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Why Waltham Doesn't Matter

Posted by Scott Kirsner  August 24, 2009 07:10 AM

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baycolony.jpgWe used to think of the placid plateaus of Mount Money in Waltham as the epicenter of our local venture capital industry. The office parks that loom high over the Cambridge Reservoir and Route 128 are home to more than a dozen venture capital firms, including Charles River Ventures, North Bridge, Matrix Partners, Advanced Technology Ventures, and Battery Ventures.

While they've funded many great local companies, I submit that they simply don't matter anymore, and that the new core of Boston venture capital has moved in closer to the city, toward Copley Square and Harvard Square.

Here's why:

There's no denying that many Waltham venture capitalists have made a great deal of money for themselves, their limited partners, and local entrepreneurs over the decades. But as a group, they represent the worst of the old-school business culture here:

    - If you don't know someone we know, or can't figure out how to get an introduction to us, we don't want to meet with you.
    - We don't want to share with you what investment areas we're interested in.
    - If you haven't built a successful business before, why should we believe you'll succeed your first time out?
    - If you're in technology but aren't focused on big enterprise customers, best of luck!
    - If you are not over 35, we don't think you have enough seasoning. Why don't you go work for someone else for a while?

By not funding first-time entrepreneurs, by not taking enough risks in new technology areas or with companies focused on consumers, and by not replenishing the entrepreneurial pond here by supporting the development of young entrepreneurs, these Waltham-based dinosaurs are trudging toward extinction. How can you endure in a business that rewards risks if you simply aren't willing to take them?

By contrast, Boston and Cambridge are now full of firms that are helping to support and promote the vibrant new culture of entrepreneurship here.

Jeffrey Bussgang of Flybridge Capital (Back Bay) was the first local investor to start a blog to share his perspective on how the relationship between VCs and entrepreneurs works (and how it sometimes breaks down.) Flybridge also runs the Stay in MA program, which makes it easy for students to plug into the local innovation economy by attending networking events and conferences. Bijan Sabet of Spark Capital (Back Bay) blogs and tweets about the technology areas that are most intriguing to him. Spark also helped bring the TechStars summer program for young entrepreneurs to Boston, and launched its own program, Start@Spark, to fund early-stage start-ups. David Beisel of Venrock (Cambridge) started Web Innovators Group, now the biggest monthly networking event on the Boston tech scene. General Catalyst (Cambridge) has been funding consumer-oriented businesses like, FanSnap, and, and recently brought Facebook co-founder Chris Hughes on board to serve as a kind of ambassador to the young entrepreneurial community. New Atlantic Ventures (Cambridge, formerly known as DFJ New England) has a blog, and a track record of funding first-time entrepreneurs working on consumer-oriented concepts. In life sciences, firms like PureTech Ventures and Third Rock Ventures (both in Back Bay) are taking a fresh, very hands-on approach to starting companies, often based on just-proven-in-the-lab research. At Fidelity Ventures (Boston), partner Larry Cheng is blogging about how the VC business works, and investing in nifty businesses like Flock (a browser for the social Web) and Prosper (peer-to-peer lending).

Cheng, it is interesting to note, was working for a Waltham venture capital firm that was the only local VC outfit, to my knowledge, to have an opportunity to invest in Facebook before Mark Zuckerberg moved his dorm room start-up to California. That firm, Battery Ventures, took a pass. Even today, no one at Battery Ventures blogs, and I've never seen a member of the Battery team at a gathering of young entrepreneurs. Good work, guys!

Of course, not every VC firm in Boston and Cambridge is part of the new culture, and not every VC firm outside the city is part of the old culture.

Lexington-based Highland Capital Partners, for instance, runs a summer program for student entrepreneurs in the first floor of its office that has already spawned at least one company that Highland has funded. Highland also recently threw a party for all the students who'd applied to participate in the summer program, regardless of whether they were chosen. That's classy. At Polaris Venture Partners in Waltham, a couple of partners blog and Tweet. And Polaris' Bob Metcalfe is a vigorous supporter of the MIT entrepreneurial scene.

Similarly, Boston and Cambridge are also home to some firms that hew to the old-school mentality, like Sigma Partners, Fairhaven Capital, and Oxford BioScience Partners. (It's too early to tell which camp Founders Collective, the newest VC firm in Boston, will fall into.)

But despite the exceptions, I think the geographic division is relevant and interesting. Going forward, the VC firms that feel to me like they'll be the most important players in our innovation economy are inside Route 128, not outside it.

