Startable – Healy Jones’ & Prasad Thammineni’s Blog

CB Insights has a new post on NYC vs. Boston venture investing, and in particular how New York and Boston compare in internet investing. Since the internet is the sector I really personally care about their data is pretty interesting.

The trend is the really important part of CB Insights’ data, as Massachusetts still has larger volume both in terms of dollars invested and number of companies funded.

NYC vs Boston Internet Investments

The number of companies funded in New York seems to be rising year over year, as does the dollar volume (I’m looking at Q4’10 vs Q1 and Q4 from 2009), as does the dollar volume. Massachusetts’ dollar volume is flat to down and the number of companies is clearly down.

This seems like a potentially bad sign for the New England area… is the internet startup momentum stagnating right now here? I’m not really concerned that NYC is having a good year – in fact I’m happy that the funding environment there seems to be healthy. I’m more worried about Boston’s health.

The difference is even more pronounced at the seed level. While over 50% of the investments (as in companies, not dollar volume) in NYC are seed or series A deals, Boston is 40% of below. So, is there a less healthy seed and early stage environment in Boston right now? And will this result in fewer successful later stage companies?

IMHO what Boston needs is a big, successful late stage exit that spawns a lot of money in potential internet seed investors handing + a large number of new potential company founders. A single home run could really invigorate the local ecosystem.

Wow, lots of “the sky is falling” reporting going on yesterday when ZipCar announced a new fund raising round. I exchanged DM’s with a couple of local reporters on how the Series G round didn’t have to mean that the company was having trouble, and looks like (hopefully for ZipCar fans) I was right.

Dan Primack actually did some real reporting here and got the scoop - ZipCar’s IPO was taking longer than expected due to regulatory issues and the company needed a top off round of capital prior to going public. These types of last minute financings (i.e. right before going public) can be really lucrative to investors, so props to the firms that stepped up and good luck to them on making a quick, solid return. And serious Kudos to Dan for taking the time to find out what was really happening.

Also, props to Galen Moore for taking the story in a totally different direction and commenting on the lack of ZipCars in less ritzy neighborhoods. As the company grows they are probably going to have to take this sort of publicity into account…

I’ve made noise recently about how Boston needs a stronger early stage technology press/blog ecosystem.

But I’ve also been thinking about what I can do to help fix this problem. I know that there are real journalists and dedicated bloggers here working hard to put out legit pieces on the New England startup scene. How can I support them?

One of the things that I think helps set the publications in other cities apart is the large number of readers who interact with the articles – in particular, in the comment sections. There are real conversations that happen around the stories by members of the startup communities in the comments on blogs like Techcrunch and Mashable. You don’t see that as much in Boston.

So, my New Years resolution is this:

I will leave at least one comment a day on a Boston tech blog

I know this isn’t much, but if other members of the community would do this too we would not only show our support for the journalists who try to help Boston tech companies get the word out, we would also potentially help increase the dialog that goes on around the local scene. (If I miss a day I’ll make it up the following with an extra comment…)

Maybe this is putting the cart before the horse. I know that other the big tech blogs have a lot of traffic, which leads to the large number of comments. But I also know, from my own blog and from the different blog publishing I’ve done for OfficeDrop, that after there are one or more comments on a post other readers are more likely to come out of the woodwork and post comments. And a healthy number of comments helps build community around a topic.

Here are the blogs that I want to try to help promote. Please let me know if I’m missing any:

Mass High Tech Galen Moore is out there everyday trying to make noise for New England.

BostInnovation I’m hopeful these guys will evolve into our own local Mashable.

Xconomy Boston I love the national ambitions coupled with local coverage.

Scott Kirsner Boston’s best known technology promoter.

Let’s try to help these local bloggers take their message to a national level. Is anyone else up for this? You could show your support by leaving a comment

I wonder how long it will take for all the VCs relocating to Cambridge to drive up the rent here to the point where all the startups have to start moving back to Route 128.

Inspired by Dan Primack’s BVP’s Cambridge office bathroom photo – I’d post a picture of OfficeDrop’s bathroom but I don’t want OSHA to shut us down

Just kidding, our office space is really cool (and we still have a spare office available for month to month rental if a local startup is interested.)

Check out the photo from the NY Times today of Prasad in our main office area:

Jeff Bussgang has some great pieces on the depth of potential IPO-able companies in Boston and NYC.

http://www.pehub.com/89560/ipo-check-up-new-york/

http://bostonvcblog.typepad.com/vc/2010/11/ipo-anxiety-east-coast-version-1.html

His take is very clear – Boston has a serious lack of depth in potentially IPOable technology companies, while NYC looks like it may be on the cusp of launching a series of great, cornerstone public technology companies.

These are great pieces and should be interesting to anyone in the East Coast technology scene.

There is a cool post on TechCrunch by Ajay Kulkarni, Sensobi CEO/TechStars alumni, on cutting edge email applications. A few of these were founded/funded out of Boston, which is really great. Email is still a killer app, in my mind. I realize that younger people don’t use it as much as I did when I was in college, but still it is an everyday app that is a part of most workflows. Innovations, like the ones Ajay mentions in this article, are going to keep email’s utility high for the foreseeable future IMHO.

A few of the companies with Boston connections are:

Boomerang, which lets you schedule emails

Followup.cc, an email reminder service

Rapportive, which connects to social networks and give you info on the people you email (bonus points if you can guess the Boston connection.)

I was tipped off by BostInno that local company EqualApp won Future Forward’s GameChanger award last week. Congrats to the college admissions counseling startup!

Pretty big news, a one billion dollar deal as reported in TechCrunch.

I guess we’ll find out how entrepreneurial the employees are at ATG in a year or two – if we see them popping up at startups/starting companies it could be good for the area. If they all get moved out to CA, though… Hard to tell if this deal will be positive or negative for New England innovation.

