Governor Patrick Announces $1 Million Business Plan Competition to Draw Startups to Massachusetts
Massachusetts Governor Deval Patrick today announced the creation of a $1 million annual business plan competition designed to attract more high-growth startups to the state. The competition, which will get underway next year, will be modeled on similar contests at MIT and other universities, but will be open to all teams of entrepreneurs willing to headquarter their companies in Massachusetts, Patrick said.
The so-called MassChallenge Venture Funds Competition, organized by a new Cambridge, MA, nonprofit called MassChallenge, will provide seed funding to some 30 startups each year. Each finalist will receive a combination of cash and equity investments worth roughly $1 million—far more than the $100,000 top prize handed out by the MIT $100K Entrepreneurship Competition, the nation’s most famous university business plan competition.
The governor made the announcement at the end of a speech to a group of several dozen infotech sector stakeholders known informally as the Massachusetts Information Technology Collaborative. The group was invited to Microsoft’s New England Research and Development Center today to discuss how to expand the infotech sector in Massachusetts.
Patrick said the Commonwealth of Massachusetts is seeding the competition by contributing $100,000 to the prize pot, with the actual funds coming out of the budget of the Massachusetts Technology Collaborative’s John Adams Innovation Institute. Boston-area technology entrepreneur and philanthropist Gururaj “Desh” Deshpande, Microsoft, and the Ewing Marion Kauffman Foundation have also signed on as founding sponsors of the competition.
Greg Bialecki, Massachusetts Secretary of Housing and Economic Development, told Xconomy after Governor Patrick’s announcement that the new competition will contribute to the governor’s larger effort to draw attention to Massachusetts as an epicenter of business creation. “We think the program itself, and the fact that people will be applying to create companies in Massachusetts, and the recognition that comes to the winners, will attract attention and will be a tangible sign that Massachusetts supports innovation and entrepreneurship,” Bialecki said.
“The other thing we find potentially very powerful…is that it’s an opportunity for people to work together on something that is bigger than any single industry,” Bialecki said. In other remarks at the Information Technology Collaborative meeting, Bialecki said state agencies are working to promote not just the infotech sector but clean energy, life sciences, and advanced manufacturing.
The MassChallenge competition will welcome startup teams in all of these areas and more. The formal competition categories will include clean technology and energy, information technology, healthcare and life sciences, nonprofit, and software and gaming. To be eligible for the competition, companies must agree to base their companies in Massachusetts and must commit to creating at least five jobs in Massachusetts during their first year of operation. (Also, their employees must be U.S. citizens or have work permits.)
In remarks immediately prior to the MassChallenge announcement, Governor Patrick said the U.S. economy is undergoing a shift unlike any since the Industrial Revolution. If Massachusetts wants to be an incubator for the companies that will create tomorrow’s new jobs—whatever industry they’re in—then “we had better lay a foundation for collaboration and entrepreneurship,” Patrick told meeting attendees. “Our job [in state government] is not to create the jobs but to create the conditions where [entrepreneurs] want to operate. Your job is to collaborate with us and with each other, both the veterans and the newcomers, the people with proven ideas and the people with just a glimmer in their imagination.”
In that spirit, the new competition is being designed to foster a culture of mentorship and collaboration between early-stage entrepreneurs and more established executives, entrepreneurs, and venture investors in the state, according to John Harthorne, the co-founder and CEO of MassChallenge. “There are two kinds of goals here,” says Harthorne. “We are focused on getting the ecosystem together for business creation and entrepreneurship. But let’s also create a culture of mentorship. We expect 3,000 entries, and if we seed 30 companies, that means 2,970 won’t get funded—but all of them will get access to team-building events, speaker events, and events designed to help them understand the Massachusetts business ecosystem better.”
Bialecki said Harthorne’s plan to line up advice and support for teams entering the MassChallenge competition—a feature adopted from competitions like the MIT $100K Entrepreneurship Competition—appealed to him and to Governor Patrick when Harthorne’s group first approached the state government about participating less than a month ago. “We like very much the fact that it’s not just a competition with prizes but that it includes mentoring support, which we think is valuable not only for the participants in the competition but it will also more generally create a habit of networking and mentoring here,” Bialecki said. “One of the things we are hearing is that the networking and mentoring that happens in California does not seem to be so naturally happening here, and there is a role to foster that.”
MassChallenge hopes to raise a $25 million fund to support the competition on an ongoing basis. Harthorne, a recent MIT Sloan School MBA who founded the organization with former Bain consultant Akhil Nigam and former medical device entrepreneur David Constantine, says donors that sign up to match the state government’s stake with a contribution of at least $100,000 before July 15 will be recognized as founding sponsors of the competition.