I was chatting with my friend Paul the other day, trying to drive home a point. We have a lot of back-and-forth discussions because we see just about everything differently. Our friendship works though because we’re both open minded enough to consider one another’s opinion.
I digress.
Something I’ve been getting him to come around on over the last two years is Detroit’s comeback. I dabble in angel investing which is a fancy term for saying I kiss small chunks of money goodbye into small private companies. Every couple months I receive an update from these companies that details their growth and progress.
I was reading one the other day, and their last bullet point said,
“We’ve received a $20M commitment from a private equity growth fund.”
I love it when people burry the lead like that!
At a $20M raise, the company is likely valued at about $100MM or slightly more. I looked back and we’d first participated at a valuation of $12MM back in 2017. That’s a near 10x.
I told Paul about this and stated that it’s far easier for a company worth $100MM to get to $1B than it is for it to go to zero.
The idea here being that it’s extremely hard to get to a $100MM valuation. But once you do, you’ve hit an inflection point. You’re finally to a point where momentum takes hold and you’re just trying to feed the machine.
Detroit has found its inflection point. There’s more momentum behind the city than there has been in arguably generations.
You can dig through the data and see it. You can look at home prices and see it. Or you can be on the ground and feel it. It’s why Detroit housing prices will likely double in the next 3-5 years. Detroit is the startup company that went from staring into the abys to hitting its inflection point.