MassChallenge, With Lessons Learned, Gears Up for 2011 Startup Competition: A Definitive Debrief

1/31/11Follow @gthuang

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be done better this year. I also recently spoke in-depth with Harthorne, to go over the metrics and lessons learned from the first year—and to address some of the issues raised by the participants.

First, some overall metrics from the 2010 program that Harthorne shared with me. Out of 446 initial applications (from 26 countries and 24 states), MassChallenge selected 111 startup teams (79 percent from Massachusetts) and offered them office space and resources for the three-month accelerator program, which ran from July through October. There were 250-plus judges and mentors involved with the program; the core advisors and sponsors included Desh Deshpande, Josh Boger, and Ken Morse.

The program has led to at least 10 new companies being incorporated and hundreds of new jobs being created, Harthorne says. Since August, more than $20 million in external funding has been secured by MassChallenge teams. And according to surveys conducted by MassChallenge, the startup finalists across the board said the program had improved their access to resources such as mentors, fundraising information, startup organizations, and other entrepreneurs.

“Generally speaking, they did an amazing job last year,” says Vineet Sinha, founder and CEO of Architexa, a Boston-area software startup that made it to the final round of the competition but didn’t win money. “It’s an incubator program, and they provided guidance.”

One issue that came up after the competition was the distribution of “winners” across different sectors. For example, although life sciences startups made up 20 percent of the finalists, only one received money (Energesis Pharmaceuticals). Similarly, only one energy-related startup won (OsComp Systems). The winners were skewed towards the software/high-tech and general/social impact categories.

Harthorne thinks the reason might have to do with the inevitability of comparing apples to oranges—and having the same criteria for entry across sectors. Startup applicants were required to have received less than $500,000 in equity investment, and to have less than $1 million in annual revenue. Since you can get further along in software with $500K than you can in, say, biotech drug development or alternative energy, the funding criteria self-selects for very early-stage life sciences and cleantech companies that don’t have as much real-world testing as a comparable Internet startup.

So, how to address this point? Rather than imposing different criteria or having separate tracks for different sectors, MassChallenge is putting more resources into what Harthorne calls “focus areas” this year. That means developing a curriculum and providing more resources and mentorship in each of the five sector categories—high tech, life sciences, cleantech, social impact, and general. Plus creating a special “early-stage” focus area, specifically targeted at young companies so they get more mentoring. (There is no company age limit for applicants.)

That point ties into another issue raised by some observers: that the competition selected for more established companies that had already been on the fundraising circuit, rather than … Next Page »

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com. Follow @gthuang

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  • http://tydanco.com Ty Danco

    As one of the “losing” finalists, I couldn’t disagree more with the unnamed mentor in the following quote:
    ‘One mentor I spoke with said the “losers”— finalists who didn’t receive any money—felt “really bad,” and that the competitive aspect of the program in fact threatens the supportive environment that MassChallenge is trying to create.’

    I can assure you that this would be a clear minority view by the 111 finalists who were given amazing access and opportunities, not the least of which was the connections of a peer group. That’s not to say MassChallenge can’t improve–I’ve made my suggestions at http://tydanco.com/2011/01/01/startup-competitions-5-lessons-from-masschallenge/
    But the hiring of Karl Buttner, the partnerships announced today, and the continued progress of some of the best entrants will only make the 2011 version more competitive, more relevant, and more successful.

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  • http://www.extendbio.com Laura Hales

    I agree with Ty. We were also a “losing” finalist team in the life sciences sector. We were a close-knit group and I still continue to interact with the teams I met months after the competition has ended. Of course, we all wanted the money really badly, but our group was collaborative as well as competitive. If there are indeed “losing” finalists who felt “really bad”, as this unnamed mentor described, it wasn’t the fault of MassChallenge.

  • http://www.tapwalk.com Dave Owens (TapWalk)

    Another loser’s perspective:

    I knew fromt the start that winning a cash prize was:
    1) Mathematically unlikely… there were 400+ entries, 111 finalists
    2) Not entirely within my control… it’s somewhat subjective… just like the real world fundraising that MC was designed to model
    3) Not “fair”… it’d be impossible to be so with multiple panels of judges, all of whom would have different priorities and points of view… just like the real world fundraising that MC was designed to model
    4) Not “fair”… the 111 different companies were at very different stages making it even harder to compare them
    5) Though it’s a competition, it’s not like football where you can play defense, so it shouldn’t get in the way of fun collaboration

    None of those are criticisms. They are just the reality we were operating within. Trying to “fix” any one of them would likely create worse negative side effects so I’d be hesitant to suggest anything but a couple tweaks for next year.

    Having accepted everything in that list, there was almost no way I could come away feeling “really bad”. I would have liked to win… I coud have used the money and, like most people, I’ve got an ego that greatly prefers winning.

    As the article mentions we were told many times that the prize money is a red herring… the biggest value you can get out of MassChallenge is the months of participation. But it’s up to the finalists to derive that value.