Becoming Fully Invested in Detroit
About a month ago, a friend of mine posted a quote on Facebook that caught my eye. It was from Charlie Rothstein, co-founder and senior managing director of venture-capital company Beringea LLC in Farmington Hills. He said: “Detroit needs to be fixed or forgotten.”
So I called him up and asked if he wanted to explain what he meant…and, thankfully, he did. The question he was answering was something like, “If you were governor of Michigan for one day, what would you do?” He said his answer was to fix Detroit, specifically. Here's a paraphrase of our conversation: If Rothstein is anything, he is honest. Venture capitalists are that way – they are a mix of financial discipline and enthusiasm. And Detroit honestly needs radical change and change-makers – NOW. He's tired of old, tired approaches. It's time to fix this mess.
“We all depend on Detroit. There is no great state in the county that doesn't have a thriving central city,” Rothstein said. “There is no ‘forgetting' Detroit. It's time to be honest with each other. Stop the baby steps and stop the bickering.
“We need to understand how important Detroit is and to make it a great place.”
While he's realistic, he's also optimistic. “It's really complicated. There's no one lever to pull. But if we're together for one goal, it can happen,” Rothstein said.
That means getting more companies to put their headquarters here. To encourage businesses to at least put some of their investments here. To get people to become entrepreneurs and grow from within.
“Being in Michigan, we (at Beringea) feel like the eyes of the world are on us,” Rothstein said. “If we get this right, we could be a case study. … You plant the seed. It's going to take some time.”
We need to be a place that takes chances – and become meaningful players in growth areas like batteries or solar panels. Michigan has to mean something again in terms of an industry, Rothstein said. We're getting back to that in terms of automotive, but we cannot obviously focus only on one area. That should have happened a decade ago…but lesson learned.
“Venture capital can be the cure for an economically depressed area,” Rothstein said. Like Beringea, they are generally regionally managed, so they are intimately involved in the community. They can push through the changes that are needed – and that can remake the economy.
Some background: Rothstein, who has a BA and MBA from the University of Michigan, is a board member of the Michigan Strategic Fund, the State's lead economic development and finance agency. He is also a board member of the Venture Michigan Fund, a $100 million fund-of-funds, and sits on the investment committee of Global Rights Fund II and InvestCare Partners. Rothstein is also the manager of the InvestMichigan! Growth Capital Fund, a $185 million venture capital fund targeting emerging businesses domiciled in the state of Michigan.
Prior to establishing Beringea, Rothstein was a vice president of Corporate Finance at J.W. Korth and Company, a Michigan-based broker/dealer where he developed the Firm's public offerings, private placement and leveraged buyout activities.
Beringea, by the way, is an international private equity and investment banking firm with offices in Los Angeles, London, Shanghai and Detroit. Beringea is the manager of Global Rights Fund II, a global media venture capital fund, among others and has $270 million under management.
Beringea is walking the walk; it is investing in Michigan companies. Rothstein also is giving of his time and expertise; he is on these boards and going to these meetings with the likes of Roger Penske, Mike Ilitch and Dan Gilbert. They are fully invested here – and they know where the region (and them in particular) has dropped the ball in the past, Rothstein said.
On the bright side, the landscape is much different now than it was five years ago. There is brainpower here and companies ready to grow. There is unbelievable value in real estate. There are employees ready to be employed. There is a core here, and something has to be done with it.
“When there's a full-blown economic crisis, everybody drops the veneer. Now, we're all in this together,” Rothstein said of his powerful cohorts. “The outcry that we need to do something is greater and louder.
“There is a commonality of the heart; they all want to make this region great.”
So – Detroit will be fixed. You heard it here. Let's hold ourselves accountable.