I won't be surprised if the old-school VCs of Waltham follow the same path of the Shakers, the religious sect that was most active in the 18th and 19th centuries. Shakers were celibate -- they didn't, you might say, invest in the continuance of their community -- and so a group that once had 6000 or so very devoted members eventually died out. Today, their communities exist only as museums and historic sites.

That could be the fate of the denizens of Mount Money in Waltham in a few years...

What do you think?

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54 comments so far...
  1. It's easy to see the Boston/Cambridge startup scene as more sexy/cool than the 128 startup scene. But before traditional (read: top tier) firms will wish they were invited to the party they are going to need to see successful exits from this new crop of companies and young entrepreneurs. Got any examples?

    Posted by Richard Tibbetts August 24, 09 08:46 AM
  1. Scott, you might be my new hero. I am no judge of whether the information in your article is accurate, but the sheer number of resources that you have provided links to is amazing!

    Posted by Dan August 24, 09 08:50 AM
  1. Richard-

    One good example: EnerNoc pitched a lot of Waltham VCs and got rejected. Their funding came from DFJ New England/New Atlantic Ventures (Cambridge) and Braemar Energy Ventures (downtown Boston):

    The company was founded by two recent grads from Dartmouth's Tuck School, with no prior successful start-ups on their resumes. The company is now public with a market cap of $500 million plus. I agree that we need more examples like this. But my point with this post is that Boston/Cambridge VCs seem to be investing in the future of this community, while our friends in Waltham, by and large, are not.

    Of course, what I love about Waltham VCs is that they tend to write off examples like EnerNoc as anomalies: how many successful companies are really started by first-time entrepreneurs? And they're right. First-time entrepreneurs fail a lot. But they also create companies like Google, Microsoft, Facebook, Dell, Amazon, Yahoo, Apple....

    Posted by Scott Kirsner August 24, 09 09:15 AM
  1. Scott,
    It is true that VCs in general are less important to starting a business today than they were in the past. It is also true that Boston and Cambridge have some aggressive and creative new VC firms, and that VCs who blog are more visible and seemingly approachable. But, to draw the geographic boundary as a dividing line is a bit of a stretch.

    Waltham has some great VC firms with partners who still work hard to uncover the next big thing.. Michael Skok at North Bridge, David Skok at Matrix, Bob Metcalfe at Polaris, Bob Davis at Highland, Elliot Katzman at Commonwealth, Paul Margolis at Longworth are just a few examples. There are many more.

    However, point well taken on the aversion to risk, and unapproachableness of some of the long time successful VCs who don't need to work so hard anymore. That is the natural result of huge success.

    Don Dodge

    Posted by Don Dodge August 24, 09 09:21 AM
  1. Don -

    I'm not saying Waltham VCs don't work hard to uncover the next big thing. My point is that most are not investing in the continuance of this community. Most of the Waltham guys you mention in your comment are rarely present at local entrepreneurial events -- they are just not making themselves accessible to the next generation of entrepreneurs...and you, who attend most of these events, would have to acknowledge that, right?

    Posted by Scott Kirsner August 24, 09 09:26 AM
  1. Great post, Scott. I hadn't thought about the VC market from this perspective. I strongly believe that location still matters. Having worked on both 128 and (now) in Kendall Square, the network of people I run into now on a day-to-day basis is, by and large, more open and progressive. And a lot of business is still done face-to-face; for example, even with a company like Hubspot, which is focused on internet (inbound) marketing, my firm became a customer primarily due to physical proximity and face-to-face interaction.

    Posted by Robert J. Sayre August 24, 09 09:27 AM
  1. Scott,
    I think it's great to laud the market development efforts of some of the firms you mention, but I think you are way too harsh. VCs are in business to make money for their limited partners (investors). Although there have been some exits by first time entrepreneurs, and they should be applauded, there have been way more successful exits by companies that fit the traditional model (experienced executives, targeting an existing business, etc.).

    If a VC steps out of their comfort zone and blows a lot of money by backing an untried entrepreneur in a market that the VC knows nothing about, their LPs will not be happy. Most VCs who try to move into new market segments do it slowly. As long as their LPs are happy with their returns, they are doing their job.

    Other VCs take bigger risks and invest more in market development. Maybe they have to do this to generate deal flow. Or, maybe they really are onto the next big thing. They'll need to generate some significant returns to prove it to their LPs. And some VCs invest in the marketing it takes to look 'new wave', but don't put the dollars out behind it.

