Governor Maura Healey has tapped prominent venture capitalist Eric Paley to lead the state’s economic development efforts and make the most of a $4 billion bond bill that lawmakers passed last year to support several of Massachusetts’ most promising industries.
Healey on Tuesday announced that Paley, managing partner at Cambridge VC firm Founder Collective, will take over for Yvonne Hao as economic development secretary. Paley will start in September and step away from his position managing the VC firm he cofounded. He’ll earn just over $200,000 a year in the state job, the standard salary for a Cabinet secretary.
In tapping Paley, Healey is fulfilling her goal to find a leader from the business community for the economic secretary post, much as she did with Hao, who left the role in April. While Hao spent most of her career in private equity, working with larger, more developed companies, Paley specializes in making early investments in startups just as they’re getting off the ground.
“It’s just a huge catch,” said Diane Hessan, an entrepreneur who has known Paley for years. “It shows how serious we are about economic development in Massachusetts. [Paley] is highly respected, he’s razor-sharp, and he has a great nose for ideas that really have the potential to be transformational.”
Advertisement
Hao came to know Paley when she helped lead Somerville startup PillPack, which counted Founder Collective among its investors. (Amazon acquired PillPack in 2018.) After she announced she was leaving the Healey administration, Hao reached out to Paley and suggested he apply for the job. He was reluctant at first but then decided to reconsider.
Advertisement
Paley said he had a tough time sleeping the night after being pitched for the job. Paley said he realized much of his professional success is due to the state’s unique innovation ecosystem.
“I owe a lot to this state and to the people and the capabilities and the talents and the resources,” said Paley, who lives in Lexington with his family. “At some point, you want to find a way to give back.”
While studying at Harvard Business School in the early 2000s, Paley began working with Micah Rosenbloom and David Frankel to launch Brontes Technologies, a Lexington company that specialized in 3D dental imaging with technology spun out from MIT. (Manufacturing conglomerate 3M acquired Brontes for $95 million in 2006.) Paley was the chief executive, HBS classmate Rosenbloom was chief operating officer, and Frankel was an early investor.
Paley, Rosenbloom, and Frankel teamed up again to launch Founder Collective in 2009 to focus on early stage, or seed, funding for promising technology startups. In addition to PillPack, the firm was also an early investor in Uber, Omada Health, Cruise (now part of General Motors), Whoop, and Formlabs, among other startups. Paley also launched an annual innovation conference, called Collective Future.
As he enters state government, Paley will relinquish any control over the firm’s investment decisions, but retain his existing equity in the firm’s funds.
“I don’t know if I would get another opportunity to do something like this,” Paley said. “They don’t come up very often.”
Hao said Paley was the first person she contacted about the economic development secretary job.
Advertisement
“He understands startups and founders and the innovation economy,” Hao said. “He [also] cares deeply about Massachusetts. ... He’s always been generous about trying to do more for the broader ecosystem.”
David Shapiro, chief executive of the YMCA of Greater Boston, had recruited Paley to join the Y’s board. Now, Paley will have to step down from that role as well.
“This guy is brilliant as a strategist and a connector,” Shapiro said of Paley. “Ultimately, I want the commonwealth to be an economically dynamic and vital place. I’m excited that this guy will be in that role.”
As economic development secretary, Paley will directly oversee a staff of 700 people and will chair the boards of quasi-public agencies such as the Massachusetts Development Finance Agency (aka MassDevelopment) and the Massachusetts Technology Collaborative (aka MassTech). Paley and his staff will be implementing elements of last year’s wide-ranging economic development legislation, which includes a large infusion of public funds to help the burgeoning climate-tech and artificial intelligence sectors, among others.
Hao’s top lieutenant Ashley Stolba has been running the economic development department on an interim basis, and the Healey administration expects her to stay in a senior leadership role. Paley isn’t a complete stranger to state policy debates: He’s been active in pushes to end or reform noncompete agreements, for example, and to try reining in bad-faith patent litigation.
“He’s been at the forefront of our future economy,” said Katie Rae, chief executive of the Engine Ventures VC firm in Cambridge. “If there’s a problem to be solved, he’s definitely a thinker people go to and somebody who will lend a hand.”
Advertisement
Jon Chesto can be reached at [email protected]. Follow him @jonchesto. Aaron Pressman can be reached at [email protected]. Follow him @ampressman.