MIT's $50K Entrepreneurship Competition is the hub of a vast network of venture capitalists, angel investors, consultants, and alumni seeking the savviest young technology innovators.
Not all business-plan competitions on university campuses are equal. To put it another way, the one at the Massachusetts Institute of Technology, in Cambridge, Mass., is more equal than all the others.
Take Pasha Roberts, 35, who won the MIT $50K Entrepreneurship Competition two years ago. He scored the $30,000 jackpot, the largest such prize in the country. (Two other finalists collected $10,000 each.) What's more, he leveraged his many MIT contacts to get his WebLine Communications Corp., a software company based in Burlington, Mass., off the ground. A classmate from MIT's Sloan School of Management, Helen Wittek, introduced him to Bob Johnson (MIT physics, 1963). Johnson, who later was a judge of the MIT competition, invested $25,000, part of the critical $600,000 that Roberts raised in seed money. Pasha's father, Larry Roberts (MIT electrical engineering, 1963), a successful entrepreneur, referred his son to some venture capitalists. They kicked in another $1 million in the next round of financing. "There's a lot of MIT people who know other MIT people," Pasha Roberts acknowledges. His 35-employee company has attracted a total of $8.6 million from investors.
MIT's student-run business-plan competition has been around only nine years, yet it ranks as an important event for many investors. Last May more than 600 venture capitalists, angel investors, lawyers, accountants, students, and others interested in start-up companies jammed the university's Kresge Auditorium for the finals. "I go because I'm looking for the technology leaders of the future," says Duncan McCallum (MIT engineering, 1987), a partner at OneLiberty Ventures, a Boston-based venture-capital firm.
MIT winners like Roberts have created at least 30 companies--by all accounts, a number higher than the comparable figure at any other university--that together have raised $43.6 million in capital and generated 500 jobs, competition organizers say. "There are a lot of quality companies coming out of that competition, and every year it's getting better and better," says Mark Gorenberg (MIT electrical engineering, 1976), a partner at the venture-capital firm of Hummer Winblad Venture Partners, in San Francisco.
Part of MIT's allure, of course, is its sterling reputation as one of the premier hotbeds of technological innovation. Unlike many universities, MIT encourages business and engineering students to work together on plans. "Many of the teams are composed of an amalgam of M.B.A.'s with marketing and finance skills and engineers who thoroughly know technology," says Kenneth P. Morse, managing director of the MIT Entrepreneurship Center.
But MIT contestants owe their success as well to what one might term the "MIT mafia," a loose network of alumni and supporters. These people help the university's business-plan competitors every step of the way. One who has profited is Michael Cassidy, an MIT aerospace engineering graduate who, at age 34, is already a millionaire. As an outgrowth of his entry in the MIT competition in 1991, he and two partners founded Stylus Innovation Inc., a software company based in Cambridge, Mass. In February 1996 they sold it for $12.9 million in cash. Cassidy attributes some of his success to what he calls his own "giant network," encompassing MIT-related venture capitalists, lawyers, and engineering consultants who have aided him.
As an old-boys' network, MIT's is hard to beat in power and influence. The school's graduates and faculty have founded 4,000 businesses, which in 1994 alone generated $232 billion in sales worldwide, according to a recent BankBoston study. The report notes, "If the companies founded by MIT graduates and faculty formed an independent nation, the revenues produced by the companies would make it the 24th largest economy in the world."