Patrick Center: Wednesday afternoon. Time for our bi-monthly conversation with MiBiz senior writer, Mark Sanchez. Calvin University launching a startup garage business incubator. Walk me through this.
Mark Sanchez: Yeah. Business incubator…many universities today and colleges run business incubators or organizations, economic development groups in the community, they run these business incubators, of course, Start Garden here in Grand Rapids. And what they do is they offer low cost space plus a lot of support, business coaching, education, networking, meeting potential customers, access to capital for men and women who are starting the business; they've got at technology, they’ve got an idea to build a business around and they want to establish this business and growing it and create something. A business incubator can really help them out. In the last 20 years we've seen so many of these forms Michigan through universities and other organizations and now Calvin University is starting start-up garage, and I love that term because it really goes back to that idea of so many entrepreneurs who start their business in their garage or basement and they grew it into something substantial. And Calvin started this with a $500,000 donation from John Berlee, a Calvin alumni, graduated in 2014, went into the ministry, was a youth pastor, and then created a business called Breeze. It was kind of a church management software company. He sold that last year and him and his wife wondered Where do we go now? What we do now? They had some money and they gave it to their alma mater. $500,000 to start the start-up garage business incubator and John’s also going to devote to 4 years of his time to volunteering to run the business incubator there at Calvin and serve as an entrepreneur in residence. Bottom line, Calvin has joined with many other universities to support entrepreneurship, and John, his goal is to create 100 Christ-centered companies over the next 10 years and help them flourish. We'll see how this goes. And it launches next week. It will primarily start with serving Calvin students and ultimately open it up to the broader West Michigan market.
PC: Is there a tie into tithing? I see that word in your article. That, of course, is a a very Christian-based way of giving.
MS: (unintelligible) We want to do this, this is what we believe we're being called to do. So, yeah, it’s a form of tithing. But also when he sold the company called Breeze, he sold it to an organization called Tithly which is a technology company for churches including for tithing to churches. So you're reading that correctly. For him this is a form of tithing.
PC: We're talking with MiBiz senior writer Mark Sanchez. Another story you've been working on: Grand Rapids based Michigan Capital network is increasing its next venture capital fund.
MS: Yeah. This is a group we've written about a lot of years started out 18 years ago is Grand Angels, this new angel investing group in Grand Rapids, that has grown up and done a lot of investing in startup companies around the region and around the state. Well, this has become a Michigan Capital Network under an umbrella organization as five angel affiliates in the state now, plus core venture capital fund. And this started with something we posted online on MiBiz.com the other day, the Michigan Capital Network, in the last year, has been raising money and soliciting investors for venture capital fund. Originally, they wanted to raise 25 million dollars. Now, they're looking at 35 million dollars. They've raised and increased that target for the venture capital fund and basically talking to uphold the model over Michigan Capital Network. It's really…they’re seeing increased interest from individuals, from family offices, from institutional investors to look more at venture capital as an invest alternative. We've seen the volatility on Wall Street, especially here in the last few weeks in yesterday's performance, so that’s a volatile place to put your money right now. Real estate, bonds... where are you gonna look? What we're hearing from folks is that venture capital investing and angel investing, you know, becoming increasingly bigger opportunities and bigger options for folks with financial ability to do this investing and are looking more. And this is kind of a reflection of that trend. Michigan Capital network now wants to raise 35 million dollars for the 4th Venture Capital Fund.
PC: And we're seeing a trend also in inclusive economic development. This seems to be the focus.
MS: That kind of reference to talk about. Also the new venture capital fund here in Grand Rapids and the new community transformation fund that’s still continuing to raise money that supports businesses, people of color who are buying or are starting businesses, and you're seeing much more attention by venture capital, as a whole, and angel investing as a whole. Here's a demographic that's been missed. There are a lot of great ideas by people of color who have great technologies, great ideas for building businesses around and creating something and it's historically not been a place where venture Capitalists have made investments. So you're seeing, in the last few years, a much larger focus on that area. But I’ve said many times, the economy works for everybody or it doesn't work. And that’s kind of the thing behind the new community transformation fund here in Grand Rapids and that’s kind of a trend and something many venture capital funds are now focusing on.
PC: We're talking with MiBiz senior writer, Mark Sanchez, you've been busy. We have another (unintelligible) that you’ve been working on here. And I don't know if this is a product of the economy or what happens when mergers take place. But BHSH system cutting 2 dozen leadership positions at Spectrum Health Lakeland.
MS: Yeah, well, initially started out with 2 dozen leadership positions at Spectrum Health Lakeland, that we heard about last week and then later in the week, BHSH system. So it was actually 400 jobs across the state that were cut at Spectrum here in Grand Rapids, Lakeland on St.Joe, and certainly over at Beaumont over in Southeast Michigan, as we reported a few weeks back when they posted their mid-year financial information a few weeks ago. This showed Beaumont over in southeast Michigan lost nearly a 100 million dollars, which is about the same revenue level was from Spectrum Health recorded in West Michigan, and Spectrum Health made almost a 100 million dollars by mid-year. On top of that, you're seeing some real serious financial pressure on health systems and hospitals out of the pandemic. There's been severe staffing shortage, folks have been leaving, nurses have been leaving, so they had to raise wages, they had to sign on retention bonuses, they had to go to the trouble of nursing organization which are charging fairly high fees. Plus, inflation is a hitting everybody. So you had a whole series of factors hitting hospitals and Health systems here this year that are driving the bottom lines down. In fact, there's an organization out in Atlanta, Kaufman Hall does monthly reports on hospital finances in the U.S. It shows the median margin, right now, for health systems is in negative territory. Negative one percent. But that the median, obviously some are doing better and some are not doing better and are doing worse. So right now the largest health system here in Michigan BHSA system, their mid-year financials came in well below expectations. They had a big loss in southeast Michigan. So as a result, they're tightening the belt. There are 400 positions last week that were cut.
PC: MiBiz senior writer, Mark Sanchez, thank you so much.
MS: Thank you, Patrick.