And congrats to the team there – a one billion dollar acquisition is a big deal!

Bostoninnovation did a nice job with their Shutup & Startup event this Friday. I didn’t attend the Saturday session, but was pumped to see a number of local students at the kickoff evening on Friday. It’s good for someone to take initiative here and try to get the Boston startup community connected with the Boston student community. I’m happy they did this.

I stole this image from the Saturday session from the Bostoninnovation tweet stream:

I would love to see more of these events, in particular ones that have a large number of students studying CS/development.

Also, hopefully I didn’t freak any students out. In my attempt to try to make people feel welcome I decided to randomly approach people and say hi. I realize this isn’t the New England way, but I’m not from here so…

Roy Rodenstein had a recent post on Mass High Tech called 5 Reasons Startups Move to Silicon Valley. He pretty succinctly sums up a number of the bigger issues facing the Boston startup scene and lists a number of smart things the area can do to better retain startups and the talent that creates them. It is a great piece.

The only area where I take issue with his reasons that startups leave is that he is very focused on funding. Basically, four of his five reasons are about the lack of depth of seed/early stage funding in Boston. I left a comment saying that if I was to list five reasons startups leave Boston I wouldn’t have funding be four of them. In other words, I see other issues as more important – onces he touches on in his fifth point, the point on the ecosystem.

I’ll try to elaborate on a few of the problems I see in Boston – problems that make it less desirable for startup founders to want to found/keep their companies here. My point of view is colored by the years I spent living in San Francisco and by the fact that I am not originally from New England. Also, please keep in mind that as a guy helping run a startup in Cambridge I actually do think this is a great place to found a technology company.

1) Willingness to take a risk on less experienced founders. Or lack thereof. I think there are investors here who are willing to back new, cool companies. However, I don’t see that many investors who are willing to back young, unproven entrepreneurs. I can think of a number of successful companies on the West Coast who have very young founders who received funding. Everyone always points to Facebook, but the one that I really think of is Box.net. Very young founder focusing on an enterprise space gets funding from well known West Coast VCs. Are there any Boston area b2b companies where an early 20 something got funded and remains the CEO? Or even got funded?

2) Little willingness to roll up the sleeves and mentor/help other companies. This is a follow up to the first point – is Boston willing to help young company founders grow? I kind of feel that very few people in Boston will back young founders because few people really want to take the time to actually mentor them. I’m hopeful that things like TechStars and the Mass Challenge will provide a bit of the framework – and more importantly create lasting relationships between younger entrepreneurs and experienced mentor-types who can help them grow into executives like Zukerberg or Gates.

Ok, maybe those first two points could be considered somewhat related to “funding” so I’ll go in the opposite direction with the next.

3) Very few here-is-how-you-grow-your-company events. There are so many Boston events on getting funding – boring. What I want to know is how do I grow my company. I want events where people from successful local companies like Monster and Smart Bargains and Constant Contact tell war stories. Where the hell are these people? I have no desire to see a group of VCs talk about how they back management teams and pick big end markets. I want to hear what works and what doesn’t from people who have just created big, awesome tech companies. Some of the recent customer development and unconferences are big steps in the right direction.

4) Very little national, customer driving press. I can only think of one blogger/reporter in Boston who can actually get me customers – Scott Kirsner of the Boston Globe. The other journalists here try hard, but appearing in their publications doesn’t drive traffic to my site that converts into paying customers. TechCrunch, Mashable, Lifehacker, GigaOm, Gizmodo… I don’t think they have anyone in Boston. Connecting with reporters directly is very important to starting a dialog that gets your startup featured. I can’t do that here very easily. I am hopeful that both Xcomony and BostInnovation will grow into publications that DO drive customer growth – the reason why I think this will happen is because they both do in depth style writeups on products, not just articles around which companies are getting funded by whom. (Please note, I still love getting any and all press for OfficeDrop!)

5) It is hard to feel welcome as a “non-native” in Boston. When I first moved to San Francisco I felt like it was my city in just a few months. It took over a year to even begin to feel welcome in Boston. It’s hard to meet new people here. Mobility, which is a big part of getting to know and feel at home, is very challenging due to the fact that the drivers here are worse than those in third world countries that I’ve visited. It’s not just that there are no street signs, it is also that I really think there is a basic lack of understanding of the rules of the road,  civility in the car and enforcement of driving rules. There is also something strange about the culture that makes it harder for people to strike up conversations and relationships with people they’ve never met before. I believe that small steps are being taken by things like the Shutup Startup weekend coming up this weekend (I think I’ll go to the Friday night event). Hopefully this be a move in the right direction in helping students feel like part of the Boston community. (Also, since this particular point is becoming a little bit of an all over the place rant – Boston needs real happy hours. I think part of the reason I quickly made so many friends in SF was how easy it is to bond with people over cheap, after-work drinks. Ok, so that particular point is a stretch, but I really really miss happy hours.)

Boston is a great place to start a company. We have funding, world class universities, blah blah. But more importantly to young founders, Cambridge and Boston are great places to live. Unlike Silicon Valley, which is a really boring place to live when you are 24, Cambridge provides both a fun atmosphere and somewhat affordable startup real estate (trust me, I tried to live in Menlo Park when I was in my early twenties and only lasted 9 months. It is the most boring place in the world to live when you are young; other than the great Indian food it is way worse than Cambridge.)

So, if you want startups to thrive in Boston, do your part. I’m trying to get a group of experienced marketing folks together to mentor startups (calling it Boston Internet Guild, BIG). I’m making an effort to attend events where young startup folks gather. I’m talking up how great of a place Boston is to be. I’m sure I haven’t thought of everything – help me think of other things we should be doing to keep startups in Boston.