MassChallenge: World's largest accelerator shoots for impact over equity
John Harthorne had cleaned himself up and checked all the boxes on the path to a stable and happy life. Once a self-described “drunk” who was wandering aimlessly around Europe doing translation work for automotive companies, Harthorne (pictured above) found his way back to Boston, won the prestigious 100K Entrepreneurship Competition at the MIT Sloan business school, ran a global startups conference, and landed himself a $200,000-a-year job at Bain Capital.
But then the financial crisis happened. He was already getting hives from the stress of his 80-hour-a-week job. Then the national economy tanked. “I thought, ‘fucking Wall Street!’”.
This was the story of the decline of America, he thought. The whole economic system had become predicated on taking value instead of creating it. One of the country’s founding principles had morphed from “Bring us your huddled masses” to “Bring us your wallets.”
People were losing jobs. Office spaces were freeing up. Laywers and investors were sitting idle. Capital was about to become cheaper. The media was dying for an optimistic story. Conditions were ripe for starutps. Eventually, Harthorne turned to his Bain colleague Akhil Nigam and said they have to do something about the situation.
A year later, Harthorne and Nigam had founded what they claim is the world’s largest startup accelerator, MassChallenge. The nonprofit organization takes no equity in the companies it incubates, it is purely funded by sponsors, and it doles out $1 million in cash prizes for every class, each of which spans four months. The program culminates in an awards ceremony at the end of October in which 26 finalists compete to win the cash and millions of dollars worth of mentorship and services.
This year, the accelerator’s fourth, MassChallenge houses 128 startups under its roof on the 14th floor of a shiny new skyscraper in Boston’s Innovation District, an urban revitalization project that has seen a number of companies, resaturants, and, soon, residences move onto a waterfront property that was previously a giant parking lot. MassChallenge has 360-degree views (also pictured above) of the Boston skyline, Logan Airport, the harbor, and the Charles River. (It might have to move out next year, but Harthorne has been busy negotiating a potential new lease through the media.)
Harthorne originally wanted MassChallenge to be a for-profit accelerator co-funded by the federal government, intended as a way to add fuel to the national economy. For various reasons, chief among them that investors were wary of investing alongside the government, that didn’t pan out. Instead, Harthorne and company decided to go the nonprofit route and shoot instead for impact.
“We said, let’s just forgo capture,” Harthorne says. “We’ll set the example.”
Harthorne says the criteria for entry into the accelerator is the potential for having a significant impact on humanity. However, given that one of the companies I talked to while at the offices was focused on helping people fit dresses on 3D avatars, the organization must interpret that mission fairly broadly. The program is also open to all-comers and all countries – it conducts many of its application interviews via Skpe – and the sponsors include organizations from Colombia and Mexico. MassChallenge also has a small operation in Israel, which in turns sends a few startups its way each year.
Because of its size, economic mission, and expansive scope, MassChallenge feels more like Helsinki’s Startup Sauna or Beijing’s Innovation Works than it does Y Combinator, Techstars, or even 500 Startups. Some people within Boston’s startup ecosystem feel that what MassChallenge achieves with scale it sacrifices with focus. The team is run by 15 dedicated staffers, whose resources are in turn spread pretty thinly across those 128 companies. As Erin Griffith has reported, other accelerators are in the midst of a shakeout and tightening their vision, including, most significantly, Y Combinator, which recently shrunk its class size from more than 80 companies to fewer than 50.
For Boston’s startup ecosystem, however, MassChallenge offers symbolic value, as well as adding to the clamor of startup activity in the city. Occupying a central place in a still-developing district dedicated to innovation, the behemoth accelerator could not be a more emphatic statement that the city cares about entrepreneurship. Whether or not that means it will spin out great, lasting companies is a question that is yet to be answered.
For Harthorne, the quest to create value continues.
Image via MassChallenge.