Business accelerators have become fashionable, and for good reason. They offer aspiring entrepreneurs access to expert mentors, marketing and media resources, funding opportunities, and office space. In part two of this multi-part article series I describe my personal experiences at MassChallenge and highlight what I think to be its strengths and weaknesses. The goal is to help academic research institutions learn what works and what doesn’t as they begin to construct incubator programs of their own.
Previous articles in this series:
– Building on the accelerator model – Introduction (part 1)
MassChallenge is among the most supportive business incubators I have participated in. To apply, start-ups must register and complete an online user and company profile. There is an application fee associated with registration to complete the application, and a pitch competition to select finalists for the program.
Those companies entering the MassChallenge program are given open office space and immediately absorbed into a strong collaborative community hosting teams from all over the world. MassChallenge does not take any equity or place any restrictions on entrepreneurs. Avoiding incubators that do so is important because they undermine the risk and hard work that is assumed entirely by the founders at this stage, and unnecessarily complicate the company’s capitalization table (outline of the founders’ and investors’ percentage ownership, equity dilution, and value of equity in each round of investment), which can turn off early investors.
For the 128 finalists in my year, MassChallenge kicked off with an intensive one-week “boot camp” of educational, mentorship and social events designed to inspire participants and jump-start the program. During this first week CEOs, investors, lawyers, and executives of top Boston companies visited the space, gave lectures and ran workshops on how to build and grow a sustainable, high-growth company.
The inclusive incubator structure, friendly/supportive staff, high energy environment and strong emphasis on collaboration and networking set a very high bar for excellence, and the supportive tone of “it takes a village” rang true throughout the timeline of the competition. This environment led to incredible relationship building with mentors, colleagues and other teams that are essential on the long and arduous road that is entrepreneurship. During the 4-month program, MassChallenge offered hands-on training through more than 150 lectures, panel sessions, interactive workshops, and on-on-one meetings with industry experts covering all aspects and stages of building a business. The accelerator curriculum was flexible and many of the events were also open to the public.
Nevertheless, there remain many areas where the MassChallenge program could be improved – areas that could be addressed best by academic institutions interested in establishing incubator programs of their own. While the MassChallenge competition boasts a $100,000 cash prize for the winning start-up, the structure of the competition, office space and support infrastructure is not currently geared to life-sciences companies, and the many valuable side-car prizes available throughout the program are heavily tech-based. Balancing their investor base by targeting more biotech and pharmaceutical companies would help correct this, and new incubators should be aware of the start-up demographics they are targeting, excluding or undervaluing, and how this aligns with their mission statement.
MassChallenge is quick to emphasize that its cash and side-car prizes do not reflect the true value of their accelerator program, and while this is completely true, there are unique requirements for life-sciences companies that MassChallenge is currently unable to meet. Primary amongst these is access to core facilities and specialized equipment such as microfluidics, flow cytometry, microscopy, and animal husbandry. Laboratory space that is separate from academic institutions is another major need for life-sciences start-ups, and will be discussed in more detail in a future post.
Universities could address this deficiency by leveraging existing industry relationships and offering small grants, lab space, or access to specialized equipment to the strongest teams each year. Many Canadian universities have co-op programs, and start-up companies would benefit greatly from subsidized student employees in exchange for hands-on education in entrepreneurship. While lawyers swarm about incubator programs like honey bees around flowers, life-sciences companies would also benefit from a stronger emphasis on technology transfer. Dedicated advice and support negotiating terms for the licensing agreements are often needed by life-science start-ups to “buy back” intellectual property from their home institutions, and represent yet another area where universities could leverage existing infrastructure and expertise to help companies that are spun out of their academic programs succeed.
Despite these shortfalls, MassChallenge is certainly well poised to make a major contribution to the international entrepreneurial landscape. Recent conversations I have had with their executive team suggest that they are very aware of their current limitations and are working hard to address them. While founded in Boston, there is interest in expanding to Canada. MassChallenge currently operates in Israel, the United Kingdom, Colombia (Innpulsa) and Mexico (Zapopan). Entrepreneurial-Spark is a similar (unaffiliated) program inspired by MassChallenge which recently launched in Scotland. Their rapid growth and expansion (MassChallenge itself is a startup) speaks volumes to the value their offerings provide and suggest their model for what a business incubator should look like is working and worth emulating.