MassVentures report reveals the impact sustained, smart public innovation finance can have

In 1978, Massachusetts took a risk and made an $8.5 million investment into one of the earliest technology-based economic development (TBED) initiatives in the world. The commonwealth, among the states hard-hit by the global manufacturing restructuring underway at the time, which led to the deep recession of the early 80s, knew it needed to try something different to restore its economy and its long-term competitiveness. A new independent impact analysis of the cumulative impact from what became known as MassVentures, spanning its 46-year history, should serve as an example of what public seeding and sustained support for TBED can deliver as a highly effective, game-changing economic development strategy. 

MassVentures President and CEO Charlie Hipwood said at the report’s release, “MassVentures is one of the most successful and impactful government-initiated programs on a per dollar basis in the United States.” The annualized impact figures and VC-envying returns bear out the proud statement.

Based on an IMPLAN study conducted by the UMass Donahue Institute with MassVentures financial support, for every $1 million of taxpayer dollars (inflation adjusted), MassVentures generated $429 million in total state and local tax revenue and $7 billion in state GDP. On $8.5 million of taxpayer money received since MassVentures was created, the agency generated:

• $112 million invested in 186 companies,
• 4,346 direct average annualized jobs,
• more than $642 million annual labor income from those jobs,
• $4.6 billion in total leveraged private capital,
• $5.6 billion in cumulative state & local tax revenue,
• $89.9 billion in total state GDP,
• $157.6 billion in cumulative output impact, and
• 535,200 total job years, a measure of labor in units of one job worked for an entire year.

TBED policymakers today should reflect on the fact that MassVentures was created at a time when there were only 20 venture capital firms in the world. Given how much private risk capital Massachusetts has been able to attract over the nearly 50 years of MassVentures’ existence, the venture development organization has been able to target its investments over the years, pivoting to address technologies, geographies and market segments that aren’t getting as much attention as MassVentures believes the state economy needs—and the private market will support—in time.