Startups And Drones: A Tale Of Two State Grants

A pair of major state grants is headed to northern Michigan, one to foster further entrepreneurial growth, the other to bolster the area’s investment and implementation in drone technologies. The Ticker touched base with 20Fathoms and Traverse Connect, the organizations receiving these dollars, to hear where the money will go and how it will make an impact.

20Fathoms among awardees for first-ever Michigan Innovation Fund

Earlier this month, the Michigan Economic Development Corporation (MEDC) announced the first eight recipients of the new Michigan Innovation Fund (MIF). One of those recipients is Traverse City’s own 20Fathoms, which will receive $1.6 million.

Signed into law by Governor Gretchen Whitmer in January, MIF allocates $60 million “to fuel Michigan innovation.”

“Currently, entrepreneurs and business startups face difficulties in Michigan due to a lack of early-stage capital,” the MEDC wrote when it was first announced. “[MIF] aligns Michigan with our Midwest neighbors by creating an innovation fund that provides financial support for entrepreneurs and companies. Not only will existing businesses be able to thrive, but companies will be incentivized to locate to our state, expanding Michigan’s talent pool and fostering innovation and economic development across our communities.”

“We’ll be using [the MIF money] to create a new fund to provide access to capital for Michigan startup founders,” says Keri Amlotte, head of outreach and strategic programming for 20Fathoms. “Startup funding is always a significant challenge for businesses as they launch and grow, and that's particularly true in rural areas like northern Michigan. We’re excited to be able to use this funding to help startups overcome that challenge.”

The new fund, Amlotte tells The Ticker, “will be specifically for pre-seed and seed-stage companies throughout the state of Michigan, with special focus on those in northern Michigan.” “Pre-seed” and “seed stage” are terms typically used to describe startups in their most fledgling of stages.

“We are still working on finalizing the details of the fund right now, since we just received the official word from the state [that we were getting MIF dollars],” Amlotte says. “But we are planning on opening applications in the coming months, and at that time, we’ll have more information on eligibility requirements, award details, and everything like that.”

The $1.6 million is the latest significant money 20Fathoms has gotten from state and federal sources. In 2023, The Ticker broke the news that 20Fathoms had landed $7.3 million across two major government grants. That money supercharged the organization, growing its geographic reach, expanding its educational programming, and enabling the launch of a new partnership with Venture North that distributes grants to small businesses multiple times per year.

According to its mid-year impact report, 20Fathoms distributed $226,375 in startup capital during the first six months of 2025, delivered training or funding to more than 200 entrepreneurs, tallied 375 hours of one-on-one coaching to business owners, and saw 470 different attendees at its networking events. 20Fathoms also reports that 115 local professionals are utilizing its coworking space in Traverse City.

Traverse Connect gets $949,000 from state’s new Advanced Air Mobility Initiative

Last week, Whitmer signed an executive directive to create a Michigan Advanced Air Mobility Initiative, “to advance the testing, production and integration of uncrewed aircraft systems technologies” throughout the state. At the same time, the state also announced $4.1 million in funding for four advanced air mobility projects, including nearly $1 million for Traverse Connect.

According to Camille Hoisington, Traverse Connect’s director of ecosystem development, the new grant is an expansion of the funding the organization received last year to “test and scale the use of unmanned aircraft systems for use cases including delivery of medical supplies and other critical healthcare services to improve rural health outcomes.” That project, a partnership with Munson Healthcare, Northwestern Michigan College, the Freshwater Research and Innovation Center, and more, launched this past spring.

“We did over 100 flights in May, essentially testing the capability of drone delivery between Munson Healthcare facilities and partner facilities that Munson works with, mostly for the delivery of lab samples,” Hoisington tells The Ticker. “That process was successful, and we learned a lot. Now, we’re iterating what that looks like for phase two and phase three.”

The new money will help fund those additional phases, which will test more advanced deployment of drone technologies. Hoisington says the initial phase was limited to “visual line of sight flights.” Future phases will test beyond visual line of site (BVLOS), “which means you can take visual observers off the ground, so the drone can be fully automated in the airspace.”

“In phase one, we had to have a person – and usually several people – on the ground to maintain eyes on the drone at all times throughout its flightpath,” Hoisington says. “For example, if the drone was flying from Munson Medical Center (MMC) to Munson Dialysis Center, we had to have multiple operators stationed, including a person at the takeoff site, a person at the landing site, and then 2-3 people on the road to maintain that visual observation.”

By road, the Dialysis Center is only about 1.2 miles from MMC – a detail Hoisington says underlines the significant limitations of visual line of sight drone flights.

“It's not an efficient way to do it, but that's what you have to do unless you have an FAA waiver to fly BVLOS,” Hoisington explains. Traverse Connect and its partners are in the application process for that waiver, with hopes of firing up BVLOS flights between Munson facilities this fall. A third phase would follow, with the same BVLOS protocol, but “doing multi-mission airspace management, with several drones in the sky at any one time.”

“[Phase three] will allow us to test airspace management and deconfliction within the airspace, which would bring us a lot closer to what a real-life scenario would look like,” Hoisington says. “It all plays into assessing the feasibility, viability, and scalability of using uncrewed aircraft systems and integrating them into the Munson Healthcare network. And then we’ll also be looking at what impact potential this has. Ultimately, what we want to see is better patient outcomes. We want this technology to help Munson deliver healthcare faster, whether it's getting your lab results back quicker or getting pharmaceuticals closer to your home.”

While timelines depend on FAA approval, Hoisington expects phase three will move forward next spring or summer.