Home Never Mind the Valley: Here’s Boston

Never Mind the Valley: Here’s Boston

With tourists flocking to the Boston to walk the cobblestone streets of the Freedom Trail and visit various historical landmarks, Boston is often thought of for its ties to the American Revolution. But Boston is also the birthplace of a revolution of a different sort.

In 1946, Georges Doriot, a professor at the Harvard Business School, founded the American Research and Development Corporation (ARDC) in Boston – one of the very first venture capital firms.

In 1957, the ARDC invested $70,000 in Digital Equipment Corporation, a company founded by two former Massachusetts Institute of Technology engineers working on transistor-based computing. The ARDC was later able to turn around and sell their investment for $450 million, quite possibly the best return on an investment ever at that point.

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Half a century later, Boston is a thriving and vibrant community not only for venture capital and startups, but also for large technology companies and research
corporations. With nearly a hundred regional colleges and universities – like MIT and Harvard – and over a quarter of a million students, Boston has quickly become a breeding ground for innovation in the tech sector.

“The thing that’s amazing is we don’t have to worry about attracting people into the Boston community,” said Jeffrey Bussgang of Flybridge Capital Partners in a speech at the Harvard Business School last October (see video embedded below). “The challenge is to retain people.”

And retain them they will, thanks to a plethora of resources available to young entrepreneurs and startups in Boston. Monthly meet-ups like Mobile Monday and Tech Tuesday as well as other events like the biannual Mass Tech Leadership Council Unconference are just a few of the great ways startups can get their feet off the ground.

Other organizations like TechStars and Stay in MA help Boston startups set up shop in Beantown with scholarships, funding, and mentorship. And why wouldn’t startups want to stay in Boston? Massachusetts boasts the highest per capita VC investment rate in the United States, eclipsing California and New York with $457 per person.

Data released today from information and data-services company ChubbyBrain shows that while other Northeaster states are suffering from floundering VC investment, Massachusetts is alive and expanding. While New York and Pennsylvania fell to just $513 million and $254 million respectively in the second half of 2009, Boston’s home state soared to $1.2 billion. Figures like these have vaulted Massachusetts past New York into the number two spot behind California for VC investments.

Bussgang says that reasons like these and the overall economic stability of the state have encouraged startups and entrepreneurs in Boston, despite being across the country from sunny Silicon Valley.

“Yeah the winter sucks, but Massachusetts has delivered a budget on time and balanced the last couple years… unlike what’s going on in California,” he says. Bussgang also points out that California continually ranks last on Chief Executive Magazine’s list of Best and Worst States for Business, though Massachusetts is usually not too far away.

The close-knit technology and innovation community of the greater Boston area has fostered spontaneous collaborations resulting in several successful companies across numerous industries. Cloud computing solutions like Carbonite and GlassHouse, robotics companies like Roomba-maker iRobot, online video providers like Brightcove, and e-commerce startups Vistaprint and Shoebuy are all examples of the firepower Boston’s potential can produce.

Boston has even seen recent expansion from larger corporations, such as Google, Microsoft and Cisco Systems. Having these larger companies in the Boston area provides excellent opportunities for startups, says Bussgang.

“Boston has become an outpost for a lot of these satellite R&D centers, and a place where the companies that we fund can find a home,” he says.

To learn more about the Boston startup scene, check out Don Dodge’s extensive list of events, resources and people, as well as Larry Cheng’s Massachusetts VC Blog Directory, which you can import right into your RSS reader to stay on top of what VCs in Boston are talking about.

Photo by Flickr user the-o.

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