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Entrepreneurs Inventing Their Own Futures with Help from the Massachusetts State Government

Posted by Alex Pearlman  October 26, 2011 05:47 PM

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masschallengelogo.jpgBy Kyle Psaty

On Monday night, Massachusetts Governor Deval Patrick stood in front of about 1,200 of the city’s top venture investors, entrepreneurs, and startup supporters and said: “We, in this Commonwealth have to be about inventing our own futures. Not waiting for better times. Not waiting for circumstances to turn so that we can all have a better way. We have to invent our own out."

He was talking about innovation in the state, highlighting the vital role startups play in creating jobs and driving economic growth. But for a dozen or so of the entrepreneurs in the room, the message resonated even more strongly. That’s because they were about to be presented with funding amounting to $1 million in total -- a large chunk of which was allocated to them by the state.

The event was a ceremony recognizing the best and brightest of Boston’s MassChallenge startup competition, which has been going on since May. Seventeen of the contest's 125 finalists took home a portion of that grant funding to seed their businesses.

MassChallenge is the largest competition and incubator of its kind anywhere, and, best of all, it's a non-profit, so contestants don’t have to give up any ownership or money to be included. It’s also how the state was able to donate $250,000 of the funding given out on Monday in the form of a grant. Governor Patrick literally played a role in helping these entrepreneurs invent their own futures.

“We both graduated from MIT, and we were both working in [Washington], D.C.,” said Ainsley Braun, CEO of Tinfoil Security, when asked how she and her co-founder landed in the competition. “Government was moving a little too slowly for us, so we decided to come back to Boston to join MassChallenge.”

Tinfoil, which helps companies find holes in their websites' security, took home one of three grand prizes -- a $100,000 check.

“The entire summer has been spent building out a real company -- a company that’s viable and can continue," Braun said. "We built out our product. We lined up customers. Right now, we’re in alpha, making sure our product is working as well as it should be so we can launch publicly.”

Drync CEO Brad Rosen, whose company banked one of 14 $50,000 prizes, tells a similar tale: “We have a huge and growing user base of passionate wine enthusiasts,” he said, noting that his company’s wine app now has over 350,000 users. “The plan has always been to get to a critical mass and then to begin selling wine. We are now literally ready to turn the crank and drive to revenue. Until tonight, we’ve had zero dollars in investment.”

For Rosen and his team, MassChallenge was about taking a smartphone app and turning it into a viable business that can raise venture funds to scale into positive returns.

“[MassChallenge] was totally worth it. It got us organized around solidifying our business plan, coming up with our go-to-market strategy, and we actually sold a bunch of wine for the first time," he said. "It was really good at getting us focused on the key milestones we needed to reach to now go out and raise money.”

Tinfoil Security has already completed a seed round big enough to get them off the launch pad. “We raised funding and are looking to build out the team now,” Braun said. “We really need to start hiring, and we’ve already made one offer.”

Other entrepreneurs from the competition have also raised funds already, including Finalta, which didn’t even take home any of the prize money awarded by MassChallenge.

The State of Massachusetts has already committed another $250,000 to MassChallenge for each of the next three years. Add it all up and throw in the $500,000 the state spent to help get the non-profit off the ground in 2009 and 2010, and you’re looking at a hefty $1.5 million investment. The competition doesn’t ask winners to stay in state after completing the contest, but many of last year’s competitors did. Those teams have already created some 500-plus new jobs in Massachusetts -- not counting the founders who competed last year -- according to MassChallenge, and they’ve gone on to raise over $116 million in additional funds to continue growing their businesses.

It’s hard to argue with devoting money to a project that’s creating jobs in such a reliable way -- especially when private investors are jumping in to offer more than 150 times what the state has laid down thus far to help these companies get a leg up. From the way it looks, Patrick was right: Massachusetts really is about inventing its own future, both on the state level and at the new companies growing here.

About Kyle -- I'm obsessed with what's next, especially when it involves truly helping people live better, more fulfilling lives. I believe this is where creativity and creation become innovation. The founding editor of the online publication BostInnovation and a former staff writer for the New England Patriots, I'm lucky to now spend my days building a brighter future for consumer banking at PerkStreet Financial, where I also manage a daily blog. Follow me on Twitter @KylePs80.

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