Faculty Q&A: Tifani Sadek helps entrepreneurs remove barriers

Source: Special to Michigan News

Tifani Sadek

When Tifani Sadek moved to Detroit in 2012, she wasn’t looking for entrepreneurship opportunities ––she was seeking an affordable place to live. 

Just having moved from Chicago, where she practiced law, Sadek started attending Detroit networking events to meet other young professionals. Many of the events were geared toward entrepreneurs. Sadek didn’t have a particular interest in startups at the time, but those meetings would lead to a career working with them. 

In 2013, she founded Sadek Bonahoom, a boutique law firm that represented startups and emerging growth businesses. After taking legal positions with Public Lighting Authority of Detroit and General Motors, she joined the University of Michigan.

Today, she is a clinical assistant professor and co-director of Michigan Law’s Zell Entrepreneurship Clinic. Believed to be the first of its kind in the United States, the clinic provides no-cost legal services to startups to help launch their businesses. 

What were your first impressions of the region –– particularly in Detroit –– in terms of entrepreneurship? How did those observations lead to your founding a firm that specialized in counsel to startups and small businesses? 

When I made the move, I had no community or friend group, so I started looking for events or opportunities to meet and interact with other people in the city. There were so many events geared toward entrepreneurs and startups, and I attended them just to be social and meet other young professionals in the city. 

However, when people found out I was an attorney and lived in the city, they would ask if I could help them with legal issues for their startups. I couldn’t – I was not that kind of lawyer – but I also found that I did not even have a firm I could refer them to. After attending so many startup events, I had an inkling of an idea of what it took to launch a business and I thought, hey, perhaps there’s a market for this and perhaps I can be the one to address it. By that time, I’d also fallen in love with the city of Detroit and wanted to do my part in its revitalization. I figured by helping Detroit’s burgeoning startup community and small businesses, I could make Detroit’s economy stronger. 

Tell me more about your work with entrepreneurs in the city, both then and now. What has changed over the years, and what still needs to change to give entrepreneurs stronger opportunities? 

I started my own boutique law firm that focused on small businesses, startups and nonprofits based in Detroit. I worked with the mom-and-pop retail business and the high-tech apps that were trying to be the next unicorn billion-dollar startup. I acted as an attorney, but I also collaborated with other organizations to generally support Detroit’s entrepreneurial scene, like BUILD Institute and ProsperUS. I also was the founding board president of FoodLab Detroit, a nonprofit dedicated to supporting triple bottom line food businesses in the city.

One of the biggest game-changers in entrepreneurship has been the city of Detroit facilitating and elevating entrepreneurship of all types. The city of Detroit has been very creative in finding ways to leverage federal funds and grants to support these businesses in programs like Motor City Match, which provides funds for business owners to build out physical locations in existing properties around the city. The city has also been doing great work making it easier for business to access city services and reducing the red tape that entrepreneurs encounter when trying to start a business. I think the city government just needs to continue addressing some of the basic needs of the city – in other words, continue “setting the table” for economic growth and development so these businesses can thrive. 

I also think there needs to be more knowledge-sharing across businesses. Charity Dean recently launched Metro Detroit Black Business Alliance, which has done a fantastic job advocating for businesses and connecting business owners and entrepreneurs to each other. Detroit needs more of that.

We see many entrepreneurs open a business, and then it closes. Why is that, particularly in Detroit?

There are so many reasons a business could fail. It could be a fundamental issue with the business model. Perhaps they are not targeting the right market or they are doing a poor job communicating their value proposition to their market. In underserved cities like Detroit, however, you also have the added problem of access to capital. High-tech and scalable entrepreneurial endeavors often need a lot of capital to hire developers and to run the company without revenue until it gets market penetration. 

Before deciding whether to invest, institutional investors routinely want to know if you’ve been able to raise money from those who know you best, typically called a “friends and family” round. Failure to raise a “friends and family” round can indicate that perhaps there’s an issue with the team or team dynamics. But when you live in one of the poorest cities in the country, failure to raise substantial capital from your community has nothing to do with your potential as an entrepreneur, for obvious reasons. 

What attracted you to the University of Michigan, and how is the university –– both in your work and the work of others –– contributing to the growth and success of entrepreneurs in this region? 

I left private practice and joined Michigan as a professor for two reasons. First, I enjoy mentoring students, especially first-generation students who do not have family to turn to on their educational paths. The other reason is that I love working with startups, especially early stage startups who need a lot of guidance. Unfortunately, almost by definition, early stage startups have no revenue and little money to pay attorneys for much needed legal services. Because the clinic is free of charge, I never have to turn away a client for inability to pay. While my clinic does not focus on Detroit-based businesses, we do work with some businesses in the city.

What other insights can you share about the region’s current entrepreneurial scene and where you see it heading in the future? 

Michigan is the fastest-growing state for venture capital investment, and Detroit-based companies are taking a large share of that money. Detroit was only second to Ann Arbor in deals secured, with Ann Arbor having an outsized pull due to the influence of the university. However, much like the overall venture capital community, we have a lot of work to do in making investment equitable. According to EntryPoint’s 2021 report on Detroit’s ecosystem, only 1.5% of VC investment dollars in Detroit went to companies led by people of color. That’s simply unacceptable in a city that has no lack of talented tech entrepreneurs of color.

What else would you like to share? 

I think Detroit is a truly special place, and although I live in Ann Arbor now, I try to get back to the city as much as I can. Every time I visit, I see new business and creative endeavors. I’m so proud of how much the city has bounced back after going through a difficult bankruptcy process. And that bounce-back is due to the hard work of the longtime Detroit citizens and business owners who kept the city running as well as the newcomers who have added their perspectives and experiences from other places.

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