MassVentures doubles down on diverse founders with $30 million fund – The Boston Globe

MassVentures doubles down on diverse founders with $30 million fund – The Boston Globe

Pelaez is the cofounder and CEO of Cyvl.ai (pronounced “civil.ai”), a Somerville company that uses 3-D software and artificial intelligence to help municipalities manage potholes and other infrastructure projects. Strobach is the cofounder and CEO of AeroShield Materials, a Boston company that uses an innovative material to develop super-insulating windows.

Pelaez and Strobach were among the first three deals that MassVentures, the state’s venture capital arm, recently made out of its new $30 million fund for deep-tech startups with a focus on underserved founders or those based in underserved regions outside the Boston-Cambridge area.

The companies represent what the state could be known for in the startup world: a place where the next generation of diverse founders can get support and seed capital to launch “deep tech” ventures. These are the businesses that use scientific and engineering breakthroughs to disrupt or create new markets.

“We want to do cool things that have big impact,” said Strobach, who grew up in rural Wisconsin. “The minute I first visited Massachusetts, I just really felt that, ‘Wow, this is a place where that can happen.’ “

MassVentures, founded more than four decades ago, finds itself flush with a record infusion of money, thanks to the US Treasury’s State Small Business Credit Initiative. The program — which was rolled out in 2010 as the country was recovering from the Great Recession — got a $10 billion boost in the federal pandemic package. Of that, Massachusetts received nearly $169 million to promote small-business growth and entrepreneurship.

Two other quasi-state agencies — MassDevelopment and Massachusetts Growth Capital Corporation (MGCC) — also got money. MassDevelopment, which received $62 million, plans to expand programs for economic development loans and loan guarantees. MGCC, which received $76.5 million, will boost its commercial lending program and create a new community loan fund guarantee program.

Cyvl.ai is a Somerville company that uses 3-D software and artificial intelligence to help municipalities manage potholes and other infrastructure projects.John Tlumacki/Globe Staff

Charlie Hipwood, CEO of MassVentures, said the additional funding will allow his team to make and lead more investment rounds.

“We get outreach from entrepreneurs on a regular basis, and I’ve seen as much activity as we’ve ever seen with people trying to start companies,” said Hipwood.

He said he’s seeing people move to Massachusetts to build their companies because the resources and talent are here to get new ventures off the ground.

“During the pandemic, a lot of people looked and said, ‘We should be creating things that help solve society’s biggest problems,’ ” added Hipwood, “and lot of those things are being created here in Massachusetts.”

MassVentures’ mission focuses on helping first-time founders turn research and early-stage innovations into viable commercial uses. In particular, MassVentures has supported under-represented entrepreneurs, with 48 percent of its portfolio companies having at least one female, Black, or Latinx founder. It also aims to spread the wealth with 44 percent of its investments located outside of the Boston-Cambridge area.

Among its best-known investments has been Ginkgo Bioworks, a Boston synthetic biology company that went public last year. MassVentures was one of its earliest backers, giving the diverse team of founders a series of grants in 2013.

With its new deep-tech fund, MassVentures plans to invest in six to eight companies in the coming months. Along with Cyvl.ai and AeroShield, MassVentures has provided funding to JetCool, a Littleton firm that specializes in liquid cooling of computer chips to help data centers reduce energy and water usage. JetCool, founded in 2019, relies on a technology that was spun out of MIT’s Lincoln Laboratory.

AeroShield has also been funded by another quasi-state authority, Massachusetts Clean Energy Center (MassCEC), starting when the founders were still at MIT.

Strobach, co-founder and CEO, started AeroShield in 2019 with two other graduate students while she pursued her PhD in mechanical engineering. They saw commercial applications for a super-insulating solid called aerogel while working at an MIT lab. They decided to focus first on creating more energy-efficient windows. The material, a clear sheet of porous glass, can be attached inside new windows to double their thermal efficiency.

(From left to right): Aaron Baskerville-Bridges, Dr. Elise Strobach, and Dr. Kyle Wilke. Dr. Elise Strobach is holding an AeroShield prototype. Handout

MassCEC led AeroShield’s latest round of seed funding, raising $4 million along with MassVentures and other investors. The Hyde Park company, which has 11 employees, plans to more than double its staff and open a new manufacturing plant in the region.

For Cyvl.ai, MassVentures led its current round of seed funding, raising $2.7 million, along with other local investors including Hub Angels and LaunchPad Venture Group. The money will allow Cyvl.ai, based at Greentown Labs in Somerville, to hire more employees and improve its technology.

A business built around infrastructure management came after Pelaez, the company’s CEO and cofounder, spent one of his college summers on the road crew of a public works department in Connecticut. He was struck by how the municipality did not have a comprehensive database of what needed to be fixed.

Pelaez thought this might be a common problem, so the electrical and computer engineer major spent his junior year driving around Massachusetts, interviewing public works directors to better understand how infrastructure management could be improved.

Along with three co-founders from WPI, Pelaez began raising money and launching its first pilots in 2021. Today, Cyvl.ai has partnered with civil engineering firms, and its technology has been used in about 50 municipalities in the Northeast.

Not lost on Pelaez, whose father is Colombian and mother is Armenian, is the opportunity that MassVentures is giving him and other diverse founders. Come to think of it, Pelaez said, he hasn’t met any Latino venture capitalists or many Latino founders yet.

“My plan after this is to figure out how I can give back as well,” said Pelaez. “That’s kind of my larger future goal.”


Shirley Leung is a Business columnist. She can be reached at shirley.leung@globe.com.

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