Tech Start Ups Move Out of Worcester to Find Funding

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Saturday, August 11, 2012

Lindsay Corcoran, GoLocalWorcester Contributor

As students interested in starting their own technology companies are graduating from Worcester area colleges like WPI and Clark University, more and more are leaving the city due to a lack of resources.

With only one angel investment firm in Central Mass and no venture capitalists in the area, the seed money needed to create these businesses is centered largely in the Boston area.

Clark entrepreneurship professor Jeff Schiebe said resources are often difficult to find in the Worcester area.

The main problem Schiebe sees with the market in the Worcester area is that there isn’t a lot of support.

“I think the money doesn’t necessarily need to be in town,” Schiebe said. “It’s more than just money, though. You want to be where there’s an ecosystem that can help you.”

Schiebe said since there is a strong community in Cambridge and Boston, many recent graduates flock there to be with like-minded individuals.

“I think there is tremendous talent here and that ecosystem just needs to be developed,” Schiebe said.

Schiebe said Clark University is trying to organize resources to help area graduates with their start ups.

“We’re trying to organize these resources at Clark,” Schiebe said. “There really is a lot here.”

Where There is Money

Lisa Kirby Gibbs, the Chair of the Boynton Angels investment group, said they focus on helping Worcester-area start ups before any others.

“I think the density and income in Boston are higher, but we see a lot of requests coming in,” Gibbs said.

However, Gibbs said half of Boynton’s investments are made east of Rte. 128.

Boynton invests $500,000 to $1 million into a business to help businesses get started, but Schiebe noted that technology startups often need more funding like the $2 million-plus that venture capital firms can provide.

There are nearly no venture capital companies west of Rte. 128.

“I think there’s some of that transfer from Worcester to Boston because of density and available money,” Gibbs said. “But it’s not like it has to be one or the other.

Gibbs ultimately said if start ups can’t find funding in Central Mass, there may just be something wrong with the business model or pitch.

“It might be the environment, it might be Worcester, but chances are you just need to tighten up your business plan,” Gibbs said.

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