4 ms·

Boston VCs don’t want to let another big one get away

47 points by helwr 15y ago

pg 15y ago
Unfortunately for the Boston VCs, they can only fix part of the problem. Boston VCs have in the past been timid and unimaginative, and they may be able to fix that by making a conscious effort to be more aggressive. But the biggest problem with Boston may be the weakness of the angel community. It's true that VCs are starting to make more angel type investments, but it seems unlikely they can completely replace angels.
- far33d 15y ago
  The explosion in angels has not skipped Boston. A few recent acquisitions will certainly increase activity as well.
- whirlycott1 15y ago
  Two years ago, I would have agreed with you about the angel situation - it was pretty dorky and very clumsy. But something big has changed here very recently and the energy is unlike anything you saw when you lived in Cambridge, Paul. I assure you, there is a substantive tangible energy in the air around town these days. Whether that translates into anything big still remains to be seen.
  - SwellJoe 15y ago
    Energy does not replace early stage money. Angels, of which there are thousands in the valley, provide early stage money.
- jsavimbi 15y ago
  And I doubt that they'll get aggressive like their counterparts in other areas of the country. People in this region are tighter with their money and need to fully understand the lifecycle of a entity before throwing money at it, versus having an urgency to be an early-stage investor like you may have out in SV. But if we're going to go through the numbers that this old chestnut provides: http://wadhwa.com/2011/03/04/boston-vs-silicon-valley-comparisons/ http://wadhwa.com/2011/03/04/boston-vs-silicon-valley-compar...
- hy 15y ago
  Interesting view. But I think this FB case, maybe it just happened that way.. Aside from the size of startup & investment communities, there are still lots of great early stage investors e.c. JBoss backer David Skok of Matrix. - one of my favorit VCs. At least these guys sometimes do very very early stages.
suking 15y ago
New England VCs have been some of the most difficult people I've talked with. SV and regional VCs have been much friendlier/easier/helpful. So saying they won't let another big one get away... they need to change their attitude for the most part. (IMO).
dlevine 15y ago
Having moved to the Bay Area from Boston when I started doing startups, I can say that the problem is more of a structural issue than just "not letting the next big one get away." Whenever we talked to East Coast VCs, they wanted our startup (pre-revenue and basically pre-product) to have a clearly defined business model and revenue strategy. In doing that, they do somewhat reduce the downside, but they also eliminate the very top of the bell curve. West Coast VCs seem to have much more of a shoot for the moon mentality. While the latter does lead to a lot of flops, it seems like it also yields some huge winners that the more conservative approach may miss.
- divtxt 15y ago
  Exactly! Nothing captures this structural difference like this search: http://www.google.com/search?q=silicon+valley+failure http://www.google.com/search?q=silicon+valley+failure edit: you can't invest in "the next big one" without investing in 90 failures and 9 small or medium ones.
thinkcomp 15y ago
The degree to which the premise of this story (which has been printed elsewhere) is absolutely ridiculous, is pretty astounding. The premise, of course, is that Mark somehow "got away" from Boston and was always destined to be more "successful" [your definition here] than any other founder. So there are really two main points: that this proves Boston needs to catch up with the Valley, and that there's another Mark lurking out there somewhere that must have been missed. Let's start with the first part. Boston has needed to catch up with the Valley since the decline of Digital Equipment Corporation, if not before. That was, if I've got my facts straight, in 1992. So it's been nineteen years that Boston's tech scene has been dying. When I was at Harvard trying to get undergraduates excited about technology entrepreneurship in 2003, the club ended up electing me President because only eight people showed up and half of them were my friends. Apparently things have gotten better since then, but I'm still on the Harvard entrepreneurs mailing list and there's not much going on. As for Mark, I've said plenty in the past. The key points are A) that people like Mark don't innovate; they copy; and B) if as much money was poured into another company as has been poured into Facebook, then we'd all be talking about that company and founder instead. (Twitter, anyone?) If VCs are just looking to fund copycats, that explains an awful lot, but they should just admit it and stop pretending that they exist to support entrepreneurs. In the meantime, their returns will continue to decline as they ignore people who actually do come up with novel approaches to problem solving in favor of the coy and disingenuous who can convince millions to waste their time in a uniform manner. There are a lot of bad ideas in Silicon Valley and a lot of bad ideas in Boston. But there are definitely some good ones, too. If VCs can't distinguish between them, they should either just fund everything in the hope that they'll just get lucky, or step aside and get out of the way.
