michigan Accelerator Fund, shared some insights on the situation. He has spent over 22 years working with early-stage investments, commercial banking, mergers and acquisitions, and investment banking.
When you speak about risk aversion what are you referring to from a financial perspective?
It refers to the desire to avoid financial loss. We put strategies in place to contain or mitigate various risks that might be present in an investment or business operation.
How does a micro-culture within a community develop its risk tolerance, or lack thereof?
Risk tolerance for a community is acquired through a reaction to collective experiences over time. The venture capital community, for example, shares its successes and failures over time to arrive at desired returns for given risks.
What is West Michigan’s attitude and approach towards risk in general? As it relates to investments?
Generally, West Michigan is a conservative community balanced with an entrepreneurial spirit. Individuals are willing to take risks within their own business but less comfortable and experienced in taking investment risk. It’s clearly a culture that views failure as bad rather than a learning experience.
How has this attitude affected economic growth in West Michigan?
Conservatism has held back some industries and economic growth. The tendency to avoid first-mover opportunities means our area waits for evidence of progress from outside communities and industries.
Can you compare and contrast Grand Rapids to another city, and would it be beneficial to adopt some of their attitudes towards risk?
Relative to Ann Arbor, GR is much more conservative and focused on its own opportunities (or with a close circle of friends) rather than encouraging an open review/sharing of new ventures. Embracing the value of learning via trying and failing, versus never trying, would be a benefit to our community.
Are entrepreneurs at a disadvantage or an advantage living in West Michigan, and why?
For now, I would say they are at a disadvantage, as the infrastructure and culture are not yet well developed. The cost of living and beginning a startup is lower in West Michigan, so in that respect, it is better than some other areas of the country.
Being the managing director of Michigan Accelerator Fund-1, what words can you offer entrepreneurs who are searching for funding in West Michigan?
Search anywhere and everywhere for funding, and don’t settle for the first interested party. Pursue multiple sources and types of funding – both in West Michigan and outside the area. Keep your burn rate low, but dare to be bold with your plan. The State of Michigan has many programs to fill gaps or supplement private dollars, so take advantage.
Check MAF-1 out online at www.maf-1.com
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