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Illustration: Rebecca Zisser / Axios

ANN ARBOR, Mich. — On the outskirts of the University of Michigan campus, there's a sight that instantly shows how much the area has changed: A sensor-connected car steered by an Xbox controller roams the streets of what is known as "M-City" to test self-driving and other connected-car technologies.

Why it matters: Michigan is known for its auto industry expertise but experienced a steep decline a decade ago when Detroit — its biggest city — lost half its population as manufacturing jobs left in droves. Detroit is fighting its way back to build a burgeoning tech scene. Ann Arbor, only 40 minutes away, is taking a complementary path: It's harnessing the university's high-tech talent factory and the state's auto factory history to be at the forefront of next-generation vehicle development.

Self-driving car city: M-City is a public-private partnership funded by 70 members including major car manufacturers, chip makers, wireless and insurance companies. Every year, it receives about $1.2 million to research things like how humans will interact with self-driving cars and how cities will need to be designed for them.

"There's a lot of disruption happening in a very short time frame," said Greg McGuire, M-City Lab Director. "We're running living laboratories" to test capabilities and effects.

  • Ann Arbor is also wirelessly connected using vehicle-to-vehicle communications technology called DSRC so that intersections and vehicle can communicate with each other.
  • 2,000 privately owned vehicles are "driving" around Ann Arbor broadcasting messages back and forth 10 times a second.
  • McGuire said a few cars will be deployed on campus next month to research how students, bicycles and other cars interact with them.

The problem: There aren't enough investors tuned in to Michigan startups, and not enough Michigan-based investors in general. As more and more Silicon Valley companies move into the self-driving car market, Michigan has stiff competition for investment, talent and attention. A lot of the university's graduates are now realizing that if they don't take the opportunity to start companies to tackle components of self-driving cars, Tesla or another Bay Area startup will, said Emily Heintz, associate director of the Michigan Venture Capital Association.

By the numbers: 78% of the total capital invested in Michigan startups last year came from out-of-state investors, according to the association. More than half of the state's venture capital currently goes to Ann Arbor-based startups.

  • Currently, there are 141 venture-backed startup companies in Michigan, an increase of 48% over the last 5 years.
  • But an estimated $504 million of additional venture capital will be needed to adequately fund the growth of those companies over the next two years alone, per the MVCA.
  • Every $1 invested in a Michigan startup by a Michigan-based venture capital firm attracts $4.61 of investment from outside Michigan.

Another problem: Old-fashioned Midwestern humility, as Michigan Governor Rick Snyder puts it. Even though Michigan is one of the better-performing Midwestern states when it comes to startups, he says, people don't know about it. "We have to do a better job telling our story — no one else is going to tell it for us."

Go deeper

Rideshare companies say driver shortage is pushing prices up

Illustration: Sarah Grillo/Axios

It's not just you: Uber and Lyft rides are more expensive, company executives said this week.

Why it matters: Demand for rideshare is roaring back as the economy starts to reopen, but the same can't be said for drivers on the apps. That means fewer cars on the road, causing a supply gap that's pushing up prices.

Pelosi slams GOP leadership's moves against Liz Cheney

U.S. House Speaker Nancy Pelosi. Photo: Al Drago/Bloomberg via Getty Images

House Speaker Nancy Pelosi this week condemned Republican efforts to oust Rep. Liz Cheney (R-Wyo.) as House GOP conference chair.

Why it matters: A number of Democrats have spoken out against attempts to punish Cheney for her criticism of former President Trump, framing the discussion as one essential to the maintenance of American democracy.

What to watch in AMLO's meeting with Harris

Three Mexico national guardsmen stand in front of the metro overpass that collapsed onto a busy highway. Photo: Julián Lopez/ Eyepix Group/Barcroft Media via Getty Images

Joint efforts to stem the increased number of migrants heading to the U.S. will likely be at the top of discussions when Vice President Kamala Harris and Mexico President Andrés Manuel López Obrador hold their virtual meeting on Friday.

The big picture: The U.S. government has consistently asked its southern neighbor to prevent immigrants from reaching the border, mostly through threats like former President Trump’s talk of tariffs.

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