    The most important thing for an entrepreneur is to match their background and their business plan to those who will fund it (not just have nice parties). Most firms have a mixture of 'new' guys who look into areas that are just developing and 'old school' guys who look at areas where they have been successful in the past. They're all important, and I think that your harsh words don't really help move people in the right direction.

    I do think that it is great for VCs to give back to the community by fostering first time entrepreneurs, judging business plan competitions, sponsoring networking events, etc. But, keep in mind, that's not their core business and may only pay off for them in the very long run.

    Mike Feinstein

    Posted by Mike Feinstein August 24, 09 09:41 AM
  1. Most venture capital in the Boston area got started within 2 stops of the Red Line...Venture Capitalists moved to Waltham... to be closer to their golf clubs.

    There is an inverse relationship between the success of a firm and its distance from MIT's Golden Dome. There is something magical about the ability to have an MIT/Harvard Professor able to jump from his lab to his startups office and back again. Also, the people you want to hire are Ph.D. students.

    Golf has been the undoing of more great venture capital companies in Boston than Silicon Valley. I hear that for every round of golf that a VC plays, his IQ goes down one point. I mentioned this to one of my VC friends. He answered, "What??".
    I told him that last year he would have understood this the first time. Then he sent on of his young associates to visit me.... with a horse's head under his arm.

    Posted by Howard Anderson August 24, 09 09:52 AM
  1. Mike-

    You make some very good points.

    I'll just make one: our biggest renewable resource in Massachusetts (and New England as a whole) is smart kids from all over the world who come here to get even smarter. We're idiots if we don't listen to their ideas and, on occasion, help them get companies off the ground. The Boston/Cambridge VCs I mention understand this; most Waltham VCs don't. Ask any college entrepreneur today to name a few local VCs, and you're not very likely to hear the names of any of your neighbors out there on Mount Money.

    Posted by Scott Kirsner August 24, 09 09:58 AM
  1. Scott, you are really "poking the bear with sticks" lately. Keep it up.
    However, at present the CRV Quickstart and Start@Spark have yet to yield any Boston area investments that I know of.
    And don't say Vlingo, that would be a joke as it is an investment with a proven and past IPO CEO, not a "new face"
    I am curious why Spark , has only invested in buying entrepreneurs a beer, as you pointed out in a past post. They are on the ground here and probably have good flow, so is it a miss match in focus (media_NYC) or what?

    Posted by Name withheld August 24, 09 09:58 AM
  1. Scott. Yes, I would agree that most successful Waltham VCs don't attend the networking events. The reality is they don't need to. Everyone knows who they are, and they get more deal flow (new company pitches) than they can handle. They may miss a few "game-changer" deals because they aren't out there pressing the flesh, but more than likely the deals will come to them.

    The newer VCs are still hungry and excited about new technology. Bijan Sabet, David Beisel, and Jeff Bussgang are great examples. Jeffrey Beir of North Bridge seems to be at every event I go to. Angel investors like James Geshwiler, Joe Caruso, John Landry, the Common Angels crew, Jean Hammond, Pito Salas, and many others are out there and approachable at many events.

    Tech Cocktail, Mashable, TechCrunch, and other big startup networkers also hold events in Boston. It is a vibrant startup community...not dominated by the Waltham VCs anymore. You are absolutley right about that.


    Posted by Don Dodge August 24, 09 10:02 AM
  1. Don:

    When you say "everyone knows who they are," I am not sure I agree. As I mentioned in an earlier comment, try playing the "name game" with any entrepreneurially-oriented student or recent grad and see how many Waltham VCs you get. Established entrepreneurs know who they are. Lots of up-and-comers don't.

    Posted by Scott Kirsner August 24, 09 10:17 AM
  1. Two points I'd make.

    First, you mention the divide as Waltham vs Cambridge/Boston, but you could just as easily draw the line between upstart VCs versus establishment VCs, it is basically the same list. Spark, GC, Flybridge, are all relatively new VC firms versus Matrix, Battery, etc. The issue for "vintage" VCs is the same as for any established company, how do you re-invent yourself, not rest on your laurels, and inject new blood into the firm? How do you enable yourself to see the new entrepreneurs, and the new trends, which necessarily are easy to dismiss at first?

    So if you are in the search for "who's relevant" I would look at the partner not the firm. Does the firm have a succession plan where they have young GPs with a stake in the future of the firm? Or the rare experienced VC still searching for the new thing and willing to take risks?

