MassMutual Invests in Springfield’s Entrepreneurial FutureNick Fyntrilakis says economic growth in Western Mass. is more likely to spring from a culture of startups than by attracting large employers.
[/caption]It’s not inconceivable, said Nick Fyntrilakis, for a company to set down roots in Springfield and advertise for 300 or 400 jobs. It’s just not likely.
“When you look around here, the idea of getting one company to show up with 300 jobs, that’s an old notion,” Fyntrilakis, vice president of Community Responsibility at MassMutual, told BusinessWest. “That’s gone, at least somewhat, the way of the dinosaur, although I hope it’s not totally gone.”
Rather, he said, “the economy is being driven by small businesses, grass-roots growth, and entrepreneurialism — not 300 people at one firm, but maybe 30 10-person firms.”
But even if that is the new paradigm in Western Mass., communities can’t sit around waiting for those companies to spring up, he added, which is why MassMutual, the region’s largest employer, is investing $6.5 million into efforts to inspire the next generation of entrepreneurial success stories.
MassMutual is pouring $5 million of that money into the creation of the Springfield Venture Fund, attempting to cultivate high-potential startups in Springfield. Over the next five years, the fund will invest in startups with business operations currently located in or willing to relocate to Springfield. Target companies will have a defined product or service, be no more than three years old, and boast strong management teams, well-defined and scalable business plans, and high growth potential.
In addition, MassMutual will invest more than $1.5 million over the next three years in a startup accelerator managed by Valley Venture Mentors (VVM), an entrepreneur-mentoring network based in Springfield. The first class of the accelerator will feature 30 startups to be selected through a competitive application process later this summer. DevelopSpringfield, a nonprofit dedicated to revitalizing the city, has been tasked with building out the physical location for the accelerator in the Tower Square building downtown.
“We’re building off a mentorship program that we’ve been running now for three and a half years,” said Scott Foster, an attorney with Bulkley Richardson and president of VVM. More than 45 startups have gone through that program, and more than 350 established entrepreneurs, business owners, and professionals have volunteered as mentors at its monthly meetings.
“We had 25 people at the first meeting, and 150 at the most recent one,” he added, noting that the gathering began in a conference room at his law firm but soon had to relocate to the Tower Square food court. “We’ve really built a great community of mentors and people supporting entrepreneurship. The accelerator is just a natural extension of what we’re already doing.”
For this issue’s focus on entrepreneurship, BusinessWest talks to Fyntrilakis and Foster about why MassMutual’s investment makes sense in the long term, and why they believe the Springfield Venture Fund and the VVM accelerator will generate some needed energy and forward momentum in the City of Homes.
MassMutual’s decision to invest $6.5 million in efforts to nurture entrepreneurship didn’t come about overnight, Fyntrilakis said, but after many conversations with Valley Venture Mentors, River Valley Investors, and other regional organizations dedicated to giving startups the resources they need to succeed.
“I was really excited to learn how much they had achieved, really organically,” he said of VVM. “They started in some vacant office space and grew this thing into a successful operation in which more than 150 people show up once a month, either to participate themselves or be a mentor — or sometimes just listen in and learn.”
Impressed, MassMutual provided a small grant to VVM, but didn’t stop there. “We started having more robust conversations over time, and I started to learn more and more about the entrepreneurial community that exists in this region, and other folks, like River Valley Investors, who are out there making investments in companies,” Fyntrilakis said.
“One thing that struck me is that you could dictate geography based on angel investments,” he added. “You could drive growth to a particular region based on the capital being there. That was exciting.”
With that in mind, the Springfield Venture Fund will target companies that will either locate or relocate in Springfield, he said. “We want them to plant roots here. It’s about being in the city of Springfield.”
Although the nuts and bolts of distributing $5 million over several years is still being worked out, Fyntrilakis said MassMutual doesn’t envision a traditional application process, but a more organic effort to connect with, and receive referrals from, the existing entrepreneurial community, which includes entities like VVM as well as large, for-profit companies.
