An MIT spinoff known as the Engine is putting “tough tech” in the spotlight as it prepares to convert an old Polaroid building in Cambridge into labs and offices for startups with potentially game-changing technologies for the energy, biotech, and manufacturing fields.
MIT created the Engine — a for-profit company that runs a $205 million venture fund — in 2016 to help startups with longer-term horizons that were finding it difficult to secure venture capital and other more traditional kinds of startup financing.
On Tuesday, the Engine marks a milestone: an announcement of a 200,000-square-foot lease with MIT in a vacant building once used by Polaroid at 750 Main St. Renovations to create offices, labs, and fabrication space are scheduled to start at the end of the year; they are expected to open by early 2022.
The Engine has invested in 19 so-called tough tech startups so far, businesses that collectively employ more than 200 people. Most of them work out of 28,000 square feet that the Engine currently leases at 501 Massachusetts Ave. in Central Square. Katie Rae, the chief executive and managing partner, said she expects to keep the existing space after the new one opens.
Rae said the Engine will eventually serve 100-plus companies, employing at least 1,000 people at the two locations.
Israel Ruiz, MIT’s treasurer and chairman of the Engine’s board, said it remains a wholly owned subsidiary of MIT, and the university invested $25 million in its signature fund. But the 21-person venture does have a separate board of directors (Boston Globe managing director Linda Pizzuti Henry is a member), acts independently, and makes its own investment decisions.
Ruiz said MIT created the Engine after noticing that some spinouts from the university struggled when they no longer had access to labs and equipment at the school, with several leaving the state. But those that went elsewhere often found it even harder to succeed, he said, without MIT and its support system nearby.
The longer these startups can be persuaded to stay and grow in Greater Boston, the greater the likelihood that the employees will put down roots here, helping to ensure they stick around.
The hope is to build a cluster of startups tackling tough problems, one that is not limited to businesses with MIT ties. Most of the first 19 startups have some links to the university, but some do not.
“They’re highly transformative for their industries [but] they were underserved by the traditional financing methods and venture capitalists,” Ruiz said.
One of the most common challenges these kinds of startups face is not enough space. Companies that want to build physical products need more space than software firms — and often that space has to be equipped to meet their specific needs.
“When you’re building out labs, it’s not just like office space,” Rae said. “You can’t just flip a switch and have a new lab open.”
Rae said the biggest Engine-backed startup, based on employment numbers, is Commonwealth Fusion Systems, which seeks to develop a viable commercial method to generate energy from fusion. The startups in the Engine portfolio tackle a wide range of problems — such as reducing food waste, improving the efficiency of biological labs, and using ultrasound to administer medicine to patients.
The Engine’s venture fund will wait up to 18 years before exiting from an investment, a much longer timeframe than for a traditional VC fund, Rae said. “Some of the . . . companies need that much time,” Rae said. The kinds of technologies they are tackling “are very hard things to do, but if you do them, they’re world-changing.”