Boston startup scene picture presentation 12-10


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What makes the boston start-up scene special? A presentation from entreperneur turned venture capitalist Jeff Bussgang of Flybridge Capital

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  • Nod to Fred Wilson, who did a similar presentation for NYC.Note that when I refer to Boston, I’m really referring to the Boston metro area, which includes all of MA and parts of New England.
  • MIT, in particular, has been a start-up company factory33,600 companies founded by MIT affiliates; 25,800 are currently activeEmploy 3.3M people and generate $2T in sales250-300 new companies started each year by students and alumniEnduring giants: Campbell Soup, Gillette, Bose, HP, Intel, TI, Genentech, Raytheon, Qualcomm, iRobot, AkamaiMIT Technology Licensing Office (TLO) 2008:282 patents filed, 122 issued20 companies started with VC or $50k of other funding$89.1M in revenues from royalties and equity
  • Harvard University and Harvard Business School have also been factories for innovation.HBS graduates have started companies like Gilt Groupe, Open Market, PTC, Staples, The Ladders, Transnational Group, Upromise Many of these companies have been in partnership with MIT talent, such as Avid, DEC, Open Market and Teradyne
  • On a per capita basis, Massachusetts has a significant advantage over other leading technology states, with 76 engineering degrees awarded per 100,000 residents, compared to 51 in Virginia.
  • Education and university research leads to patent leadership.
  • Education and university research leads to NIH funding – with over $2 billion in NIH funding pouring into basic research into the region.
  • VC Investments are very, very concetrated in the US. 70% of all VC $ flows into 3 states.Massachusetts has always been a strong #2 to California. But when you look at the numbers on a per capita basis (which is what entrepreneurs care more about – after all, it’s not very relevant how much capital is invested in China, what’s relevant is how concentrated that capital is)…
  • …you can see that Boston is the top region of the three major markets. Per capita is, after all, a proxy for how capital is available PER ENTREPRENEUR
  • Many similarities in the environment between Silicon Valley and Massachusetts; One area of distinction beyond the weather (which, three months out of the year, quite honestly sucks) is a well-functioning government; Even in these difficult economic times, The Governor and the Legislature have worked together to deliver on-time, balanced budgets every year, which translates to sustained high quality schools and communities for the future.
  • Every major life sciences company is expanding in Boston and Cambridge.The gene mapping happened at the Broad Institute, which has expanded to a multi-hundred million dollar budget world-class research institute.Highlights of the PwC 2007 Life Sciences Survey include: Ninety-nine percent of respondents with R&D in Massachusetts reported that they plan to maintain or increase their R&D activities in the state over the next two years.Almost half of respondents with manufacturing operations have these operations in Massachusetts, and over half of those expanded their manufacturing over the past year. Nearly six out of ten (59%) expect to increase manufacturing activities in Massachusetts over the next two years.Two-fifths of respondents said their intellectual property was developed at a Massachusetts academic institution.Massachusetts Life Sciences Initiative, a ten year, $1 billion package of investment resources designed to foster continued growth in the Massachusetts Life Sciences Supercluster signed in 2008.Harvard Medical School and Massachusetts General Hospital doctor, Dr. Jack Szostak (SHAH'-stak), won Nobel Prize for 2009 for research into how chromosomes protect themselves from degrading when cells divide. Of the top 25 biotechnology research and development firms in Massachusetts, 14 are in Cambridge, and account for 2/3 or $1.175 billion--of R&D spending by the top 25 biotechnology firms.
  • Obama administration pledge $150B over next 10 years, says clean tech can generate 5 million new jobs.MA passed comprehensive energy bill in 2008 that placed it at forefront of clean energy in the US.Force utility companies to invest in home-grown energy that is cheaper in long-run.Encourage investment in renewable energy.Incentivizes businesses and individuals to invest in energy-saving products.NECEC – New England’s Clean Energy Economy, brought together Clean Energy Roundtable and piloted Fellowship Program to transition entrepreneurs from other industries into clean energyGreatPoint Energy, Mascoma, Evergreen Solar, Agrivida, MIT’s Ignite Clean Energy CompetitionEnerNOC was named 2007 Top IPO in New England by ACG and Mass High Tech, for its $99MM IPO.
