Detroit is Trying to Become the Next Major Tech Hub

techtown detroit

Detroit isn’t exactly known as a tech hub. But some people and organizations are looking to change that. One such organization is TechTown Detroit, a non-profit business incubator located in an old General Motors factory in the city’s Midtown neighborhood.

The TechTown Detroit building is a five-story building currently playing host to about 40 small businesses. And the organization is working to build that community even more by promoting some of the benefits of starting a business in Detroit.

One of the main benefits is the low cost of living. Rents at TechTown Detroit are about 70 percent cheaper than they would be in a comparable space in Silicon Valley. And homes and other amenities are also much more affordable than in more established hubs like the Bay Area.

However, cheap space isn’t the only benefit. CEO of TechTown Detroit Ned Staebler told NPR:

“We have more engineers per capita than anywhere in the world. So, if you need to know how to make something, you need to know how to extrude plastic or bend metal, there’s no place better in the world to do it.”

Adam Leeb is one of those entrepreneurs who has realized some of the benefits of launching a business in Detroit. The MIT grad co-founded Hemingwrite, a company that produces typewriters that automatically add whatever you type to a cloud-based server. The product allows people to have that old typewriter feel while still giving them the opportunity to save documents digitally so they can go back and make edits later. It also allows for distraction-free writing since there aren’t any emails or other windows popping up.

Leeb works out of the TechTown Detroit building, and enjoys the low cost of living and comeback spirit of Detroit.

But being part of a tech community that’s still relatively small doesn’t come without drawbacks. Leeb said that his company has had a more difficult time raising money since it’s not located in a major hub like Silicon Valley.

He also added that the other benefits won’t necessarily offset the downsides for all different kinds of businesses, telling NPR:

“If you’re coming here just for the cheap office space or the cheap living, then you probably need a better idea.”

Finding an inexpensive place to run a business can clearly have its benefits. And those companies that might need access to nearby engineers for product development could also very well benefit from setting up shop in Detroit. But low rent, alone, shouldn’t be the deciding factor for choosing a startup location.

The high cost and oversaturation of Silicon Valley have caused many entrepreneurs to set up shop elsewhere. And Detroit’s up and coming tech startup scene is an intriguing option. But entrepreneurs should consider all of the pros and cons so they can choose a location that offers the benefits that will cater most to their specific needs.

Image: TechTown Detroit 7 Comments ▼

Annie Pilon Annie Pilon is a Senior Staff Writer for Small Business Trends, covering entrepreneur profiles, interviews, feature stories, community news and in-depth, expert-based guides. When she’s not writing she can be found exploring all that her home state of Michigan has to offer.

7 Reactions
  1. Low costs are great, but you’d better bring your talent and/or training with you. Places like Silicon Valley become so expensive because they have a high level of talent, which spurs wage competition and allows people to spend more living there. It’s an upward spiral and getting those people to leave is going to be tough.

    • Very true. I think it will be sort of an evolving thing, because if enough innovative people flock to a lower-cost city like Detroit it could become that sort of community. But I don’t think it’s a change that will happen overnight.

  2. “Detroit Tech City” would have slammed as a title for this. Awesome article nonetheless!

  3. Justin Thompson

    Detroit is reallt the original place for technical innovation.

    More engineers per capita than anywhere is a no-brainer that will be a deciding factor for companies to locate to Detroit.

    A very old city with allot of history & problems as well as deveopment makes the city very appealing to people with ideas & capital.

    Capital & massive redevelopment is what will remake the city into a bigger one than ever.

    Where there is a slum is actually billions of dollars.

    A pile of old tires is a future high rise apartment building.

    • That’s true as well! There are a lot of innovative people here and a lot of history. But I think it will take some time for it to get back to that level of development.