The new year wasn’t even two weeks old when Gov. Gretchen Whitmer signed bills into law on Jan. 13, 2025, creating the $60 million Michigan Innovation Fund and an R&D Tax Credit. The Michigan Innovation Fund will infuse five evergreen, nonprofit, and university-backed funds supporting startups with early-stage capital, so they need not look outside the state for such funding.
The five funds set to see Michigan Innovation Fund capital are the Michigan State University (MSU) Research Foundation, ID Ventures at Invest Detroit, Ann Arbor SPARK, the University of Michigan’s Accelerate Blue Fund, and Western Michigan University’s Biosciences Research and Commercialization Center. The Michigan Innovation Fund will also help establish and grow three new, early-stage emerging evergreen funds in Grand Rapids, Traverse City, and the Upper Peninsula.
‘Sustainable Funding Pathways’
“This is an exciting moment for our state’s entrepreneurial future,” said Jeff Wesley, executive director of ventures at the MSU Research Foundation, at the bill signing. The foundation manages Red Cedar Ventures and Michigan Rise Pre-Seed Fund III. “This bipartisan achievement is the first step toward establishing sustainable funding pathways for Michigan’s most promising startups and innovators. By leveraging our existing ecosystem and creating new evergreen funds, we’re investing in Michigan’s long-term economic growth and innovation leadership.”
Gov. Gretchen Whitmer announces the Make It in Michigan economic development strategy for her state at a press conference
Photos courtesy of MEDC
House Bills 5100 and 5101, also signed into law on Jan. 13, 2025, established a Research and Development (R&D) Tax Credit. It allows taxpayers and authorized businesses with 250 or more employees to claim up to $2 million per taxpayer or business, respectively, per year, according to a Michigan Economic Development Corporation (MEDC) overview of the new incentive. Companies with fewer than 250 employees can claim up to $250,000 per taxpayer or business, respectively, per year.
The credit also allows taxpayers or employers to claim up to $200,000 in additional credit for expenses if they collaborate with a research university, says the MEDC, noting that these bills will help leverage the state’s universities, making Michigan a hub for innovation and providing a vital boost to local economies across the state. Michigan joins 36 other states with an R&D tax credit.
Renaissance Zones 2.0
In May 2024, Gov. Whitmer signed into law measures that facilitate companies’ investing in Michigan’s Renaissance Zones — traditionally underinvested communities that are less equipped to participate in the state’s Make It in Michigan blueprint for statewide economic development. Announced in May 2023, the strategy focuses on making Michigan a top state for talent through the following methods: training and upskilling; honing the state’s competitive edge in R&D, advanced manufacturing, and clean tech; cultivating entrepreneurship and startups; and investing in communities’ housing, childcare, high-speed Internet, and other lifestyle amenities.
House Bill 5096 removes specific business categories that companies needed to fall under when attempting to establish in a Renaissance Zone, according to the governor’s office. This bill simplifies the process for using the zones and encourages the development of more businesses in the reduced tax areas.
“Let’s start the HIRE Michigan Fund to lower overall payroll taxes for firms. The value here is simple: The more you hire in Michigan, the more you should save in Michigan. We had a similar, bipartisan program years ago that worked well. So, let’s bring it back — because everyone loves a throwback.”
— Gov. Gretchen Whitmer in her State of the State Address
Gov. Whitmer called for this measure, along with the R&D Tax Credit, the Michigan Innovation Fund, and a payroll tax credit, in her 2024 State of the State address. The latter is the High-Wage Incentive for Regional Employment (HIRE) Michigan program, where companies with at least 25 workers would be eligible for up to 100% wage withholding tax capture for up to 10 years.
“Our current toolkit limits our ability to attract small and second-stage businesses,” said Gov. Whitmer in her 2024 State of the State address. “Let’s start the HIRE Michigan Fund to lower overall payroll taxes for these firms. The value here is simple: The more you hire in Michigan, the more you should save in Michigan. We had a similar, bipartisan program years ago that worked well. So, let’s bring it back — because everyone loves a throwback.”
A 10-year extension of a Renaissance Zone in Midland was among Michigan Strategic Fund (MSF) measures announced in July 2024 that will allow Dow to modernize its Michigan Operations Industrial Park in the city and the Auburn Operations facilities in nearby Williams Township. The measures protect approximately 5,000 jobs in the Great Lakes Bay Region. The MSF is Michigan’s grants and loans approval and authorization board.
Another component of the MSF plan for Dow is a $120 million Critical Industry Program (CIP) grant. Launched in December 2021, the CIP makes funds available to qualified businesses for deal closing, gap financing, and workforce creation or retention due to a technological shift in production, acquisition of heavy equipment, infrastructure improvements, and other factors.
In March 2025, the MSF approved a series of updates to the Michigan Innovate Capital Fund (MICF) program, launched in June 2023. The program supports high-tech startups by awarding incentives to nonprofit fund programs that support startups requiring early-stage financing.
The MEDC says the updates include (1) an allocation of $5 million from the Jobs for Michigan Investment Fund to the MICF program; (2) an amendment to the investment criteria, allowing MICF investment fund managers to increase the exposure limit per company to a total of $500,000; and (3) an amendment to the grant agreement between the MSF and the Invest Detroit Foundation ID Ventures to fund the continuation of investments in the form of loans and equity financing under the MICF program.