  • There are more iPhone developers are using the Skyhook location API than in any other state, a rough proxy for all iPhone developers$100M+ exits in mobile:M-Qube, mobile billing company, acquired by VeriSign for $250MMMobile advertising company Enpocket bought by NokiaAOL acquired mobile advertising network Third Screen MediaStrong Boston mobile industry:10 VC-backed mobile companies in 2002 to 45 in 2008Quattro, Skyhook Wireless, Jumptap, vLingo
  • robotics: iRobot, Kiva Systems, Heartland Robotics, Droid Workscloud computing:  Glasshouse, Netezza, Carbonite, Akamai, Nasuni, Cloudswitchonline video:  Brightcove, Blackwave, Scanscout, Visible Measuresgaming:  38 studios, Harmonix, Turbinee-commerce:  RueLaLa, CSN Stores,, TripAdvisor, Vista Print, Cartera Commerce, Zoom Infomarketing technology:  DataXu, HubSpot, Click Squared, Jingle, Constant Contact
  • A quick shuttle ride or Acela ride away, you have New York, the world’s advertising and media headquarters3 of world’s top 6 advertising agencies have digital teams headquartered in BostonPublicis/Digitas, Aegis/Isobar, Havas DigitalHistorical media strength and customersEasy flow of talent and capital between Boston and New YorkBzzAgent, DigitalArbor, DataXu, ScanScout, Brightcove and other marketing and digital production portfolio companies, have CEOs in NYC weekly and local sales teamsBoston VCs investing in NY media companies – Flybridge, Spark, General Catalyst
  • LogMeInRemote access computer software$107MM in 2009 IPO in tough marketA123Rechargeable batteries for green energy cars$379MM in 2009 IPO and started third quarter public offeringsOther IPOsConstant ContactEmail marketing software$107MM in IPO in 2007, stock price jumped 75% next dayAthena HealthInternet-based office services for physicians$113MM in 2007 IPOEnerNOCDemand-side energy management software for utilities$99M in 2007 IPO
  • 33 Innovation Economy companies with market capitalizations of greater than $1 billion -EMC, Thermo, Genzyme, Akamai - important companies, leaders in their field, and full of great future prospects-Parametric, Novell, Progress - slower growth, are a bit more tired, and may get gobbled up in the years ahead-Acme Packet, VisaPrint, Athenahealth-  recent IPOs who are growing nicely and may become multi-billion dollar revenue companies in the years ahead
  • -Other recent IPOs, like Constant Contact ($720M), A123 ($960M), Insulet ($520M) and EnerNOC ($600M), are sub $1 billion in market cap -Headquarters of each company is within 30-45 minutes of each other, so the degree of talent concentration and social interaction is very high
  • pipeline of IPO candidates growing fast, revenue runrate > $30m, profitable or converging on profitable and probably worth > $100M today -Acquisitions in the last 12 months such as Unica (IBM $480M), ATG (Oracle $1B), Netezza (IBM $1.7B), Phase Forward (IBM $685M) and Starent (Cisco $2.9B) show that there’s a vibrant M&A market for small cap technology companies in 2010 and will likely be a catalyst for talent to be recycled.
  • Cisco:$3.5B on nine acquisitions of Boston-based companiesNew 5000-employee New England Development CenterMicrosoft:Boston Concept Development Center: research unit incubating new Internet businesses within companyCapacity to double current 550 MA employees by 2010Google:Rapid expansion of employment to 50 in Boston, with plans to doubleBoston as data networking center: Ericsson and Siemens also have headquarters in the city; Nokia has a big presence
  • Cisco:$3.5B on nine acquisitions of Boston-based companiesNew 5000-employee New England Development CenterMicrosoft:Boston Concept Development Center: research unit incubating new Internet businesses within companyCapacity to double current 550 MA employees by 2010Google:Rapid expansion of employment to 50 in Boston, with plans to doubleBoston as data networking center: Ericsson and Siemens also have headquarters in the city; Nokia has a big presence
  • Events:Mobile Monday – Monthly meet-up of mobile and wireless startups, VCs, and tech execs.Open Coffee – Open meeting for entrepreneurs every Thursday at Andala Coffee House in Cambridge.WebInno –Venrock organized monthly meeting of 200 to 400 startup people, VCs, Angels and tech execs. Resources:BetaHouse Boston – Co-working office space for entrepreneurs. Cambridge Innovation Center - Flexible office facility for growing technology and life sciences companies.DogPatch Labs - Polaris Venture Partners’ creation to connect entrepreneurs and help founders conceive and launch startups. Organizations:TechStars - A startup boot camp that provides $25K in funding with lots of mentorship, advice, introductions, and access to investors.Stay in MA is funded by Flybridge Capital Partners and is committed to providing as many scholarships as possible, to Massachusetts college students, up to a total of $10,000 total per calendar year.
