15 ms·

Boston-area startups are on pace to overtake NYC venture totals

198 points by e1ven 8y ago

DoofusOfDeath 8y ago
I'll be curious to see how Boston-area software-developer compensation changes over time. My impression is that dev compensation in SF is higher than in Boston, but SF also has higher property prices AFAICT.
- duwahahahah 8y ago
  We are currently in a weird place where, while compensation is growing, it's not growing fast enough to keep up with the rising property prices. There's been a huge surge to build luxury apartments in the downtown areas, but outside of that, available land is at a standstill and we are starting to see the same problem that SF has. Nothing is affordable anymore, and no one in the state/city government is really putting in an effort to slow things down.
  - nostrademons 8y ago
    The property prices are largely driven by compensation increases. As long as there are more Apple/Google/Facebook engineers seeking houses than houses on the market, then there will be an incentive for housebuyers to bid up the price of available housing right up until it equals the extra money they earn from working at one of these Bay Area tech companies. Existing landowners will continue to capture basically all of these tech wage gains until the supply of housing exceeds the number of tech workers who want it. The tech workers who are getting rich are the ones whose living situations resemble college students or service workers. They compete in the housing market for cheap apartment rentals with folks making maybe 1/5 as much, which holds down rents (well, sorta...rent is still insane, but only about 1/3 what a typical mortgage payment would be) and lets them bank the excess.
  - dsfyu404ed 8y ago
    MA, particularly the Boston area has spent just shy of 400yr embracing micro-managerial busybody government at every level (several other New England states exist because living in MA was too onerous for various groups). Local governments have a lot of power. They use this power to implement self-serving bylaws and zoning rules that cause the cost of living to skyrocket relative to cities/towns that have more of a "you want to have an adult entertainment store two blocks from a high-school, ok fine, just don't forget to pay your taxes" attitude. It's a tragedy of the commons situation. Everyone wants to zone the strip mall, the lumber supplier, the mechanic and the big box store out of existence or relegate them to some small commercial area. Every town thinks their a special snowflake that should be able to embody picturesque New England town in Yankee magazine. Well actions have consequences and all those things all have to go somewhere and if every town makes doing business (or at least the kind of business that doesn't fit their vision) hard and expensive those costs get passed on down. You can still be a homeowner, buy good groceries and keep your fridge full of beer on a single entry level tech salary in MA. The catch is you just have to do it in one of those "bad" cities like Worcester, Fall River or Fitchburg. I welcome the SF problems in the Boston area.. You reap what you sew.
    - Finnucane 8y ago
      > You reap what you sew. On the other hand, our cities are willing to spend money on schools.
    - anomatopoeia 8y ago
      I have long believed that the real solution to Boston's housing crunch is high speed transit to Worcester, Fall River, Lowell, New Bedford etc. Build HSR out to these areas and drop in lower cost high density density housing. Essentially use these old mill towns as Boston's Brooklyn -as none of the closer in cities are willing to take on the role.
      - meddlepal 8y ago
        Quincy and Lynn could be vastly improved first. Lynn needs blue line access and Quincy needs to build up its downtown and along its four fucking Red Lines stops. Also I would love Worcester high-speed transit, but that's a bigger and more complicated problem than just getting the wheels turning in the two big cities right next to Boston.
throwaway2016a 8y ago
Key word being Boston-"area" I think Boston is often taken to be a very large geographic area. For example, PillPack (one of the flagship examples in this article) was actually founded -- and still headquartered I think -- in New Hampshire. But to put that in perspective, Manchester and Nashua New Hampshire (the two largest cities in the state) are both less than an hour drive from Boston. To be fair PullPack does have a Boston presence as well but I feel I need to point it out because I don't think New Hampshire often gets enough credit. It has a disproportionately high tech population for a state its size. I also don't think Boston gets enough credit. The shear amount of innovation and academia happening in Boston and Cambridge, MA is astounding.