- rdl 15y ago
  > The key point is that people like Mark don't innovate. James and Orville Wright didn't invent the airplane. Henry Ford didn't invent the automobile. Thomas Edison didn't invent the lightbulb. Ray Croc didn't "invent" McDonald's. James Walton didn't invent EDI or data-driven retailing. etc. But as an investor, you sure wouldn't go broke investing in them. That's the kind of person you want to set up shop in your town if you care about the economic benefits, not necessarily another PhD developing technology years before its time. ("MIT graduates develop technology. Harvard graduates hire MIT graduates and build businesses." was the old saying.) I think Boston's non-life-sciences tech scene is doomed for a variety of reasons, but thinking everyone needs to invent one amazing new scientific advance ("idea") to build a world-changing business, vs. lots of correct, incremental decisions along the way ("execution"), is a major reason.
ilamont 15y ago
I can't speak to the VC environment in Boston, but I do think there are lots of support resources for tech entrepreneurs in the Boston area, through events (TechStars, Lean Startup Challenge, etc.), meetups, support groups, startup spaces (such as the Cambridge Innovation Center) and educational networks fostered by MIT, Harvard, and other schools (even BU offers a mentoring service, modeled roughly on a program that MIT started). There is also a small but strong media cohort that helps spread the word. It's nothing like Wired/TC/VentureBeat/assorted blogs/MSM bureaus in the Bay Area, but people like Scott Kirsner (Innovation Economy, a column in the Boston Globe), and the staff of the MIT Technology Review, Xconomy, and some of the IDG publications write frequently about local startup activity.
rokhayakebe 15y ago
Facebook — turned down by Battery Ventures and MetroPCS — is valued at $82.4 billion on SharesPost, a secondary exchange for shares of private firms. This is like passing on Lady Gaga in High School because she was, well, odd. It has to be hurtful.
localhost3000 15y ago
Part of the problem with Boston is that it isn't hip to be doing a startup here like it is in SV (this is getting better. A few years ago it was awful). Boston is an old-fashioned town that values aristocratic careers (Lawyer, banker, doctor) and name-brands (John Hancock) far more than pave-your-own-way careers. This sounds a bit trite but it is a significant cultural barrier for a 22-year-old to overcome. You'll be far more accepted if you move west, so most do.
anamax 15y ago
The "VCs let Facebook get away" theory seems to imply that Facebook could have been built in Mass. Could facebook have been built in MA? In SV, Facebook could poach from Google's mothership and the alums, not to mention Yahoo, etc. Are there enough comparable people in Mass? And, even if there are, are they available? Doesn't Mass have enforceable fairly-general non-competes? Do the Mass companies that currently employ the folks that Facebook would have hired use them?
- kragen 15y ago
  Agreed. Also, California has this lovely law that guarantees that your employer doesn't own what you develop on your own time without using company equipment in areas that aren't the company's business. Which means that in California, an awful lot of people who would otherwise have continued working for HP, Shockley, IBM, Apple, and so on, went out and started companies — the companies that have, over the last 30 years, brought the people that Facebook needed to hire to California. Not to Massachusetts.
hughesdan 15y ago
Boston is certainly no Silicon Valley (and perhaps never will be), but I'd argue it's still a great place to start a company. Through MassChallenge I had an opportunity to really connect with the community up there and can say from experience that it's a vibrant and helpful one that is turning out some great companies. The article is probably correct in the way it characterizes Boston VCs. But the local VCs are only one small part of what makes a city startup-friendly.