  • Named by 2ThinkNow as the #1 most innovative city in the world and “Under30CEO” as the #1 city for young businesspeople, Boston has a rich heritage of start-ups, and is poised to continue with that heritage well into the 21st century. It’s all here.
  • Boston startup scene picture presentation 12-10

    1. 1. What Makes Boston’s Technology Start-Up Scene Special?<br />Jeff Bussgang<br />General Partner<br />Flybridge Capital Partners<br />December 2010<br />
    2. 2. Ingredients for a Vibrant <br />Start-Up Ecosystem<br /><ul><li>Intellectual Capital – academia, innovation, diverse industries and ideas
    3. 3. Venture Capital
    4. 4. Advisors, Angels, Accelerators
    5. 5. Successful Companies – to partner, poach and/or sell to</li></li></ul><li>Historical Leadership<br />
    6. 6. MIT – Factory of Innovation<br />33,600 companies, 300 each year, employ 3.3 million people, generate sales of $2 trillion, 282 patents in 2008 <br />
    7. 7. Harvard – The Business-Side Partner<br />
    8. 8. Other Colleges and Universities<br />74colleges and universities in Boston-area, 265,000 students, 8 research universities pump $7 billioninto economy, spending $1.5 billion on R&D yearly, 264patents, 280 commercial licenses, and 41 start-up companies.<br />
    9. 9. Innovation Leadership: #1 Patents<br />
    10. 10. Innovation Leadership: #1 NIH Funding<br />Source: NIH (2008); Center for an Urban Future<br />
    11. 11. Innovation Economy Is Densely Concentrated<br />
    12. 12. Geographic Clusters<br />Benefits of High Concentration<br />128 Corridor<br />Cambridge/Boston<br />495 Corridor<br />
    13. 13. Venture Capital: Regional Comparison<br />Total VC Investment 2008<br />Boston: $3.0B<br />New York: $1.3B<br />California: $14.3B<br />Source: NVCA 2009 Yearbook<br />
    14. 14. Venture Capital Per Capita<br />VC Investment Per Capita 2008<br />Boston: $457/person<br />New York: $67/person<br />California: $388/person<br />
    15. 15. Boston vs. Silicon Valley<br />
    16. 16. Life Sciences Leadership<br />
    17. 17. Boston’s Energy Sector<br />
    18. 18. High Technology MicroClusters:<br />For Example, Strength in Mobile<br /><ul><li> Hundreds of iPhone developers in MA
    19. 19. Over 50 VC-backed mobile start-ups
    20. 20. Four 9-figure exits:
    21. 21. Quattro Enpocket, M-Qube, Third Screen
    22. 22. Other mobile leaders
    23. 23. JumpTap, Skyhook</li></ul>iPhone developers using location API<br />
    24. 24. Other MicroClusters<br />Cloud Computing<br />Robotics<br />Gaming<br />Marketing Tech<br />Online Video<br />E-Commerce<br />
    25. 25. Proximity to NYC<br />
    26. 26. Recent Boston-area IPOs<br />
    27. 27. Public Company Ecosystem<br />33 Innovation companies with market cap > $1B<br />
    28. 28. Public Company Ecosystem (2)<br />33 Innovation companies with market cap > $1B<br />
    29. 29. Future IPO Candidates (not incl. Flybridge portfolio!) <br />
    30. 30. Expansion of Major Tech Companies<br />
    31. 31. Expansion of Major Tech Companies (2) (new: Mouse Ears!)<br />
    32. 32. Start-up Resources<br />More resources can be found at:<br />
    33. 33. Conclusion: Boston Ranked #1 City of Global Innovation Economy <br /> #1 Boston<br /><br />
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