- sp332 8y ago
  Manchester Airport renamed to "Manchester-Boston Regional Airport" so travel agents/websites would list them when people were traveling to Boston. Back when Logan Airport was really bad, you could plausibly arrive at MHT and drive to Boston faster than flying in to BOS and waiting for your luggage.
  - bamboo_7 8y ago
    Yeah that was also back when Southwest wasn't at Logan but wanted to advertise that they had the lowest fairs "in the Boston area".
- deleted 8y ago
  [deleted]
- cowsandmilk 8y ago
  PillPack started by two people meeting at a hackathon at MIT and the company's headquarters were in Davis Square in Somerville. They have a large operation in New Hampshire, but the positions there always seemed to be related to shipping and preparation of prescriptions (i.e. pharmacists, data entry techs) vs. the engineering, designing, HR positions in Boston.
  - throwaway2016a 8y ago
swampthinker 8y ago
Some of SV's biggest tech companies and institutions started in Boston. Reddit was in Davis, Drew started Dropbox while he was still at Bit9, Zuckerberg was in his Harvard dorm with staff meetings at Pinocchio's pizza. Hell I used to live next to the original YC office in Cambridge. The talent exodus and missed deals was a huge wake-up call for Boston VC's to take more risk, and I think we're finally seeing the results.
- kornish 8y ago
  Didn’t know Facebook had staff meetings at Noch’s. That’s an awesome tidbit.
  - cuchoi 8y ago
    They hanged a nice photo of him eating pizza: https://secure.i.telegraph.co.uk/multimedia/archive/02223/From_Pizza_dough_t_2223684a.jpg https://secure.i.telegraph.co.uk/multimedia/archive/02223/Fr...
- Roritharr 8y ago
  Interesting take, do Boston VCs think that locally? In Germany I get the feeling the VCs invest wherever globally it makes sense.
  - swampthinker 8y ago
    It was almost as if PG and Jessica set out to prove the Boston/NYC status quo of VC wrong. If you wanted funding around here pre-2005, you had to be an experienced exec w/ a strong team of MBA's and senior engineers. Once YC + FB left and saw huge success, there was a scramble to figure out what went wrong. Check out this meetup that a local VC set up back in 2005 [1]. Justin Kan, Emmett Shear, and Reddit's co-founders (Along with many other notables!) attended. All of them left for the West Coast. [1]http://worcester.typepad.com/pc4media/2005/11/boston_web_inno.html http://worcester.typepad.com/pc4media/2005/11/boston_web_inn...
replicatorblog 8y ago
Boston has had at least one $1B+ tech IPO (not including bio) every year for the last decade. There have been as many High nine-figure, billion-plus acquisitions in the same period. Boston doesn't get much in the way of national PR, but it's arguably the 2nd best city in tech, measured by liquidity over the last decade, in the country. And not just in boring security/B2B areas. Wayfair is a top 10 ecommerce player. CarGurus has thoroughly beat TrueCar. DraftKings created its category.
- asmithmd1 8y ago
  A little over a month ago Boston founded Simplisafe sold to a private equity firm for $1B https://www.bostonglobe.com/business/2018/06/29/simplisafe/xQQ9Rb55kf3WOcrFql5R3K/story.html https://www.bostonglobe.com/business/2018/06/29/simplisafe/x...
  - blanderman 8y ago
    That explains their recent advertising push!
  - jforman 8y ago
    Boston-founded by an HBS-grad engineer who made early units himself, and bootstrapped until raising from Sequoia's growth fund. An amazing story that got almost no coverage in the tech press.
- allcentury 8y ago
  Pill pack just sold for 1b
- mjfl 8y ago
  Is the explanation that Silicon Valley companies invest a lot more in / are better at publicity - best example being Mark Zuckerberg boy genius meme?
  - replicatorblog 8y ago
    I think it has more to do with the fact that 3 of the 5 most important companies in tech are headquartered there have a combined $2.3T in market cap whereas Boston's biggest tech co's, TripAdvisor, Akamai, and Wayfair, have a combined market cap of ~$30B.
syntaxing 8y ago