47 points by helwr 15y ago

pg 15y ago

Unfortunately for the Boston VCs, they can only fix part of the problem. Boston VCs have in the past been timid and unimaginative, and they may be able to fix that by making a conscious effort to be more aggressive. But the biggest problem with Boston may be the weakness of the angel community. It's true that VCs are starting to make more angel type investments, but it seems unlikely they can completely replace angels.

far33d 15y ago
The explosion in angels has not skipped Boston. A few recent acquisitions will certainly increase activity as well.
whirlycott1 15y ago
Two years ago, I would have agreed with you about the angel situation - it was pretty dorky and very clumsy. But something big has changed here very recently and the energy is unlike anything you saw when you lived in Cambridge, Paul. I assure you, there is a substantive tangible energy in the air around town these days. Whether that translates into anything big still remains to be seen.
- SwellJoe 15y ago
  Energy does not replace early stage money. Angels, of which there are thousands in the valley, provide early stage money.
jsavimbi 15y ago
And I doubt that they'll get aggressive like their counterparts in other areas of the country. People in this region are tighter with their money and need to fully understand the lifecycle of a entity before throwing money at it, versus having an urgency to be an early-stage investor like you may have out in SV. But if we're going to go through the numbers that this old chestnut provides: http://wadhwa.com/2011/03/04/boston-vs-silicon-valley-comparisons/ http://wadhwa.com/2011/03/04/boston-vs-silicon-valley-compar...
hy 15y ago
Interesting view. But I think this FB case, maybe it just happened that way.. Aside from the size of startup & investment communities, there are still lots of great early stage investors e.c. JBoss backer David Skok of Matrix. - one of my favorit VCs. At least these guys sometimes do very very early stages.

suking 15y ago

New England VCs have been some of the most difficult people I've talked with. SV and regional VCs have been much friendlier/easier/helpful. So saying they won't let another big one get away... they need to change their attitude for the most part. (IMO).

dlevine 15y ago

Having moved to the Bay Area from Boston when I started doing startups, I can say that the problem is more of a structural issue than just "not letting the next big one get away." Whenever we talked to East Coast VCs, they wanted our startup (pre-revenue and basically pre-product) to have a clearly defined business model and revenue strategy. In doing that, they do somewhat reduce the downside, but they also eliminate the very top of the bell curve. West Coast VCs seem to have much more of a shoot for the moon mentality. While the latter does lead to a lot of flops, it seems like it also yields some huge winners that the more conservative approach may miss.

divtxt 15y ago
Exactly! Nothing captures this structural difference like this search: http://www.google.com/search?q=silicon+valley+failure http://www.google.com/search?q=silicon+valley+failure edit: you can't invest in "the next big one" without investing in 90 failures and 9 small or medium ones.

thinkcomp 15y ago

The degree to which the premise of this story (which has been printed elsewhere) is absolutely ridiculous, is pretty astounding. The premise, of course, is that Mark somehow "got away" from Boston and was always destined to be more "successful" [your definition here] than any other founder. So there are really two main points: that this proves Boston needs to catch up with the Valley, and that there's another Mark lurking out there somewhere that must have been missed. Let's start with the first part. Boston has needed to catch up with the Valley since the decline of Digital Equipment Corporation, if not before. That was, if I've got my facts straight, in 1992. So it's been nineteen years that Boston's tech scene has been dying. When I was at Harvard trying to get undergraduates excited about technology entrepreneurship in 2003, the club ended up electing me President because only eight people showed up and half of them were my friends. Apparently things have gotten better since then, but I'm still on the Harvard entrepreneurs mailing list and there's not much going on. As for Mark, I've said plenty in the past. The key points are A) that people like Mark don't innovate; they copy; and B) if as much money was poured into another company as has been poured into Facebook, then we'd all be talking about that company and founder instead. (Twitter, anyone?) If VCs are just looking to fund copycats, that explains an awful lot, but they should just admit it and stop pretending that they exist to support entrepreneurs. In the meantime, their returns will continue to decline as they ignore people who actually do come up with novel approaches to problem solving in favor of the coy and disingenuous who can convince millions to waste their time in a uniform manner. There are a lot of bad ideas in Silicon Valley and a lot of bad ideas in Boston. But there are definitely some good ones, too. If VCs can't distinguish between them, they should either just fund everything in the hope that they'll just get lucky, or step aside and get out of the way.

