#StartupsEverywhere: Michael Van Steenburg, Founder/CEO/CTO, Modal Motors
This profile is part of #StartupsEverywhere, an ongoing series highlighting startup leaders in ecosystems across the country. This interview has been edited for length, content, and clarity.
Moving Midwest Motor Manufacturing Forward
Modal Motors is a startup based in Farmington Hills, Michigan, that designs and manufactures non-rare-earth electric motors with low- to no-touch labor. We spoke with founder and CEO Michael Van Steenburg about Modal Motors’ experience securing public and private funding, the importance of patents for startups, and the hurdles of navigating trade policy.
Tell us about your background. What led you to Modal Motors?
I was a kid in Texas with big dreams of owning a car company. Many years later, I’d done six or seven full vehicle development programs, and along the way, I got hooked on electric vehicle motors. I started inventing unique aspects of electric motors that increased performance and decreased costs, which manifested into Modal Motors technology.
What is the work you all are doing at Modal Motors?
We produce lightweight electric motors that are designed for low-cost manufacturing and assembly. Our production can happen in a single robotic cell, which makes the process much faster than human labor, and we’re developing a manufacturing process that can work on eight motors simultaneously. Modal Motors also doesn’t use rare earth magnets, which is a big advantage over our competitors, because we can outperform them at a fraction of the cost.
Have you secured grants in Michigan? What would you like policymakers to know about public grants?
We’ve secured six grants in Michigan, including $100,000 in pre-seed funding from the Michigan Economic Development Corporation. These grants are meant to spur innovation, but they are all reimbursement grants. We have to pay for upfront costs ourselves, then wait for the government to pay us, which is tough because we have to come up with the money in the first place—often making them non-starters. Not a single one of the grants even covered our tooling costs. Such funding is useful, but it doesn’t bring a product to market.
Policymakers need to look at the entire product cycle, which can span multiple administrations, meaning that startups like mine have to deal with changing goals and policies. Bringing a product to market is very time- and capital-intensive. With our motors, for example, we are trying to reshore manufacturing, and sometimes we have to buy foreign-made equipment because the machines we need are not made here. Production volume numbers project out three to four years, and if the next presidential administration changes course on reshoring, we will have sunk money into expensive tooling costs that are suddenly useless.
What was your experience receiving funding from private investors?
The Midwest is conservative when it comes to venture funding. Our seed round was funded exclusively by Michigan investors, but we’re currently talking with a California investor who would be our bridge to Series A funding. In my experience, Midwest investors want to see a return on investment quickly and often invest smaller amounts than West Coast investors, which is limiting for startups in this area. When it comes to manufacturing, Detroit and the Midwest are powerhouses. The expertise is already here. The capital should be here too.
What has been your experience with patents?
Right now, we have seven patents pending and ten more in the pipeline, averaging about one filing per month. Patents take a lot of time to get because of the background research needed to ensure a technology hasn’t been created before, and because the U.S. Patent and Trademark Office takes so long to process them. This is frustrating because if we don’t have patents, certain investors won’t fund our company, and raising capital takes time away from filing patents. It’s a vicious cycle.
How do you source inputs and materials?
Our manufacturing is here, but sourcing parts domestically can be very challenging or not possible for some inputs (like printed circuit boards). Tariffs affect everything, and every time we import a part or material, it takes an additional week to go through clearing customs, even if it’s coming from an allied country. The tariffs increase our costs and the delay slows down our manufacturing timelines.
Are there any local, state, or federal startup issues that you think should receive more attention from policymakers?
American manufacturing would be a lot easier if certain cities provided incentives for specific industries because we lose a lot of time and money sourcing materials and parts across a vast geography. Industry-specific innovation hubs would speed up manufacturing and allow the US to better compete with foreign competition.
All of the information in this profile was accurate at the date and time of publication.
Engine works to ensure that policymakers look for insight from the startup ecosystem when they are considering programs and legislation that affect entrepreneurs. Together, our voice is louder and more effective. Many of our lawmakers do not have first-hand experience with the country's thriving startup ecosystem, so it’s our job to amplify that perspective. To nominate a person, company, or organization to be featured in our #StartupsEverywhere series, email advocacy@engine.is.