I've been definitely seeing more and more startups popping up (or maybe I hear them in the news more) coming from Boston. But I'm not entirely sure if Tech Crunch's conclusion is sound. You can see from the past five year data graph that NYC's investment is quite high but all of sudden there is a dip this year. Boston-area startups is "overtaking" the pace of NYC not because of a boom in Boston but rather a dull in NYC.
- kevincennis 8y ago
  The 2018 numbers are YTD though. Both cities seem like they're on track to do as well or better than they did in 2017 assuming that funding doesn't tend to be significantly front-loaded toward the beginning of the year (which might be the case – I honestly don't know).
gumby 8y ago
I thought Boston and NY traded back and forth for #2. But looking at the latest MoneyTree report, it doesn't look that way at all (https://www.pwc.com/us/en/moneytree-report/MoneyTree%20Report%202018%20Q2%20-%20Final_F.pdf https://www.pwc.com/us/en/moneytree-report/MoneyTree%20Repor...) Now that MT splits out SF and SV differently, you can see a secular split: the (mostly) consumer-facing online businesses in SF (5.6B) and NY (2.8B) take in a lot more money than the more technology-oriented businesses of SV (3.9B) and BOS (3B). I assume that's due to risk profile; wonder what the return rate is?
swalsh 8y ago
As a Boston resident, but former midwesterner, I wish the story was "Midwest competitive with East and West Coast for venture totals". I think it's a real problem that venture capital is highly concentrated in just a few places.
- lotsofpulp 8y ago
  Terrible weather, flat terrain, socially conservative populace, lower probabilities of meeting important or rich people to create network. These qualities don't seem like they would appeal for those with money or in tech/science oriented fields.
  - pretendscholar 8y ago
    Why is flat terrain an negative trait?
    - lotsofpulp 8y ago
      I didn't mean that it's inherently negative, I meant given the option, more people will choose mountainous/hilly terrain over flat terrain. Either for aesthetics, or hiking, or skiing, or whatever. My only proof is that property values are higher in those areas.
    - RandallBrown 8y ago
      Flat terrain is one of the biggest reasons why I never plan to move back to my home state of Michigan. Skiing, hiking, and climbing are 3 important things to me that the midwest simply doesn't have in any meaningful way.
      - ensignavenger 8y ago
        There are plenty of hiking trails throughout the midwest, and Arkansas has some of the finest rock climbing in the nation. Plenty of climbing in other Midwestern states as well. Snow skiing, not so much.
aaavl2821 8y ago
The article sort of buries the real reason for this: the large amounts of biotech VC funding. Boston is the world-center of biotech startups and VC, and biotech VC funding is on pace to be $15-20B this year. As recently as 2013 __total__ VC activity was just $29B The amount of money being invested (and made) in biotech today, and the level of technological advancement in the field, is disproportionately higher than mainstream awareness of the field
- biohax2015 8y ago
  Makes me regret abandoning biotech/computational biology for the safer shores of software engineering :(
  - simmanian 8y ago
    I would think software engineers are still very much needed in almost every biotech startup :)
    - aaavl2821 8y ago
      There are some that rely very heavily on software engineers but most don't, although that is starting to change I think. The biotech startups that the tech press covers represent a tiny fraction (under 10%) of biotech startup activity. The separation between the biotech and tech startup worlds is almost at a global maximum. It used to be that major tech VCs were also major biotech VCs. Starting about 5-10 years ago tech VCs gave up on biotech. Coincidentally that's about when all the exciting stuff started happening Pretty much all of the big biotech exits are mostly not even covered in the tech press (with the exception of stemcentrx, unity and maybe a few others)
      - ghaff 8y ago
        AI/ML seem to be leading to some new companies that have a big software component. But in general the “tech” crowd doesn’t think much about pharmaceutical, biotech, personalized medicine etc.
dmode 8y ago
An interesting comparison would be comparison Boston to NYC without WeWork's massive funding. I think that single company has probably distorted NYC VC raise for the last couple of years.

