Print
Email
Print Edition StoriesFriday, July 17, 2009
MassChallenge makes plans for global business plan challenge
By Jackie Noblett
Breaking down the MIT $100K
MHT's Efrain Viscarolasaga: Tech companies may have to wait for stimulus funds
Flash Slideshow: Mass High Tech All-Stars Thought Leadership Roundtable
John Harthorne paced outside the campus of MIT waiting for a text message from one of his business partners. That would be the signal the state’s economic development chief, Greg Bialecki, was exiting the Kresge Auditorium after the finals of the MIT $100K Business Plan Competition, and it was time for the young entrepreneur to make his move.
He had practiced his elevator pitch to Bialecki: a technology business competition, much like the one he had just witnessed, but open to any company willing to establish its headquarters in Massachusetts. The prize would be cash, buzz and, most importantly, seed funding.
Two imposing state troopers patrolled the entrance. A limo was perched outside the door. Harthorne knew this was his only shot at the chief, and it could be short.
“I practiced a 10-second version with hands around my neck in case I was being restrained,” he said.
Of course, the troopers were not Bialecki’s bodyguards and the limo was for someone else, but Harthorne and his business partners did confront Bialecki and made their pitch while walking the secretary to his car: Their plan worked.
“They ambushed me,” Bialecki said with a chuckle. “If you talk to folks in the business, they say young people want to feel more connected to the business community and get more mentorship opportunities. It will be a real showcase of the entrepreneurial talent here.”
Such persistence will be necessary for Harthorne’s nonprofit, MassChallenge, to live up to the hype it has created within the local technology community. The challenges of scaling an event like the $100K, which dozens of students organize every year, to a potentially global scale are formidable; So will be raising the funds to provide the seed grants and ensuring the venture and angel investment community is on board to provide matching funds.
“I know from experience that business plan competitions can make a single, positive impact on the spirit of entrepreneurs and the ecosystem,” said Ken Morse, an adviser to MassChallenge and managing director of the MIT Entrepreneurship Center, which sponsors the $100K. “John is the right person to infect leaders across the state with the mission and entrepreneurial virus.”
The concept and mission of MassChallenge is relatively simple: to provide a platform for early-stage companies to receive mentorship and seed funding through a $25 million business plan competition. While he was an MIT Sloan school student in 2006 and 2007 he led the Global Startup Workshop, which he describes as having a mission of “spreading the gospel of the $100K around the world.”
While the format and structure will be similar to university business plan competitions, it will differ in one significant way: a seed funding round up to $1 million will accompany the cash prize.
The program will work with an interactive web presence, where scientists and entrepreneurs can prepare themselves for the competition, as well as find team members. Harthorne expects to receive up to 3,000 submissions, which would then be reviewed and scored by a team of 20 to 30 entrepreneurs, venture capitalists and other professionals. About 150 would make it through the first cut.
Each of those 150 would be assigned a mentor, and the team would build a business plan. There would be another cut down to 60 finalists, separated among six technology tracks, and then a final event where 30 winners would be chosen, and seed funding allotted, based on the business plan.
The key to MassChallenge’s success will be the ability of companies to attract matching seed funds from investors. While winners would receive a cash prize, the MassChallenge seed funding would be placed in escrow until the matching funds were secured.
“We don’t want to manage the investment, we want to be a passive investor,” Harthorne said.
Yet Harthorne is confident the investment community will benefit from such a program, even feeding more seed rounds, as the contest would reduce the time investors themselves would need to meet and screen pitches from entrepreneurs.
Another challenge will be raising MassChallenge’s own investment pool. The state’s $100,000 investment through the Massachusetts Technology Collaborative was for operational funds, and investments can only come from the public and nonprofit sectors. Grants and loans can come from any entity, although it can not receive an equity return.
Harthorne has been able to gain the support of some of the largest players in the local IT community, including Sycamore Networks founder Gururaj “Desh” Deshpande, Flybridge Capital Partners General Partner Michael Greeley and Cambridge Innovation Center founder Tim Rowe.
Determining success of the concept will take time; the first competition is slated for 2010. While the program would, in theory, create up to 150 jobs per year — five jobs for each of the 30 winners — Bialecki said jobs is not the ultimate goal.
“There’s a bigger prize than that,” he said. “This kind of event will showcase the state as having an environment that is supportive of entrepreneurship.”
Comments
If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.
RSS Feeds
