MITX's Digital State of the State Report

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MITX's Digital State of the State Report

  1. 1. MITX DIGITAL STATE OF THE STATEBabson MCFE Team: Carlos Acosta, James OConnor,John Skayne, Mahmoud Mattan, Niket Anjaria
  2. 2. Table Of ContentsI. IntroductionII. Overview of the Digital EcosystemIII. Investment ActivityIV. Exit ActivityV. Economic IndicatorsVI. Leading Voices in the SectorVII. RecommendationsVIII. SummaryIX. Scope, Objectives & Methodology
  3. 3. II. IntroductionBoston’s digital ecosystem is continually being measured through comparison. Somehave suggested the ecosystem faces an inferiority complex as a result. This report, TheMITX Digital State of the State, illustrates that while comparisons offer relativebenchmarks, there is little reason for this subsector to feel inferior. Boston’s digitalecosystem is on the move and growing in virtually all its forms. Through our research, thestrengths of this ecosystem’s infrastructure have become readily apparent and have ledus to conclude the sector is poised for future growth.This is not to say that gaps and weaknesses do not exist. This consulting team hopes toilluminate these areas for improvement and provide a set of recommendations to bolsterthe gaps that we have observed. Through implementation of these suggestions, theseimprovements will solidify and catalyze further growth in Boston’s digital ecosystem.-Babson MBA MITX Consulting Group, Class of 2013
  4. 4. II. Overview of the Digital Ecosystem:Boston’s Strength in Diversity Diversity of Industries • Analytics • Big Data • Health • Marketing software • Robotics • Social Impact The City • Public Transportation Unique Talent Pool • Schools • 1st in US with a four- • Salary/Cost ratio year college degree or higher Experienced VC community • Diverse • Operational backgrounds knowledge • Dense • Hands-on • Better talent for less
  5. 5. III. Investment Activity: New England 2nd Largest VC Hub in US Percentage of VC Deals by Region (2009 - Q3 2012) (all sectors) 4% 3% Silicon Valley 2% 4% New England 5% New York Metro Los Angeles 6% 46% Midwest San Diego 8% Southeast DC/Metroplex 9% Northwest Colorado 13%Source: PWC MoneyTree Report 2012
  6. 6. Still Room for Improvement… Venture Capital Investment Activity in the US (all sectors) $14,000 $12,000 $10,000 $ in MM $8,000 2009 $6,000 2010 $4,000 2011 Q1-Q3 2012 $2,000 $-Source: PWC MoneyTree Report 2012
  7. 7. Digital Investments Garner Bigger Slice of Investment Pie Boston Digital VC Investments 1,400.00 Total $1204.2 1,200.00 $301 1,000.00 CAGR 23% $ in MM 800.00 600.00 $971.3 $903.1 400.00 $523.0 $464.7 200.00 0.00 2009 2010 2011 2012 (as of Q3) Actual ProjectedSource: ThomsonOne Banker
  8. 8. YOY Increase in Digital Deals Boston Digital VC Deals 600 Total 505 500 CAGR 6% 126 400 300 469 200 400 426 379 100 0 2009 2010 2011 2012 (as of Q3)Source: ThomsonOne Banker Actual Projected
  9. 9. Boston Ecosystem Attracting Outside Dollars VC Origins Year Out of State In MA 2009 62% 38% 2010 63% 37% MA Based 2011 64% 36% Investments 37% 2012 (as of Q3) 63% 37% Out of State Investments 63% • Data based on 4,200+ firms making investments in MA based companies • Analysis based on location of firm headquartersSource: ThomsonOne Banker
  10. 10. IV. Exit Activity: Strong M&A Activity in Boston 10/2011 $1075 MM 11/2010 $1032.69 MM 7/2010 $700 MM 10/2009 $350 MMSource: S&P Capital IQ
  11. 11. Linear Growth in Digital Exit Values Total Value of Exits in New England $1,200 Total $1054 $1,000 CAGR 14% $800 $522.5 $ in MM $600 $400 $854.9 $621.8 $696.5 $522.5 $200 $- 2009 2010 2011 2012 Actual ProjectedSource: PWC MoneyTree Report 2012
  12. 12. Linear Growth in Digital Exits Total Number of Exit Events 200 Total 188 180 CAGR +8% 160 140 94 120 100 80 154 165 138 60 94 40 20 - 2009 2010 2011 2012Source: PWC MoneyTree Report 2012 Actual Projected
  13. 13. 2012 Companies, Jobs and Revenues by Sub-Sector # of Companies per Sector 2012 Bre a kout by T e ch Ca te gory Digital Content 10% Jobs R e ve nue Ca te gory (thousa nds) ($ MM) Technology Digital 50% Marketing Digital Content 11.4 $ 2,684 25% Digital Marketing 29.4 6,074 eCommerce 7.5 2,349 Mobile & Social 9.8 2,507 Technology 58.9 17,659 Mobile & Total 116.9 $ 31,273 Social 8% eCommerce 7%Source: LexisNexis Company Dossier, Mass High Tech database, Capital IQ and CrunchBase