    Second point, new firms, of course, by their very nature have a younger stable of GPs, usually half of which broke out of old firms (Spark, Flybridge) and so in the short term have an advantage on the "new new" thing -- which may or may not mean better financial returns. There are some firms that have been aggressive about turning over their partnership (Charles River Ventures comes to mind) and so you see those firms with younger GPs, trying relatively riskier things. Other firms have ostensibly the same stable as always, with a rotating set of junior principals and analysts - and are often making the same bets over and over.

    To me, it's less about location, and more about the who's running the show.

    Posted by Nabeel Hyatt August 24, 09 10:59 AM
  1. Scott, as always a good, provocative article, certainly with a good bit of truth to it. As a general matter I think you are onto a very compelling point: across the startup community a new generation of entrepreneurs is leading the bulk of interesting new projects, and they tend NOT to fit into the traditional orbits of most VCs who have been in the business for a while. Same holds both for Winter Street and Sand Hill Road. At Polaris, we are dead serious about understanding and responding to this trend. On the Life Science side this actually is requiring little adjustment, as our GPs spend the bulk of their time in the labs at MIT and Harvard already. On the tech side our most visible effort to date has been the creation of Dog Patch Labs in San Francisco (see The emergence of a next generation of tech entrepreneurial leaders in Boston has, truthfully, been less straightforward, but we think we have a pretty good bead on it now and have interesting plans you'll be hearing about this fall. Look forward to telling you more about it.

    Posted by VCMike August 24, 09 11:09 AM
  1. Hi Mike-

    Thanks for the comment. I give you full credit for supporting the early stage start-up scene in San Francisco with Dog Patch Labs. As we all know, San Francisco and the Bay Area is a market where there is not much entrepreneurial activity, so they need all the help they can get. ;)

    When you say that "the emergence of a next generation of tech entrepreneurial leaders in Boston has...been less straightforward," I think you're wrong. It's happening, and this new leadership is visible at all sorts of local events. (They just may not get out to the Bay Colony Center that much.) But I have not bumped into you around Boston in the last few years, so maybe you have not been plugged in to all this activity...

    I note that 7 of your 10 current investments are outside of Massachusetts (mostly in California). I suspect you are on planes a lot...

    Posted by Scott Kirsner August 24, 09 11:24 AM
  1. Interesting post………incumbent to being a thoughtful steward of an LP’s capital is never forgetting that in the end, it’s “Mrs. Smith’s pension money” that you’re investing………..with that in mind, I don’t think it’s rational to label any VC, as out of touch, who regularly dismisses investment opportunities representing an untenable level of risk…………there are five major risk dimensions to evaluate in any investment: market size/demand, business/revenue model, technology (landscape or development), management (execution), and financing…………a very large percentage of the new young entrepreneurs (and their business ideas) you’re referencing incur all, and mitigate none, of these risks…………that has not, typically, been a thoughtful approach to investing as most VC try to have at least two of five risks meaningfully mitigated before they invest (ex: you’ve worked with mgmt before and have enough capital to fully fund the business plan hence you’re willing to incur techn, mkt, and biz model risk); probability weighted expected outcomes tend to be more favorable when two or three of five risks are mitigated rather than zero…………. nor do I think Mrs Smith wants the stewards of her pension money to be playing that zero mitigant end of the risk reward spectrum as she’d probably rather take that portion of her capital and play it in Vegas where her odds would be similar and the fun much greater………I think your Google, Microsoft, et al references are helpful but your fundamental premise there is that VCs should be willing to ignore the fundamental tenets of risk/reward as investors and make capital available into many more situations than they do currently regardless of the risk………..I think the dearth of decent returns from the venture asset class these last 10 yrs is precisely because many young/new investors to the business in that era did exactly that in 1998 to 2000……….it was a poor choice………….so perhaps I’m a curmudgeon, though I enjoy many of the networking events you mention, but just as Shakespeare’s plays are timeless because they deal with the fundamental and unchanging tenets of human nature……….so too is the risk/reward balance a timeless fundamental that successful investors, in any era, will use to drive gains for Mrs Smith…………….Waltham or Bos won’t make a difference……… investors putting money into businesses that make money will………….thanks for the provocative piece, you’re probing an interesting issue…….………..

    Posted by John Ward August 24, 09 02:25 PM
  1. Scott, you are way out of line. You make meaningless distinctions based on random characteristics. Maybe you think you "get it", but "getting it" is completely irrelevant. The only thing that matters is the returns the venture firm provides to its limited partners, and the way that it conducts itself to create those returns.

