Cafe Zola and Tech Brewery have emerged as the go-to places for venture capital deals in Ann Arbor. Walk into either establishment at the right time and you are likely to see scores of new economy entrepreneurs and VC pros pitching start-ups or hashing out investment deals. These are the places for business and investors to not only be seen -- but to see each other, connect and collaborate.
Big deals for large sums of venture capital aren't negotiated on golf courses or yachts in Ann Arbor. They take place in more casual places, like restaurants and co-working spaces. It's why investors spend more of their work day at places like Cafe Zola and Tech Brewery than the University of Michigan Golf Course.
This new economy-based trend has roots on the coasts. Silicon Valley is known for its geek watering holes, like Coupa Cafe and Philz Coffee where the seeds for million-dollar venture capital deals are planted and germinate. There are parallels in Ann Arbor where entrepreneurs and angel investors split a six pack on Friday's during the Beer:30 happy hour at Tech Brewery or when venture capitalists listen to start-up pitches over breakfast at Cafe Zola.
Cafe Zola was well established when I arrived in the late 1990s. There is no competition for it today.
"Two or three people get together and talk about a company or do a presentation," says Terry Cross, an angel investor who has made dozens of early stage investments, including getting in on the ground floor at Google. "I have seen a lot of power points passed across the table at Cafe Zola."
The investor breakfast meetings at high-end restaurants make sense to investors whose schedules are often booked solid during the day.
"Breakfast is the one time of day that is open to meetings," says Chris Rizik, a venture capitalist who has run $100 million funds at Ann Arbor-based VCs Avalon and Ardesta and current CEO of the Renaissance Venture Capital Fund. "The rest of the day is full of meetings. It's tough to get everybody's schedules together and that the one time it can happen, early in the day.
The casual atmosphere makes it comfortable to deliver extensive elevator pitches and is open enough that well-to-do investors can still easily mingle with entrepreneurs living the lean start-up lifestyle. It's a good middle ground that has served Ann Arbor's growing investor community for years.
"Cafe Zola was well established when I arrived in the late 1990s," Rizik says. "There is no competition for it today."
Well, no early morning competition for Cafe Zola. The work day and evening opportunities have become the realm of the Tech Brewery and its associated activities. The former brewery recently became a collaborative workspace for small businesses. It is now the home dozens of tech start-ups, including recent venture-backed firms like Duo Security and DeepField Networks. In a region where talent and is often sprawled out and synergies stretched, Tech Brewery serves as a magnet for tech start-ups that turn into new economy gazelles.
The really wonderful thing about Tech Brewery is it's a self-aggregating incubator. When you go there there is a ton of buzz and excitement. Things are happening. You see all of the things that make a great entrepreneurial ecosystem at play there.
"We don't have critical mass. We have to find ways to make it," says Doug Song, CEO & co-founder of Duo Security and the driving force behind Tech Brewery and its associated events, like A2NewTech Meetup. "For it to work you need people to show up regularly. That's why Tech Brewery works. I am always here. The other entrepreneurs always show up."
And it happens organically. Tech Brewery isn't the ward of a government agency or dependent on public funding. It has become the entrepreneurial hot spot because a number of like-minded technologists, entrepreneurs and investors like to congregate there.
"The really wonderful thing about Tech Brewery is it's a self-aggregating incubator," Cross says. "When you go there there is a ton of buzz and excitement. Things are happening. You see all of the things that make a great entrepreneurial ecosystem at play there."
Those things include breaking down the barriers that often form in a collegetown prone to building silos. The destruction of those barriers also means the creation of synergies between like-minded people who are from different industries but share entrepreneurial ambitions.
These places are great places to meet. They make a great contribution to the entire entrepreneurial ecosystem.
Other places also serve a similar purpose, such as Sweetwaters coffee houses in downtown Ann Arbor and Kerrytown or Ann Arbor SPARK's downtown incubator or TechArb, the University of Michigan's incubator for student-led start-ups. The results are hard to argue with. Ann Arbor has enjoyed a series of high-profile acquisitions as of late, including the $275 million exit of Accuri Cytometers and Expedia buying mobile-app start-up Mobiata.
Tech Brewery and Cafe Zola can't take the lion's share of credit for these hugely profitable exits, but the growing number of investment professionals and entrepreneurs need some place to work and meet and capitalize on the next big start-up opportunity.
"These places are great places to meet," Cross says. "They make a great contribution to the entire entrepreneurial ecosystem."
How place impacts entrepreneurship