Venture Capital Stories - MassVentures

Hi, I’m Charlie Hipwood, President and CEO of MassVentures. We’re an investment firm focused on early-stage deep-tech companies in Massachusetts.

Tell Us About Your Journey

Well, my journey is a bit of a complicated one, but a fun one. I originally worked on Wall Street, but at a time when the tech boom was occurring, realized I was working in the wrong department. I was in currency derivatives, but I wanted to be in tech. So I went to business school and landed a job at a tech firm out in Colorado, where I worked in corporate finance. And that sparked my first entrepreneurial idea.

I started my first company in 2003 here in Boston, which was a real estate tech firm that evolved into a real estate private equity firm. Did really well. I got the entrepreneurship bug, decided I needed to start something else. Started two more companies, and then eventually decided that I needed to move over to the investment side of the table because my companies succeedingly did worse as they went along. So my best company was the first one. The third one was a little bit less successful. So I moved over to the investment side of the table. And now I’ve been at MassVentures for six years. I took over running MassVentures about three years ago, and we invest in early-stage technology companies in Massachusetts.

What is the History of MassVentures?

The history of MassVentures is actually quite long, but fairly distinguished. We’re one of the oldest and longest running venture capital firms in the world. We were founded in 1978. At the time, there were fewer than 20 venture capital firms in the United States.

But we’re also unique as a venture capital firm in that one. We were founded by the Commonwealth of Massachusetts. So the Commonwealth is our investor, along with some money from the federal government.

The other thing that makes us unique is that we run an evergreen fund. We’re still on fund one after 45 years. We just reinvest the profits of our good investments into future investments.

The other thing that makes us unique is we also run a variety of non-dilutive grant programs in addition to our venture fund. So we actually fund about 60 to 70 companies per year in Massachusetts through non-dilutive grants, loans, and investments.

The other thing that makes us unique is that we are really an economic development engine for the Commonwealth. And so we do invest just locally here in Massachusetts. We’re a team of entrepreneurs, so we work closely with our entrepreneurs to help them grow their businesses and ultimately create new businesses and jobs in the Commonwealth.

What Attributes Lead to Success?

So the attributes that lead to success as a venture capitalist, you don’t have much to go on with seed-stage technology businesses as to which businesses you want to invest in. So I look for a variety of traits that I believe lead to success.

I think first and foremost, what separates entrepreneurs from those who are not entrepreneurs is the ability to make good decisions with limited information. And so we look for that trait for people to be able to make decisions, move forward, iterate as needed, and be comfortable putting their neck on the line.

The other things that I look for are passion. Passion comes across immediately if somebody’s passionate about the idea that they’re trying to create. If there’s not that passion, then there’s not going to be that push through the dog days of a start-up to get to the next level. Also looking for entrepreneurs who are intellectually curious, always looking to learn, who are willing to admit that they don’t know a lot. In fact, they don’t know what they don’t know. And so they’re willing to ask and learn and work with you in a long-term relationship.

And strong work ethic. Obviously you have to have a strong work ethic in order to get through the start-up world, right? It’s a slog. You’ve got to have the ability to work hard, build a team that’s going to work hard. And so those are the four traits I typically look for.

What Are Your Must-Haves Before You Make An Investment?

The must-haves that I need before I make an investment are just a couple. One, and probably the most important, our investment thesis is diverse teams outperform. And so I need to have a founding team that understands the power of diversity and the fact that building a diverse team increases their probability of success. And so the first question I ask is, how do you think about diversity and how do you hire a diverse team? And that’s first and foremost.

The other must-have is I really need to see a team that has done customer discovery. You can’t just have an idea and think that people are going to buy it. There has to be a lot of customer discovery done behind the scenes. I know one entrepreneur who did 500 customer discovery calls in one month. That’s extreme, but that’s what we look for.

What Advice Do You Have For Entrepreneurs?

The advice I have for entrepreneurs is don’t go it alone. Leverage all the resources that you have at your fingertips. We have a tremendous innovation ecosystem in the Boston, Cambridge, and greater-Massachusetts area. There are a lot of people out there who are willing to help, who are willing to provide advice, open doors. As an entrepreneur, you often think you have the idea you need to do it yourself. You need to go and get things done the way you think it needs to get done. But the reality is you need to leverage all of those people around you, your network, advisors and others who are going to really help you make the best decisions, make the right customer intros, make the right employee intros. So, make sure you put yourself out there and just kind of leverage that ecosystem around you and that’ll help prop you up in the good times and the bad.

What Value Does Gesmer Bring to Scaling Companies?

Gesmer brings a lot of value to both our portfolio companies and to MassVentures. We’ve been in a long-term relationship with Gesmer for well over 20 years, and Gesmer has provided a ton of advice to us on a lot of employee matters, financial matters, and other structural matters. But most importantly, they help our portfolio companies with navigating some of the complexities of the legal system and other things so that the founders can focus on their business and what they do well, which is growing their company. And I think it’s incredibly important for a trusted advisor to set up kind of those guiderails so that portfolio companies know that they don’t have to worry about kind of the legal side of things. They can just focus on growing their business, but within the guiderails that the trusted advisor brings to the table.

Why Go With Gesmer?

At MassVentures we go with Gesmer because of the entrepreneurial mindset that Gesmer brings to the table. It’s critically important in an early-stage company, seed-stage in the innovation economy, to have that entrepreneurial mindset and partners who can make quick decisions, help you with guiding you through the unknowns. Because there’s so many unknowns for an early-stage company. And so to have a partner with an entrepreneurial mindset that puts himself alongside the founders and says, we need to move this business forward, we need to help with sales, we need to help with building a team, we have a short runway with a limited amount of capital, so let’s bring our advice to the table quickly. Let’s turn around documents quickly. Let’s make introductions to partners and employees and customers and things like that. Gesmer brings all those to the table. And so that’s why it’s critically important to work with a firm like Gesmer that can kind of not just provide services to the entrepreneur, but to be a partner to the entrepreneur in their journey.

Venture Capital Stories – MassVentures