198 points by e1ven 8y ago

I'll be curious to see how Boston-area software-developer compensation changes over time. My impression is that dev compensation in SF is higher than in Boston, but SF also has higher property prices AFAICT.

duwahahahah 8y ago
We are currently in a weird place where, while compensation is growing, it's not growing fast enough to keep up with the rising property prices. There's been a huge surge to build luxury apartments in the downtown areas, but outside of that, available land is at a standstill and we are starting to see the same problem that SF has. Nothing is affordable anymore, and no one in the state/city government is really putting in an effort to slow things down.
- nostrademons 8y ago
  The property prices are largely driven by compensation increases. As long as there are more Apple/Google/Facebook engineers seeking houses than houses on the market, then there will be an incentive for housebuyers to bid up the price of available housing right up until it equals the extra money they earn from working at one of these Bay Area tech companies. Existing landowners will continue to capture basically all of these tech wage gains until the supply of housing exceeds the number of tech workers who want it. The tech workers who are getting rich are the ones whose living situations resemble college students or service workers. They compete in the housing market for cheap apartment rentals with folks making maybe 1/5 as much, which holds down rents (well, sorta...rent is still insane, but only about 1/3 what a typical mortgage payment would be) and lets them bank the excess.
- dsfyu404ed 8y ago
  MA, particularly the Boston area has spent just shy of 400yr embracing micro-managerial busybody government at every level (several other New England states exist because living in MA was too onerous for various groups). Local governments have a lot of power. They use this power to implement self-serving bylaws and zoning rules that cause the cost of living to skyrocket relative to cities/towns that have more of a "you want to have an adult entertainment store two blocks from a high-school, ok fine, just don't forget to pay your taxes" attitude. It's a tragedy of the commons situation. Everyone wants to zone the strip mall, the lumber supplier, the mechanic and the big box store out of existence or relegate them to some small commercial area. Every town thinks their a special snowflake that should be able to embody picturesque New England town in Yankee magazine. Well actions have consequences and all those things all have to go somewhere and if every town makes doing business (or at least the kind of business that doesn't fit their vision) hard and expensive those costs get passed on down. You can still be a homeowner, buy good groceries and keep your fridge full of beer on a single entry level tech salary in MA. The catch is you just have to do it in one of those "bad" cities like Worcester, Fall River or Fitchburg. I welcome the SF problems in the Boston area.. You reap what you sew.
  - Finnucane 8y ago
    > You reap what you sew. On the other hand, our cities are willing to spend money on schools.
  - anomatopoeia 8y ago
    I have long believed that the real solution to Boston's housing crunch is high speed transit to Worcester, Fall River, Lowell, New Bedford etc. Build HSR out to these areas and drop in lower cost high density density housing. Essentially use these old mill towns as Boston's Brooklyn -as none of the closer in cities are willing to take on the role.
    - meddlepal 8y ago
      Quincy and Lynn could be vastly improved first. Lynn needs blue line access and Quincy needs to build up its downtown and along its four fucking Red Lines stops. Also I would love Worcester high-speed transit, but that's a bigger and more complicated problem than just getting the wheels turning in the two big cities right next to Boston.

throwaway2016a 8y ago

Key word being Boston-"area" I think Boston is often taken to be a very large geographic area. For example, PillPack (one of the flagship examples in this article) was actually founded -- and still headquartered I think -- in New Hampshire. But to put that in perspective, Manchester and Nashua New Hampshire (the two largest cities in the state) are both less than an hour drive from Boston. To be fair PullPack does have a Boston presence as well but I feel I need to point it out because I don't think New Hampshire often gets enough credit. It has a disproportionately high tech population for a state its size. I also don't think Boston gets enough credit. The shear amount of innovation and academia happening in Boston and Cambridge, MA is astounding.