“As for criteria, the startup has to have some infrastructure in place, a proven product or service, and a scalable market. This is that initial seed capital that can really get them off the ground and up to the next level,” he explained, adding that, if the fund is successful, MassMutual might have conversations down the road about continuing and increasing the investment.Meanwhile, the accelerator will accept applications from mid-August through September. The 30 accepted startups will be notified in November, and will operate from January through April in a co-working space being developed at the former Mad Maggies pool hall in Tower Square.
At the end of the four months, VVM will award $200,000 to the six startups that have shown the greatest success, judged according to how well they met their goals — and how ambitious those goals were to begin with. “There’s a degree-of-difficulty factor,” Foster said. Several startups will be invited to continue using the accelerator space rent-free for the rest of 2015.
He noted that the accelerator draws plenty of inspiration from MassChallenge, an annual, Boston-based startup competition and accelerator program. “There had been a discussion among business people here to have some kind of business-plan competition, some kind of program to help out new businesses in this area. Once MassChallenge started having success, people saw the economic impact on Massachusetts.
“We’re unabashedly copying what MassChallenge has done,” he added. “We’ve even reached out to MassChallenge, they’re very excited about what we’re doing.”
Foster stressed that the accelerator program will be “industry-agnostic” when considering applicants.
“We know there are strengths in this area; precision manufacturing, healthcare, and financial services are fairly strong,” he said. “But we don’t want to pre-emptively discourage anyone from applying. Teams that come through our mentorship program really run the gamut, from food-based companies to tech firms to Internet companies moving to a more bricks-and-mortar type of service. We’ve seen a wide variety of companies on the mentorship side, and we expect similar variety in the accelerator.”
Meanwhile, nonprofits are just as eligible to apply as for-profit enterprises.
“MassChallenge emphasizes diversity of ideas, diversity of talent, diversity of perspectives,” he noted. “It just adds to the strength and creative ideas there. If you only hang out with people who act like you, think like you, and agree with you, it can be a recipe for disaster.”
The give-and-take cultivated in a vibrant accelerator creates a buzz that shouldn’t be underestimated, Foster said.
“It creates an energy. People want to be in the space, or want to be involved as mentors,” he said, noting that he expects participants to reflect a similar demographic mix as VVM’s mentorship program, which attracts entrepreneurs from their 20s to their 50s.
And mentors don’t have to be industry-specific, he added. “They have private-sector experience with things all startups need — how to make connections with customers, how to deal with employee issues, how to divide up equity with partners … these are common themes across all businesses.”
No matter how big or small, Fyntrilakis said.
“This really is where job growth is coming from; growth in the economy is coming from the entrepreneurial sector and small-business sector; it’s not coming from the old-line companies adding thousands of employees. Even beyond this region, it’s mostly smaller firms.
“We wanted to capitalize on that, so we’re helping them with capital, helping them with mentoring,” he continued. “Our hope is that, in the next five years, we’ll create at least 100 jobs as a result of this capital being available. In addition to that, we want to support Valley Venture Mentors in their work.”
Foster said MassMutual’s major investment is further validation of what the organization and others like it have been doing. “It reminds people of the importance and reward of supporting entrepreneurs. They’re seeing VVM as a very positive force in this area, something they want to support.
“It also gives us a much bigger megaphone to announce our support of entrepreneurs here in the Pioneer Valley as a whole, and to encourage more and more people to explore their dreams and ideas, see if they can launch them and grow them. It’s pretty darn exciting.”
Smiling, Fyntrilakis laid out a vision of teams of entrepreneurs clustered downtown, working all hours of the night, drinking coffee, and creating something new — and perhaps providing a lift to further economic development in Springfield’s center.
“I think the accelerator can be an epicenter, stimulating other activities, like a chicken-and-egg thing, whether it’s restaurants or retail shops,” he said. “Hopefully we get enough chickens and eggs.”
Joseph Bednar can be reached at firstname.lastname@example.org