“There’s no reason for us to be intimidated at all by what is happening in California,” Patrick said in a speech to business and technology leaders gathered at the Microsoft offices in Cambridge, Mass.
Patrick said that up to $1 million could be made available to a startup that agrees to base operations in the Commonwealth, create a minimum of five jobs in the first year — and that had appropriate work permits in the U.S. Each startup must also gain matching funds from an outside investor.
The MassChallenge Venture Funds Competition (MVFC) is modeled upon the annual business plan competition held Cambridge’s Massachusetts Institute of Technology, and offers a similar amount of seed capital: $50,000 in cash for the launch of the business. The competition will be financed through a combination of public and private funds. Microsoft, Gururaj “Desh” Deshpande (co-founder and chairman of Sycamore Networks, Inc.), the Ewing Marion Kauffman Foundation and The John Adams Institute serve as initial founding sponsors of new $1 million startup competion.
Should a funded company become successful, fund officials hope a portion of the profits could be used to make the competition self-sustaining. Initially, the competition wants to fund between 25 and 30 companies each year, using a collaborative, innovative website built in consultation with the founders of Monster.com, LinkedIn and Facebook.
According to the initiative website, there will be six different tracks that can receive funding:
- Health care, and life sciences
- IT, software, and gaming
- Clean technology and energy
- Social development and nonprofit
- Open category, seed stage
- Open category, expansion stage
This initiative is a marked departure from the creation of direct employment opportunities created by the federal stimulus act. Offering seed funding from a public-private partnership of venture capitalists, foundation and the state itself for startups that are founded, built and headquartered here is innovative. The number one concern, however, expressed by Massachusetts IT executives in a study presented by researchers from the Massachusetts Donahue Institute, was the cost of doing business in the Commonwealth, with respect to taxes, unemployment insurance and compensation. Public and private partnerships came in far below improvements to IT infrastructure or the science and technology pipelines.
Even so, the hundreds of technologists and business leaders were left buzzing following the announcement here in Cambridge; clearly, there are high hopes for the innovation that may be sparked by MassChallenge Venture Funds Competition. That said, Boston Globe reporter Scott Kirsner tweeted the following: “Key detail about $25 million MassChallenge “fund”: it hasn’t been raised yet, and winners will need matching $ from VCs.”
An archive of the livestreamed video of the announcement is embedded below. The Governor’s speech begins 20 minutes in.
(We apologize for the relatively low quality of the audio and video.)