Last month we had a little scoop in the BostInno Beat: MassChallenge, the 6-year-old incubator that claims to be the world's biggest startup competition, is considering raising its first-ever fund.
It wouldn't be the first time a fund for investing in startups has been affiliated with a startup co-working space. TechStars has been doing this for years. Y Combinator started this summer. I'd be shocked if some day soon, we don't see similar activity at WeWork.
But MassChallenge is a nonprofit. Funding comes exclusively from corporate sponsors. Raising a fund might not be so simple.
When I think about the things MassChallenge does, I think of them as products.
The person running that effort is Ted Wiley. Formerly a co-founder of Aquion Energy, a battery tech company in Pittsburgh, Wiley moved to Boston for family reasons: His wife got a great job at Harvard Medical School. He'd met MassChallenge CEO John Harthorne in Davos. At first, he just wanted a desk at MassChallenge, but the two started talking about ways MC could diversify its funding.
In the end, MassChallenge may not raise a fund. It may raise funds by productizing some of its existing activity, selling market-rate services to companies and startups. Recruiting, for example. With a network of 600 alumni teams, could MassChallenge do recruiting for startups more efficiently and effectively than a traditional recruiter? Or, perhaps trickier, could it sell specific services to its sponsor base?
"When I think about the things MassChallenge does, I think of them as products," he said.
Whatever happens, it will keep its nonprofit status, Wiley said. "There's some real power in the fact that MassChallenge was started as a nonprofit," he said. Sponsor funding led MC to build the "strongest ties to large corporations of any accelerator in the world," he said.
He views MassChallenge as enabling "engagement between people that are doing innovative projects and people who are part of big, established projects," he said. "The proxies for that are startups and corporations."
Wiley said he's at the "hypothesis" stage of developing a plan to get new sources of funding for Masschallenge. Next will come a vetting of proposals against MassChallenge's mission, followed by interviews with stakeholders. He hopes to have a working plan in place by October.