sp332 8y ago
Manchester Airport renamed to "Manchester-Boston Regional Airport" so travel agents/websites would list them when people were traveling to Boston. Back when Logan Airport was really bad, you could plausibly arrive at MHT and drive to Boston faster than flying in to BOS and waiting for your luggage.
- bamboo_7 8y ago
  Yeah that was also back when Southwest wasn't at Logan but wanted to advertise that they had the lowest fairs "in the Boston area".
deleted 8y ago
[deleted]
cowsandmilk 8y ago
PillPack started by two people meeting at a hackathon at MIT and the company's headquarters were in Davis Square in Somerville. They have a large operation in New Hampshire, but the positions there always seemed to be related to shipping and preparation of prescriptions (i.e. pharmacists, data entry techs) vs. the engineering, designing, HR positions in Boston.
- throwaway2016a 8y ago

swampthinker 8y ago

Some of SV's biggest tech companies and institutions started in Boston. Reddit was in Davis, Drew started Dropbox while he was still at Bit9, Zuckerberg was in his Harvard dorm with staff meetings at Pinocchio's pizza. Hell I used to live next to the original YC office in Cambridge. The talent exodus and missed deals was a huge wake-up call for Boston VC's to take more risk, and I think we're finally seeing the results.

kornish 8y ago
Didn’t know Facebook had staff meetings at Noch’s. That’s an awesome tidbit.
- cuchoi 8y ago
  They hanged a nice photo of him eating pizza: https://secure.i.telegraph.co.uk/multimedia/archive/02223/From_Pizza_dough_t_2223684a.jpg https://secure.i.telegraph.co.uk/multimedia/archive/02223/Fr...
Roritharr 8y ago
Interesting take, do Boston VCs think that locally? In Germany I get the feeling the VCs invest wherever globally it makes sense.
- swampthinker 8y ago
  It was almost as if PG and Jessica set out to prove the Boston/NYC status quo of VC wrong. If you wanted funding around here pre-2005, you had to be an experienced exec w/ a strong team of MBA's and senior engineers. Once YC + FB left and saw huge success, there was a scramble to figure out what went wrong. Check out this meetup that a local VC set up back in 2005 [1]. Justin Kan, Emmett Shear, and Reddit's co-founders (Along with many other notables!) attended. All of them left for the West Coast. [1]http://worcester.typepad.com/pc4media/2005/11/boston_web_inno.html http://worcester.typepad.com/pc4media/2005/11/boston_web_inn...

replicatorblog 8y ago

Boston has had at least one $1B+ tech IPO (not including bio) every year for the last decade. There have been as many High nine-figure, billion-plus acquisitions in the same period. Boston doesn't get much in the way of national PR, but it's arguably the 2nd best city in tech, measured by liquidity over the last decade, in the country. And not just in boring security/B2B areas. Wayfair is a top 10 ecommerce player. CarGurus has thoroughly beat TrueCar. DraftKings created its category.

asmithmd1 8y ago
A little over a month ago Boston founded Simplisafe sold to a private equity firm for $1B https://www.bostonglobe.com/business/2018/06/29/simplisafe/xQQ9Rb55kf3WOcrFql5R3K/story.html https://www.bostonglobe.com/business/2018/06/29/simplisafe/x...
- blanderman 8y ago
  That explains their recent advertising push!
- jforman 8y ago
  Boston-founded by an HBS-grad engineer who made early units himself, and bootstrapped until raising from Sequoia's growth fund. An amazing story that got almost no coverage in the tech press.
allcentury 8y ago
Pill pack just sold for 1b
mjfl 8y ago
Is the explanation that Silicon Valley companies invest a lot more in / are better at publicity - best example being Mark Zuckerberg boy genius meme?
- replicatorblog 8y ago
  I think it has more to do with the fact that 3 of the 5 most important companies in tech are headquartered there have a combined $2.3T in market cap whereas Boston's biggest tech co's, TripAdvisor, Akamai, and Wayfair, have a combined market cap of ~$30B.