  14. 14. MA Leads New England’s Digital Ecosystem # of Companies # of Jobs (000) Revenue ($MM) 3,600 120.0 $32,000 VT, VT, RI, VT, $161 RI, 1.1 RI, $605 103 NH, 2.3 NH, 133 6.2 $1,036 3,200 NH, ME, ME, 303 2.1 $394 100.0 ME, 2,800 130 $24,000 2,400 80.0 2,000 MA 2,830 60.0 MA 105.4 $16,000 MA $29,104 1,600 1,200 40.0 $8,000 800 20.0 400 - - $-Source: LexisNexis Company Dossier, Mass High Tech database, Capital IQ and CrunchBase
  15. 15. 2012 Study Results New England’s Internet Business & Marketing Industry 2012 2010 2009 2008 Study Study Study Study Number of 3,499 2,880 2,169 2,122 companies Number of 117,090 87,045 86,742 67,000 employees Revenue $31.3B $27.8B $28B $23B
  16. 16. The Hub is Attractive for Tech Jobs In 2001 In 2009 In 2011 • Annual tech wages • Annual tech wages • Tech jobs accounted averaged $77,314 averaged $100,208 for 1 of 10 workers • Compared with • Compared with • 20% of all wages in wages that wages that the state were averaged $45,561 averaged $56,659 attributed to tech for all other sectors for all other sectors • Each of the tech • Tech wages were • Tech wages were industries were 70% above the 77% above the concentrated more in average average Mass than found nationally • Overall conversion rate for turning interns into full-time hires hit an all-time high of 58.6%Source: Bureau of Labor Statistics, National Association of Colleges and Employers
  17. 17. VI. Leading Voices in the Sector:Primary Sources - InterviewsInvestor CommunityJeff Bussgang - General PartnerGus Weber - PrincipalAntonio Rodriguez - General PartnerLarry Begley - Managing DirectorChris Sheehan - Managing Director
  18. 18. Primary Sources - InterviewsFounders & CEOsSteve Vinter – DirectorGreg Selkoe – Founder & CEOTim Rowe - Founder & CEOBrian Halligan - CEODave Balter – CEOJennifer Lum - Co-founder
  19. 19. Primary Sources - InterviewsAccelerators/IncubatorsReed Sturtevant - Managing DirectorWalter Somol – DirectorJohn Harthorne - FounderGovt & Academic InstitutionsGreg Bialecki - Secretary of Housing & Economic Development, MALen Schlesinger – President
  20. 20. Opinions of Key Players in Boston’sDigital Ecosystem“Great startup environment. It has realstuff” “More measured environment than others.” “Companies that should get funded, are getting funded.” “Diversity is a key driver.” “Dense cluster of innovative people, Nobel Laureates, world class universities.”
  21. 21. Opinions of Key Players in Boston’sDigital Ecosystem“Needs to leverage diversity” “It should be more aggressive/edgy” “Disadvantages (of Boston) are all about perception” “Lots of ideas – youthful population.”
  22. 22. VII. RecommendationsTalent Development – Retain and AttractTalent• Internship Programs• Executive Training and Development• Company Policies – Attractive to Gen Y? Attractive to students?• Engage diverse skillsets
  23. 23. RecommendationsMedia Coverage• To be at par with San Francisco, New York City• Partner with national media organizations to create better visibility for Boston• Feature Boston in more publications – Have it on the global digital startup map
  24. 24. RecommendationsBusiness Development for startups• Integrate startups in the value chain of larger companies• Create events/platforms for startups to pitch their products and services• Events to focus more on selling and creating value• Bring together inter-industry professionals
  25. 25. IX. Scope, Objectives & MethodologyProject Scope & Objectives Create a report that maps the digital ecosystem in the greater Boston area and build a database of all the digital companies. Including information on: • Public Companies • Private Companies • Startups • Venture Capital and Private Equity firms • Accelerator/Incubator programs Develop recommendations about ways to help drive growth to create a stronger innovation ecosystem.
  26. 26. MethodologyPRIMARY: Interviews with prominent membersof the digital ecosystem in the greater Bostonarea.SECONDARY: o Electronic Databases: Mass HighTech Directory, LexisNexis, CrunchBase, Capital IQ, MITX Member Database o Web-hosted information on companies that fell within the scope of the report o Further Sources: See Bibliography

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