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Innovation Economy

The Engine at MIT is revving up the potential of ‘tough tech’

The Engine is run by Katie Rae, who was hired three years ago.
The Engine is run by Katie Rae, who was hired three years ago.MIT Engine

If you happen to bump into Bill Gates or Tim Cook in Central Square, odds are good that they’re heading to the Engine. It’s a hub for startups operated by MIT, just across the street from the Middle East restaurant and club.

MIT announced the venture in 2016, as a way to supply funding and work space for companies building businesses around scientific and engineering breakthroughs — what some call “tough tech.” It can require five or 10 years of hard work to transform those kinds of breakthroughs from a successful lab experiment to a marketable product customers can buy. Gates has invested in companies that were born at the Engine, and Cook dropped by in 2017 to meet with some of the entrepreneurs.

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The Engine has a $205 million pool of capital to invest — most of that from outside investors, with just $25 million kicked in by the Massachusetts Institute of Technology. It has been three years since MIT hired Katie Rae, a former director of the TechStars Boston accelerator program, to run it. And it’s on track to soon make its 24th investment.

So what kinds of “tough tech” has the Engine been funding?

Boston Metal, spun out of MIT’s materials science department, is developing a lower-cost way to produce steel and other metal alloys, with zero greenhouse gas emissions. (The steel industry today relies on coal-fired furnaces, making it a major emitter of carbon dioxide.)

E25Bio is trying to create an over-the-counter test for mosquito-borne diseases like dengue fever and Zika virus, which could diagnose patients more quickly than by sending blood samples to a central testing facility.

Syzygy Plasmonics is developing a reactor that would be able to produce industrial chemicals with better efficiency while reducing greenhouse gas emissions. Its technology would also allow chemicals to be produced closer to where they’re used, avoiding the need for trucking or shipping them long distances.

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Cellino is creating what Reed Sturtevant, a partner at the Engine, calls “a tissue foundry, almost like a semiconductor-style manufacturing process” for growing human cells and tissues for use in medical procedures.

Form Energy is designing large-scale batteries that would be connected to the electrical grid, with the storage capacity “to power a city the size of Worcester, in about the size of a gymnasium,” Sturtevant says. It has raised $51 million.

Cambridge Crops is working on an ultra-thin, water-based coating that could be applied to fruits, veggies, and meat to both reduce the amount of packaging they’d require and to keep them fresher for longer periods, cutting down on food waste.

And down in the basement of what was once the Central Square Radio Shack, a startup called Commonwealth Fusion Systems aims to perfect some of the components of what it hopes will be the first commercially successful nuclear fusion reactor. The company raised $115 million in funding last summer — the most so far for a company based at the Engine. It has rechristened the basement “The Magnet Shack,” because of the extremely powerful superconducting magnets being built there.

“We definitely have a lane that we stick to” when choosing startups to fund, Sturtevant says, “which is science and technology companies that could be really great businesses at scale, like fusion power, and have positive social impact.” The Engine is putting money into three broad areas, he explains: human health, new computing technologies, and the climate crisis.

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Two-thirds of the companies funded so far have ties to MIT; the rest have come out of other schools, including Harvard, Tufts, and Northeastern. The core technology at Syzygy Plasmonics was invented at Rice University, and the company is based in Houston. The Engine’s most recent investment, Lilac Solutions, is based in Oakland, Calif., and is run by a CEO who earned a doctorate at Northwestern University. Lilac has developed a process to produce the lithium needed for lithium-ion batteries using salt water, with what the company says will be 80 percent lower greenhouse gas emissions than with other methods.

While not every company operates out of the Engine’s Central Square facility, those that do rave about the collaborative benefits.

“We could brainstorm solutions for common problems faced by tough-tech companies and share best practices as we all grew,” says Ted Wiley, CEO of Form Energy. (The company now has 50 employees and has moved to its own facility in Somerville.)

“It’s so easy to have a quick conversation in the hallway about a small question, from business topics to electron principles,” says Jeffrey Chou, CEO of Sync Computing, which is developing a new kind of analog data-processing unit. “Most of us are first-time founders, so having a support system during these exciting times is beyond valuable.”

Given the big commitment that MIT and other investors have made to the Engine so far, what are the questions about its future? (Linda Henry, managing director of the Globe, serves on the Engine’s board of directors.)

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The key one is how much financial return versus positive societal impact MIT and the Engine’s other backers expect. So far, this first crop includes companies that are still largely in product-development mode. None have been acquired or gone public, which would provide a return to investors. How much of that market success will the backers want to see before they provide more money? Or could it pull together another $200 million or $300 million to continue supporting “tough tech” startups just on their potential?

And what happens in an economic downturn, when the investment firms that are currently banding with the Engine to provide millions of dollars of funding suddenly become stingier? The team running the Engine may suddenly have to make difficult choices about which startups to continue supporting, and which ones may need to shut down or be hastily sold to acquirers willing to continue developing the technology.

But for now, the Engine has managed to create a supremely supportive ecosystem for these startups. And in August, MIT announced a major expansion into a former Polaroid factory on Main Street in Cambridge that will add 200,000 square feet of space. It will be able to house 800 to 1,000 people and accommodate forklifts, as well as welding and other fabrication tasks. It should be ready for occupancy in spring 2022, Sturtevant says — the Engine’s five-year anniversary.

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Scott Kirsner can be reached at kirsner@pobox.com. Follow him on Twitter @ScottKirsner.