Overview of MassVentures

Overview

Chapter 497 of the Acts of 1978¹ established the Massachusetts Technology Development Corporation, now MassVentures (MV), as a quasi-public corporation to provide financial assistance to startup companies in Massachusetts, with the primary purpose of increasing employment in the state. According to the MV website,

MassVentures was founded in 1978 when there were fewer than 20 venture capital firms in the world. . . .

MassVentures is mission oriented with a mandate to support the early stage ecosystem across Massachusetts. . . .

Formerly known as the Massachusetts Technology Development Corporation (MTDC), MassVentures was formed . . . to address the capital gap for start-up companies and to encourage the growth of early-stage technology firms.

Initial funding of MV came from a grant awarded by the US Department of Commerce ($2,972,000) and appropriations from the Commonwealth ($13,700,000). MV is governed by an 11-member board of directors. Eight of these members are appointed from the private sector by the Governor, and three are public officials.

From its inception in 1978 through June 2019, MV invested $91.9 million in 152 Massachusetts companies. In addition, MV launched its Small Business Innovation Research Targeted Technologies grant program in 2012; from 2012 through June 2019, the organization awarded $22.1 million to 79 companies, helping to finance 85 projects, under this program. The total numbers of employees at the companies in which MV has invested or to which it has awarded grants, combined, were 2,114 as of December 31, 2017 and 2,716 as of December 31, 2018.

MV primarily invests in technology companies across various industries. The typical initial investment size is between $250,000 and $500,000, and MV may also provide subsequent funding. In return for this funding, MV receives either stock or debt instruments² from the companies. All companies in which MV invests must maintain a significant portion of their operations in Massachusetts.

MV is located at 308 Congress Street in Boston. According to its organizational chart, as of June 30, 2019, MV had three full-time employees and two part-time employees. Staff members are responsible for administering and evaluating candidate companies for the equity portfolio, administering the grant program, marketing and conducting outreach for the equity and grant programs, and performing accounting activities.

During the audit period (fiscal years 2018 and 2019), the organization’s financial position, revenue, and expenses, as reported by its independent accounting firm, included the following selected data.

	June 30, 2018	June 30, 2019
Total Assets	$21,387,162	$18,628,604
Total Liabilities	337,041	543,229
Total Fund Balance	$21,050,121	$18,085,375

 

The Total Assets category includes investments of $7,692,832 and $6,486,138, net of unrealized net loss³ on investments of $3,244,861 and $5,817,716, respectively, for fiscal years 2018 and 2019.

Revenue and expenses during fiscal years 2018 and 2019 were as follows.

	Fiscal Year 2018	Fiscal Year 2019
Total Revenue	$2,100,526	$1,861,819
Total Expenses	4,950,290	4,826,565
Deficiency	$2,849,764	$2,964,746

 

The table below shows the number and total value of the equity investments made and grants awarded during the audit period, according to MV’s audited financial statements and internal records.

Type of Financing	Number of Companies July 1, 2017–June 30, 2019	Amount July 1, 2017–June 30, 2019
New Investments	6	$1,065,000
Follow-on Investments	12	2,276,629
Total Investments	18	$3,341,629
Grants	39	$6,700,000
Totals	57	$10,041,629

1. MassVentures’ enabling and governing legislation is Chapter 40G of the Massachusetts General Laws, as amended in 1993 and 2002.
2. A debt instrument is a document that serves as legally enforceable evidence of a debt and the promise of its timely repayment.
3. An unrealized net loss is a loss that results from holding an asset (or security) after it has decreased in price (rather than selling it and realizing the loss).

Date published:	March 19, 2020