Startable - Healy Jones’ & Prasad Thammineni’s Blog

These guys are the number 1 sports one app in iTunes, if I understand their tweet correctly! Wahoo! A great TechStars Boston company.

Chris, an investor with Common Angels, has a great post from the 16th (I came across it via PEhub.) Chris interviews Andy Payne, a Boston area startup guru exec. Check it out!

PWC/NVCA venture capital data is out for the first half of 2010. Happily, New England venture investing is moving along with the rest of the US, and nicely increased from the first half of 2009 - when looked at from a first half of the year perspective.

VC $ Invested First Half of the Years

Deal Volume:

First Half VC Deal Volume

But the Q1 to Q2 data shows a different story.

The thing that is interesting to me about the New England data is that NE deal volume stayed flat from Q1 2010 to Q2 from 96 to 95, while the entire of the US was up 740 to 906. Also, the dollar volume in NE was DOWN from $796 million to $581 million, while the US was up $4.87 billion to $6.52 billion.

Why was New England down while the US was up?

It could be partly because all the deals have yet to be reported in New England, but I don’t know if that would explain such a big drop in dollars invested vs. the rest of the US. This also means that the average deal size in NE is also down quite a bit. I know there is a ton of angel investment activity in Boston, which is a great thing, but does this mean the later stage VCs are gone? Anyone have any ideas??

I attended the AlwaysOn Venture Summit East last month, and was just sent a survey of venture capitalists in the Northeast that came out of that conference. Happily, our local VC friends are pretty optimistic about the rest of the year. You can get the survey here.

In particular, they think that the number of new financings will increase pretty significantly in the second half of 2010 and into 2011:

The survey also suggests that the dollar amount invested will grow in line with the number of new deals. (I’m not going to bother to paste in that chart since it looks pretty similar to the one above.)

VCs are also excited about early-stage investing in the coming years. I guess that’s not too surprising, since that is where they traditionally invest money. The large percentage interested in seed financing is pretty interesting, but without a feel for what this chart has looked like over the past few years I can’t really draw any conclusions on how the environment is changing. But still, an interesting chart.

More VCs seem weighted toward slightly higher valuations than lower - although most, 43%, claim to think that valuations will be flat in 2010 and 2011. Hmm… I tend to think valuations are going up! Let’s start that rumor.

Finally, the charts on exits. When I first looked at it I felt that it seemed pretty optimistic; over 40% of VCs think that at least 20% of their portfolio is ready for exit. But it’s hard to argue that this really means anything. From my time at VCs, 20% of portfolio companies being at a stage when they could be sold is pretty standard. The real question isn’t
“are companies ready for exit.” The real question is, “are the capital markets open.” Open, as in, are there IPOs/M&A opportunities for tech companies.

72 venture capital funds raised $7.5 billion in the first half of 2010. That is an increase of 13% (on a dollar basis) from the previous year. But it’s way less than the $14.2 billion raised in 1h 2008. Dow Jones has more info.

I attended Angel Boot Camp yesterday (June 1, 2010) at the Microsoft NERD center. It was a great event with something close to 300 angel investors gathering to discuss how to activate the angel community in Boston. Jon Pierce of the Awesome Foundation organized everything - nicely done Jon! Here are a couple articles/posts on the Boot Camp from the community:

Wade Roush of Xconomy published a great summary of the speakers main topics.

Also, Don Dodge put the key points from his talk up on his blog “The Next Big Thing.”

two more posts inspired by Angel Boot Camp:

Will Herman on Angel investing - why he does it and what he gets out of it, plus some ground rules for success.

Brad Feld on suggestions for angel investors.

And another Angel Boot Camp post:

Gabriel Weinberg was reminded of how much he likes backing hackers and needs to make more investments.

BostInnovation on the first sessions of Angel Boot Camp.

Hiring talent is one of the most challenging things facing a startup. Hiring the best programming and technical talent is even harder. Taking data from The Entrepreneurs Census, which I wrote about yesterday, we can get a glimpse into how hard it is to hire programmers in Boston, Palo Alto and New York.

It may be easier for startups in Boston to hire programmers than startups in Palo Alto

Startups in Boston may have a better time hiring programmers, as measured by how long it takes to fill an open position and by the percent of startups that have open positions.

