MTDC's Role in Massachusetts Venture Capital

History & Objectives
The Creation of MTDC
Investment Programs
The Commonwealth Fund
MTDC Resources

History & Objectives

Massachusetts has a long tradition of leadership in the application of technology to solve basic problems and advance the commercial success of new enterprises. In part, this history has been a result of the Commonwealth's need to provide premium-priced products for export to other parts of the nation and world to offset the high cost of importing the basic resources of food and energy. The tradition has long been institutionalized through the large number of public and private universities, the strong system of public schools and the financial institutions that have supported these activities.

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The Creation of MTDC

In 1978, the Commonwealth enacted a law creating the Massachusetts Technology Development Corporation, which was established to address the "capital gap" for start-up and expansion of early-stage technology companies.

The Capital Gap: What is it?

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Through each phase of its existence, MTDC has pursued the following four basic objectives:

To help create primary employment in Massachusetts;

To attract and leverage private investment in Massachusetts companies;

To foster the application of technological innovations where Massachusetts companies are, or can be, market leaders; and

To nurture entrepreneurship among Massachusetts citizens planting the seeds for long-term economic development in the Commonwealth.

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Investment Programs

From 1980 through June 30, 2006, MTDC's total cumulative investments from all of its investment programs were more than $72 million in 122 companies. The Corporation is self-supporting based on returns from previous investments.

The size of MTDC's initial funding to an applicant is determined by the capital needs of the firm and the investment of the co-investors. Though initial investments can range up to a maximum of $500,000, most are typically in the $250,000 to $500,000 range.

Investments are made primarily as equity where MTDC will purchase Preferred or Common stock of the Company. These investments carry the normal rights and privileges accorded shareholders and other co-investors. MTDC may also offer long-term, unsecured, subordinated debt. As a condition of providing such favorable debt financing, MTDC seeks an equity participation that is fair and reasonable when compared to the investment being made by the co-investors.

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The Commonwealth Fund

In 2000, MTDC closed $15 million in the Commonwealth Fund Investment Program II, which was modeled on the $5 million Program I that had been launched in 1995. MTDC committed $12 million to Program II and was joined by BancBoston Investments, Inc. for $2 million and the Essex Regional Retirement Board for $1 million.

The purposes of the Program are to provide risk capital to fund the continued growth of businesses, helping them to create jobs, and to provide the opportunity for attractive financial returns to co-investors. Both funds are fully invested.

MTDC has invested in many of the State's most promising new technology-based companies. These companies provide incalculable economic benefits that spread through the entire Massachusetts economy.

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MTDC Resources

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