North Bridge picks two winners in first (annual?) seed funding competition

Waltham-based North Bridge Venture Partners is announcing today that it has chosen two winners of the venture capital firm's first-ever seed capital competition: Manhattan-based Profitably, a Web-based business intelligence app for small and medium companies, and Magoosh, a multi-media test prep company in San Francisco.

North Bridge had initially expected to dole out just one prize ($50,000 in funding, $25,000 in services, mentorship from North Bridge's partners, and six months of free office space), but decided to double that based on the quality of the entries the firm received, says principal Cali Tran.

Of the eight other finalists in the competition, several are based in Boston, including MobileMob, a site that helps consumers save on wireless services; Somerville-based Ubiqihealth, which offers up online tools for migraine management (see the demo video below); Bizstro, offering social media marketing tools for small and medium-sized businesses; and DPL Health Games, a stealthy company run by Laila Partridge that is "building next generation social networking games to aid dieting and healthy living," according to a description on LinkedIn. Other finalists have team members spread out across the country. Datalette, for instance, "the marketplace for data," has a Boston-based CEO in Eric Moriarty, but other team members in San Francisco and Austin.

One issue Tran and I discussed yesterday was how entrepreneurs view competitions like North Bridge's, or incubation programs like Polaris' DogPatch Labs. One concern I hear often is that if a start-up participates in one of these programs, but the sponsoring venture capital firm doesn't choose to invest further, that can create the perception that the company is damaged goods. Essentially, "No one knows you better that North Bridge/Polaris/Acme Capital, and if they decided not to keep funding you, why would anyone else?"

Tran acknowledged that he'd heard that question, too.

"It's a valid concern," he says. "People wonder if it's like the Scarlet Letter."

I asked Tran how North Bridge would look at a start-up in that situation. "It's a mixed answer. You want to learn why, but it's important to remind ourselves that the nuances of why a fund does or doesn't do a deal involve that particular fund's constraints and focus. We'd love to learn why they're passing, but that doesn't necessarily dramatically impact our evaluation of the business."

Tran (based in San Mateo, Calif.) says the competition, which he started with Waltham colleague Dayna Grayson, could become an annual tradition at North Bridge, and that the firm may experiment with how prizes at higher and lower levels affect entrepreneur interest. This time around, Tran says roughly one-third of the applications came from California, one-third from New York, and one-third from the New England region. For North Bridge, he says, the competition was "a new way to communicate with new entrepreneurs that we don't have a relationship with yet."

Here's the video from finalist Ubiqi Health, using the Web and mobile phones to combat migraines (they're also competing in the MassChallenge):

Ubiqi Health - MassChallenge from ubiqi health on Vimeo.