Hiring Programmers in Boston vs Palo Alto

The two thirds of startups in Boston were able to fill open positions in under three months - verses about half in Palo Alto and 63% in New York City. (OK, the difference between New York and Boston is probably statistically insignificant.) Three months is a lifetime for many software and web startups; being unable to add a critical developer in that period of time could derail product launches and critical feature updates. Heck, a lot of startups are out of business in 6 months to a year, so if you can’t fill your positions by then who knows if it’s even worth still looking…

The data collected by the study would fit with anecdotal evidence that I have heard from friends starting companies in Palo Alto. Many people have told me that it’s impossible to find talent in the SF Bay area… especially at a reasonable price. I know it is hard to find good people in Boston as well, but this study would suggest it is a bit easier here than in Palo Alto.

Compensation of programmers in Palo Alto is higher than Boston and New York

And of course the other important part of the equation is how much it costs to hire talent. From the study:

Compensation for Programmers Palo Alto Boston

Doing some really crude math, it looks like programming talent in Palo Alto is 13% more expensive than Boston and 36% more expensive than New York. (I very roughly calculated that the average comp in Boston was $66.85k, Palo Alto 75.65k and New York $55.75k; I assumed the comp for each salary range was in the middle of each range for my calculation. Again, the numbers are small so the difference may not be statistically significant.)

The other data point in the above compensation chart that I’m trying to get my head around is low end and high end. The high end is easy enough to understand; you have to really pay up to get good talent in some cases in Palo Alto (and NYC). This doesn’t surprise me too much, but it is interesting that the high end is zero for Boston. Maybe due to a small sample set? I just don’t know enough.

The low end is also pretty intriguing. I’d bet that most of the sub $50k programmers are working for equity. It looks like regions OTHER than Boston have more programmers working for a pittance, trying to get equity. Does this mean that Boston has less of a founders culture???

Pretty ironic and not really very important, but Gmail decided to add in this little advertisement to the top of an email conversation that I’m having with someone about this post… it looks like Google is hiring developers in Boston!

I recently got a copy of a new study called “The Entrepreneur’s Census,” created by Matt Shapiro of Yale. There are some pretty interesting data points in the survey regarding startup in Palo Alto, Boston and New York City. As a person interested in growing entrepreneurship in Boston, something cool I took away from the census is that

Founders move to Palo Alto to start companies

and

Boston founders are likely to be students to came to Boston and then started companies

First, a little info on the census, as taken from the report:

The study originated in January 2010 as a project to understand the recent increase in entrepreneurial activity and investment in New York City… In March, we undertook the task of gathering granular information regarding the venture communities in Boston, Palo Alto and New York… We received response from 307 entrepreneurs. Collectively, these businesses have created more than 1,300 jobs and paid more than $7 Million in annual rent.

I believe that, as Scott Kirsner says, Boston’s greatest renewable resource is the students who show up every year. While a number of the people who found companies in Boston seem to be here because of their education, I’m not convinced that enough is being done to keep students in Boston after they complete their education. We need to actively support some of the efforts underway to make people feel more comfortable starting businesses in Boston, like DartBoston, Greenhorn Connect, TechStars and the Mass Challenge. (and I think something else that would make students feel more at home would be if the local road system/drivers could be a bit less third world and behave a little more like the rest of the country. Street signs and lane markers would be a good start.)

Secondly, there has got to be a way to make Boston more of a destination for starting new companies. I am convinced that Boston is by far the second best place in the entire world to start a software/internet business (I am saying that this is a really good thing!) and somehow the area to get more people to realize this.

Scott Kirsner recently let me know about a great upcoming event in Cambridge - the Momentum Summit (http://www.momentumsummit.com). The conference is bringing together experienced local entrepreneurs and letting them share advice with the local startup community, and sounds like a good opportunity for people like me to hear from people who have done it before. The conference seems to have a internet/online business angle, which is also pretty perfect for me!

Some of the people speaking have done some amazing things; some of the execs who caught my eye are:

Gail Goodman, Constant Contact CEO

Steven Kaufer, TripAdvisor CEO

Trynka Shineman, VistaPrint CMO

David Cancel, Performable CEO

According to Scott, the purpose of the event is to “ to bring in some of the most successful CEOs, founders, marketers, and salespeople from our region, and have them share their advice on how small companies developing great products can build really big customer bases.”

As a guy trying to grow OfficeDrop’s customer base into something really big, it sounds like a good conference to me!

I also think that the proceeds will benefit a local non-profit, Stay In MA (a scholarship program for Massachusetts-based college students), which is an added bonus.

Congrats to the awesome team at Localytics, a mobile apps analytics provider, who has just raised a solid angel round. This is yet another Boston TechStars company that has gotten funding. Raj and the team are kicking butt over there!