syntaxing 8y ago

I've been definitely seeing more and more startups popping up (or maybe I hear them in the news more) coming from Boston. But I'm not entirely sure if Tech Crunch's conclusion is sound. You can see from the past five year data graph that NYC's investment is quite high but all of sudden there is a dip this year. Boston-area startups is "overtaking" the pace of NYC not because of a boom in Boston but rather a dull in NYC.

kevincennis 8y ago
The 2018 numbers are YTD though. Both cities seem like they're on track to do as well or better than they did in 2017 assuming that funding doesn't tend to be significantly front-loaded toward the beginning of the year (which might be the case – I honestly don't know).

gumby 8y ago

I thought Boston and NY traded back and forth for #2. But looking at the latest MoneyTree report, it doesn't look that way at all (https://www.pwc.com/us/en/moneytree-report/MoneyTree%20Report%202018%20Q2%20-%20Final_F.pdf https://www.pwc.com/us/en/moneytree-report/MoneyTree%20Repor...) Now that MT splits out SF and SV differently, you can see a secular split: the (mostly) consumer-facing online businesses in SF (5.6B) and NY (2.8B) take in a lot more money than the more technology-oriented businesses of SV (3.9B) and BOS (3B). I assume that's due to risk profile; wonder what the return rate is?

swalsh 8y ago

As a Boston resident, but former midwesterner, I wish the story was "Midwest competitive with East and West Coast for venture totals". I think it's a real problem that venture capital is highly concentrated in just a few places.

lotsofpulp 8y ago
Terrible weather, flat terrain, socially conservative populace, lower probabilities of meeting important or rich people to create network. These qualities don't seem like they would appeal for those with money or in tech/science oriented fields.
- pretendscholar 8y ago
  Why is flat terrain an negative trait?
  - lotsofpulp 8y ago
    I didn't mean that it's inherently negative, I meant given the option, more people will choose mountainous/hilly terrain over flat terrain. Either for aesthetics, or hiking, or skiing, or whatever. My only proof is that property values are higher in those areas.
  - RandallBrown 8y ago
    Flat terrain is one of the biggest reasons why I never plan to move back to my home state of Michigan. Skiing, hiking, and climbing are 3 important things to me that the midwest simply doesn't have in any meaningful way.
    - ensignavenger 8y ago
      There are plenty of hiking trails throughout the midwest, and Arkansas has some of the finest rock climbing in the nation. Plenty of climbing in other Midwestern states as well. Snow skiing, not so much.

aaavl2821 8y ago

The article sort of buries the real reason for this: the large amounts of biotech VC funding. Boston is the world-center of biotech startups and VC, and biotech VC funding is on pace to be $15-20B this year. As recently as 2013 __total__ VC activity was just $29B The amount of money being invested (and made) in biotech today, and the level of technological advancement in the field, is disproportionately higher than mainstream awareness of the field

biohax2015 8y ago
Makes me regret abandoning biotech/computational biology for the safer shores of software engineering :(
- simmanian 8y ago
  I would think software engineers are still very much needed in almost every biotech startup :)
  - aaavl2821 8y ago
    There are some that rely very heavily on software engineers but most don't, although that is starting to change I think. The biotech startups that the tech press covers represent a tiny fraction (under 10%) of biotech startup activity. The separation between the biotech and tech startup worlds is almost at a global maximum. It used to be that major tech VCs were also major biotech VCs. Starting about 5-10 years ago tech VCs gave up on biotech. Coincidentally that's about when all the exciting stuff started happening Pretty much all of the big biotech exits are mostly not even covered in the tech press (with the exception of stemcentrx, unity and maybe a few others)
    - ghaff 8y ago
      AI/ML seem to be leading to some new companies that have a big software component. But in general the “tech” crowd doesn’t think much about pharmaceutical, biotech, personalized medicine etc.

dmode 8y ago

An interesting comparison would be comparison Boston to NYC without WeWork's massive funding. I think that single company has probably distorted NYC VC raise for the last couple of years.