A City Of 66,000 Is At The Center Of An Audacious, $200M Attempt To Build A Tech Hub From Scratch

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Lars Perkins was the managing director of Boston-based Idealab when it spawned an innovative company called Picasa, which developed software for digital photos. He became CEO of the firm and led its sale to Google in 2004.

Through that trajectory and into his career since, as an investor and advisor mostly working in Southern California, he kept a vacation house in Maine. He and his wife bought it 25 years ago after she fell in love with its landscape and people.

Then came the pandemic, during which a small city in Maine looked like a pretty good place to be full-time. And then, came a chance to be part of a $200 million effort to turn Portland, a city of 66,000 known for its lobsters, into a technology hub. Perkins just became the head of the new Techstars accelerator associated with the city’s new Roux Institute.

“COVID put me in Maine, and this opportunity came along, and I just thought it was a match made in heaven,” said Perkins.

READ MORE: Google Exec Joins Portland Accelerator

Like Perkins, most people know Maine, and Portland particularly, as a vacation destination. Tourism is its bread-and-butter industry. But the city is now also the center of one of the more audacious efforts in the United States to build a tech hub from scratch. In a heralded move in early 2020, a private equity magnate donated $100 million to establish a new research institute in the city; one of Maine’s big foundation’s has since joined with another $100 commitment. Now the hope is that innovative companies will relocate to the city for the new accelerator, joining the slower-moving tide of people who may study in advanced life sciences and technology programs at the Institute.

Though there’s a small tech scene in Portland, the city has — to put it euphemistically — not been a contender in the traditional software tech scene.

Moreover, Maine faces two entrenched and related problems in its business community, which are both tied to its declining working age population. By 2028, the state economist’s office projects that the working age population will decline 3-4.5%, while the population of people over 65 is projected to grow more than 44%. Small businesses in the tourism economy struggle to find workers. Meanwhile, the tourism economy is almost the only game in town — before COVID-19, the industry had about a $12 billion economic impact in the state, AP reports.

It’s a situation faced by many cities and states whose natural resources — like coal or timber — kept it from developing a more diversified economy during the last century. Maine is 89% forested and home to about 1.3 million people.

A love of home drives many actions. In this case, a Maine-born entrepreneur sparked the large-scale movement to try to re-ignite the state’s economy, especially in Portland, which is its largest city. David Roux, co-founder of the private equity firm Silver Lake, which has $83 billion in assets under management, established the Roux Institute as a branch campus of Boston-based Northeastern University last year. 

More quietly, the Harold Alfond Foundation committed $500 million to boost the state’s economy, including $100 million for the Institute, a majority of which funds institute students’ scholarships. The Foundation, which reported $900 million in assets at the end of 2019, was started by the founder of the Dexter Shoe Co., who died in 2007. It’s particularly known in Maine for its commitment to giving $500 to each child born in the state to kickstart higher education savings.

A $200 million investment by private donors in systemic economic change is unusual — but such large investments by private individuals are growing more common in today’s world of outsized fortunes. For instance, private equity founder Orlando Bravo donated $100 million to spur entrepreneurship in Puerto Rico. 

READ MORE: Entrepreneurship In Puerto Rico Gets A $100M Jumpstart From A Billionaire

Luke Thomas, a longtime Portland resident and founder of tech app Friday, who frequently blogs about the city’s tech scene, says Portland tech “punches above its weight class.” Though, its talent is often in the woodwork.

When Thomas was hiring his eleven employees, he cast a wide net, hiring from across the country. He had worked from home for years, and his software is designed to improve remote working, so it only makes sense that his team would work remotely as well. He’s hired a cluster of people from Maine, but it wasn’t a straight cut process.

“There’s a lot of great talent, but they’re not going to just jump out at you,” he said. “I’ve been able to hire some really amazing people, but it takes work. You kind of have to get connected and build something interesting —  if you build something interesting, a lot of times people will reach out to you instead.”

He also notes a major roadblock for the city becoming a hub is its cost of living. Portland is strict on development, he said, so the demand for homes is much higher than the supply, hiking prices up. It’s still cheaper than living in a major city, like Boston, for one, but for what it offers, people tend to opt for living there only a few months of the year, he said.

Techstars to Portland

How much the Roux Institute focuses its initiatives on entrepreneurship versus research remains to be seen. In its bid to create career tracks for innovative people, the Institute is establishing graduate degree programs that are connected to the state’s big corporations, which have strengths in biotechnology.

But one of the Institute’s first moves was bringing the Techstars accelerator to the city and hiring Perkins as head of it.

“It’s just got enormous potential,” Perkins said about Portland.

Most recently, Perkins was a consultant for a Santa Monica, California-based startup he invested in called Community.com. While working with the entrepreneurs there, he realized he loves to work with startups. The Roux accelerator was a chance to mentor more entrepreneurs.

The Roux Institute paid an undisclosed amount to bring the Techstars program to Portland. The accelerator also takes an equity share of the companies created out of the program. 

Situated on the water, Portland is filled with restaurants and breweries that teem with tourists in the summer, and in the winter fill with locals wearing stocking caps pulled down low. 

The Roux Institute’s vision is to make Portland to Boston what San Jose is to San Francisco. Thomas emphasized that the Institute is the city’s largest driver to get there. 

“If there’s an X Factor, if there’s a thing that will drive the momentum for years to come and really make the city kind of grow up, so to speak, the Roux Institute will be the driver for that, like far and away,” Thomas said.

While companies and startups, like Friday, that have grown up in the city show its potential, Perkins describes its tech scene as “nascent.”

“This is what David Roux, the Roux Institute and the Harold Alfond Foundation are really trying to change,” he said. “We’re all working together to put Portland on the map as a tech hub on the east coast.”

The accelerator, which closed applications May 26, is in the process of selecting 10 startups innovating solutions in artificial intelligence, advanced life sciences and data, areas Roux is passionate about. Its first cohort will run September through December. 

As is typical with Techstars, the program emphasizes team dynamic. Perkins says that it’s a key factor when reading through applications — rarely does a Techstars program accept a solo founder because the program is designed for teams, he said. “An important characteristic is the team’s curiosity, enthusiasm, discipline and the founding team having a good working relationship, because you’re going to be spending a lot of time with each other.”

Teams will have to relocate to the city for the 13 week program.

Perkins’s advice to entrepreneurs getting started: “Fall in love with solving your customers’ problems. Don’t fall in love with your idea,” he said. It’s important to be open to learning customers’ needs and shifting business models to fit that, he said. 

The business idea is less important than the team. “What we’re really looking for is a team that can come in and learn from the experience, and if they come out as a turbocharged version of what they were going in, that’s one kind of a good outcome, but more likely, they’re going to come out with a slightly different trajectory than they initially thought they were going to be on.”

He also notes founders ought to have grit. “Startups aren’t for the faint of heart,” he said. “They are all consuming, and you have to be ready for something which is not a job, but a way of life, at least for a period of time. So, you really have to love what you’re doing because you’re going to be doing it a lot.