Here’s a good question: What would you do if someone handed you $100,000 in cash with no strings attached?
It’s not a hypothetical. The other day, I asked Ashley Stanley. And Josh Schwarzberg. Ditto John Hoctor. Also Chris Mills and Breanna Berry. Any of them could end up with a six-figure check soon.
All survived earlier competition to reach the final round at MassChallenge, the Boston business accelerator that nurtures start-up companies. Judges — including former Vertex Pharmaceuticals chief Josh Boger, famous tech entrepreneur Desh Deshpande, and Boston Celtics chief Wyc Grousbeck — will hear 20-minute presentations from 26 finalists Tuesday and Friday this week. The winners will be announced Oct. 23.
Every one of the people I asked about the money had an immediate answer about what they would do with any cash. (MassChallenge awards a total of about $1 million; last year, it awarded three $100,000 prizes and 14 $50,000 prizes.)
Stanley would buy a new truck and hire a driver for Lovin’ Spoonfuls, a nonprofit that collects unsold food that would be thrown away and delivers it to shelters and other social services. Schwarzberg needs an engineer at iAgree LLC, an online dispute resolution business. Hoctor needs to fund more work on IntegralReach Corp.’s software analyzing television viewing data to better target advertising. Mills and Berry would use the money to improve the production of HelmetHub Corp., which wants to place helmet rental machines next to bike rental centers in Boston and other cities.
But none of them seemed very focused on prize money until I brought it up. Of course, $100,000 isn’t going to get a business very far. They sounded much more interested in the access they had to MassChallenge’s hundreds of mentors and exposure to other business contacts during the three-month program.
“The money is the least valuable aspect of the entire thing,” says MassChallenge founder John Harthorne. “It’s necessary as a marketing tool for competition. But from a start-up’s perspective, it’s probably least important.”
MassChallenge received 446 applications for the first competition it ran in 2010. The next year, 773 companies applied. This year, a total of 1,237 entrepreneurs submitted applications — more than the first two years combined. This year’s applicants are located in 35 counties and 37 states, though about 70 percent of them call Massachusetts home. The initial pool was whittled to 330 and then the field was thinned to 125 who were invited to run their businesses from MassChallenge headquarters on the South Boston Waterfront for three months.
The business accelerator concept — hosting and helping small businesses for a limited amount of time before sending them out on their own — is growing fast and Boston is home to several big accelerators. Small business incubators, which tend to host start-ups for longer periods, are also in the mix.
MassChallenge wasn’t the first accelerator. It’s not the biggest, and it doesn’t have the highest national profile. It’s not directly connected to any of the big research universities in Boston or Cambridge.
But MassChallenge has a lot going for it. It has very broad and deep local support from accomplished entrepreneurs, venture capitalists, academics, attorneys, and politicians.
And despite a technology tilt, it considers all kinds of businesses (a shoe company ended up winning $100,000 last year). Nonprofits like Lovin’ Spoonfuls are welcome to enter because the ability to make profits is not a contest criteria. Unlike some accelerators, the nonprofit MassChallenge doesn’t demand ownership interests in its contestant companies — or any other kind of compensation — in return for help. MassChallenge gets money for prizes and operating expenses from sponsorships and donations.
So what happened to start-ups involved in the previous two MassChallenge competitions? A large majority are still in business, though others have gone dark. Some were acquired by big companies. Boger, the retired Vertex chief, was so impressed with one of the 2011 winners — Alkeus Pharmaceuticals Inc. — that he joined the start-up as executive chairman this year.
Overall, Harthorne says, the 236 companies invited to the MassChallenge accelerator over the past two years have raised more than $250 million in funding. They employ more than 2,100 people — including at least 1,200 jobs created after the companies competed in the contest.
Soon, there will new MassChallenge winners. No doubt they’ll all be happy. But it’s not really about the money.