Build an innovation ecosystem
At first glance, the statistic sounds depressing: Worcester County only gets 1% of the venture capital funding invested statewide for startups and early-stage growth companies. Now, an average take of $89 million in annual venture funding over the last five years isn't a bad number considering the size of the Central Massachusetts market, but since we're so close to Boston – one of the top three places in the country for venture capital funding – you would expect there to be more spillover.
With about $8.3 billion up in venture capital for grabs annually in Massachusetts, according to industry tracker PitchBook, you would hope that Worcester County's slice of the pie could grow.
As News Editor Grant Welker points out in his “Little Venture” story, venture capital isn't the only way for startups to get funding and survive those initial years. Still, having venture capitalist paying closer attention to our innovation economy can be an important accelerant to its growth. If our region wants to grab more of the dollars now highly concentrated in Boston and Cambridge, officials from government, education and the business community here should be more actively encouraging and feeding the creation of a robust innovation ecosystem. With positive momentum, exciting startups should become more commonplace than they are today.
Organizations like Worcester Polytechnic Institute, the incubator Massachusetts Biomedical Initiatives, the Worcester Regional Chamber of Commerce and Massachusetts Biotechnology Council clearly understand this and are actively pushing to develop more critical mass to drive further innovation. MBI offers low-cost space and startup assistance for entrepreneurs. WPI funds its students' startup ventures and hosts competitions for them to receive funding, and the chamber's StartUp Worcester initiative provides a similar service. The biotech council is a statewide organization, but it offers early-stage mentoring programs to turn ideas into startups and, eventually, sustainable companies. The council understands the potential for Central Massachusetts to be a growing breeding ground for entrepreneurs.
With an environment encouraging innovation and risking exploring new ideas, successes and failures go hand in hand. But the net effect of growing such an environment will be the region becoming a destination where entrepreneurs can find enough support to grow their ideas to the point where investors want in. Venture capitalists and angel investors – like all other sources of capital – are creatures of habit, who tend to fish in the same ponds. If Central Massachusetts can churn out more startups who turn out to be good investments, more of those venture capital dollars will start to swing in our direction.
So, no, 1% of the total venture investment made in the state is not acceptable, but it's a number we can improve upon. The region, as well as the city of Worcester, has a good story to tell, but we've got to be more aggressive in building the right ecosystem and more coordinated in those efforts.
WBJ Web Partners
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