rdl 15y ago
> The key point is that people like Mark don't innovate. James and Orville Wright didn't invent the airplane. Henry Ford didn't invent the automobile. Thomas Edison didn't invent the lightbulb. Ray Croc didn't "invent" McDonald's. James Walton didn't invent EDI or data-driven retailing. etc. But as an investor, you sure wouldn't go broke investing in them. That's the kind of person you want to set up shop in your town if you care about the economic benefits, not necessarily another PhD developing technology years before its time. ("MIT graduates develop technology. Harvard graduates hire MIT graduates and build businesses." was the old saying.) I think Boston's non-life-sciences tech scene is doomed for a variety of reasons, but thinking everyone needs to invent one amazing new scientific advance ("idea") to build a world-changing business, vs. lots of correct, incremental decisions along the way ("execution"), is a major reason.

ilamont 15y ago

I can't speak to the VC environment in Boston, but I do think there are lots of support resources for tech entrepreneurs in the Boston area, through events (TechStars, Lean Startup Challenge, etc.), meetups, support groups, startup spaces (such as the Cambridge Innovation Center) and educational networks fostered by MIT, Harvard, and other schools (even BU offers a mentoring service, modeled roughly on a program that MIT started). There is also a small but strong media cohort that helps spread the word. It's nothing like Wired/TC/VentureBeat/assorted blogs/MSM bureaus in the Bay Area, but people like Scott Kirsner (Innovation Economy, a column in the Boston Globe), and the staff of the MIT Technology Review, Xconomy, and some of the IDG publications write frequently about local startup activity.

rokhayakebe 15y ago

Facebook — turned down by Battery Ventures and MetroPCS — is valued at $82.4 billion on SharesPost, a secondary exchange for shares of private firms. This is like passing on Lady Gaga in High School because she was, well, odd. It has to be hurtful.

localhost3000 15y ago

Part of the problem with Boston is that it isn't hip to be doing a startup here like it is in SV (this is getting better. A few years ago it was awful). Boston is an old-fashioned town that values aristocratic careers (Lawyer, banker, doctor) and name-brands (John Hancock) far more than pave-your-own-way careers. This sounds a bit trite but it is a significant cultural barrier for a 22-year-old to overcome. You'll be far more accepted if you move west, so most do.

anamax 15y ago

The "VCs let Facebook get away" theory seems to imply that Facebook could have been built in Mass. Could facebook have been built in MA? In SV, Facebook could poach from Google's mothership and the alums, not to mention Yahoo, etc. Are there enough comparable people in Mass? And, even if there are, are they available? Doesn't Mass have enforceable fairly-general non-competes? Do the Mass companies that currently employ the folks that Facebook would have hired use them?

kragen 15y ago
Agreed. Also, California has this lovely law that guarantees that your employer doesn't own what you develop on your own time without using company equipment in areas that aren't the company's business. Which means that in California, an awful lot of people who would otherwise have continued working for HP, Shockley, IBM, Apple, and so on, went out and started companies — the companies that have, over the last 30 years, brought the people that Facebook needed to hire to California. Not to Massachusetts.

hughesdan 15y ago

Boston is certainly no Silicon Valley (and perhaps never will be), but I'd argue it's still a great place to start a company. Through MassChallenge I had an opportunity to really connect with the community up there and can say from experience that it's a vibrant and helpful one that is turning out some great companies. The article is probably correct in the way it characterizes Boston VCs. But the local VCs are only one small part of what makes a city startup-friendly.