    Come back when you have some real data for us.

    Posted by VC Jimbo August 24, 09 02:32 PM
  1. I work in that space. I stupidly visited 1 of these places for a second round after business school, and I couldn't get out of there fast enough.
    Who in their right mind would even for a second consider working out there?
    The options for lunch include scads of great parking lots.

    If that's where you choose to locate, you choose to close yourself to that segment of the applicant pool that wants to see people and get some air during lunch (i.e., human beings). Reservoir walking paths SO don't count.

    Posted by Rob August 24, 09 03:12 PM
  1. Scott-
    I admire your willingness to stir the pot.
    It seems the distinction is more one of culture as you had pointed out in a previous post, rather than geography.
    It is also one of market, where the traditional Boston VC's do not wade into the web and mobile apps waters with the entrepreneurs you are depicting.
    Lastly, I think Nabeel is right on in his assessment.
    A quick look at who is attending the upcoming MTLC unconference will give you an Idea of who is "in the game" locally.

    Posted by Tom Summit August 24, 09 03:33 PM
  1. Dear VC Jimbo-

    Thanks for your anonymous comment. Do you work out in Waltham? Care to disclose any affiliations that would be relevant to this discussion?

    I agree that the first job of a VC firm is to provide great returns on the capital that limited partners invest with them. My post isn't so much about past performance, though, and if you re-read it you'll see I credit the Waltham bunch with having made some great investments. Rather, this post is a prediction about what's likely to happen should they continue on their current course. As with all predictions, you're free to disagree with it, but I'd love to know more about where you are coming from...

    Posted by Scott Kirsner August 24, 09 03:39 PM
  1. Scott,
    Have you been listening in on my conversations? This really hits a nerve. As a local entrepreneur in Kendall Square (full disclosure: I'm not a first-time entrepreneur, just turned 35 and have taken VC money before), I just dread the drive out to Waltham. Among entrepreneurs in town we joke about the trips to "the Evil Empire" and wonder why anyone likes working so far removed from the action? I learn so much from the repeated and rapid interaction with other entrepreneurs and investors in Boston/Cambridge. I don't understand the benefit of this splendid isolation and can't imagine it generates superior returns for the LPs in the long run. It does make it easier though to say no to someone if you never run into them again because you avoid all the events and the local proximity.

    Posted by Bettina Hein August 24, 09 04:30 PM
  1. Been having lots of good e-mail exchanges today that haven't been making it into the comment stream here....

    Howard Anderson notes that the very first VC firm, American Research & Development, was located not in Waltham but in downtown Boston.

    And Battery Ventures, which Howard helped start, was in downtown Boston, too -- until it moved out to Wellesley and then Waltham in the mid-1990s.

    "Let's not forget where we make our money," Howard writes. "We suck up to the Great Universities....and since not a lot of insanely great companies come out of Wellesley and other terrific but not rigorous scientific places, we will find them at the intersection of Intelligence and Opportunity Way... which means....Cambridge, Boston...."

    Also, Mike Feinstein (formerly a VC with Venrock and Atlas Venture) has this rebuttal, titled "Dinosaurs aren't going anywhere."

    Posted by Scott Kirsner August 24, 09 06:11 PM
  1. Now there's a change of pace. I tremendously enjoy the exchange that has gone on so far. I did not think it was possible to have people exchanging opposing points of view on this blog without calling each other "morons," "idiots," or even "liberals." It is refreshing to see some class.

    O yeah, I love the article, too. That type of subject is not my "point fort," but did learn a few things just reading the article and the comments. Thank you.

    Posted by Luciennepierre August 24, 09 06:58 PM
  1. Soooo...they aren't approachable to under 35 year olds and because of their past success (and their past failures) their approach may be more skeptical or conservative than some of the VC firms you mention.

    I fail to see the crime in this. Different folks for different folks. Is everyone supposed to be bleeding edge and trendy? Clearly these firms have done something right in the past and whichever way they wish to invest their money now is up to them, rightly so because they take the risk.

    Posted by steve in w ma August 24, 09 07:49 PM
  1. Dead On!

    And only the beginning of the story. Please continue telling it. The clowns on Mount Money have destroyed the great entrepreneurial culture Boston once had.

    More interested in a very comfortable lifestyle, their HBS connections, and "don't call us we'll call you" business style. They've failed.... Made money sure, but failed...Missed the PC revolution, missed servers, missed networks, missed THE INTERNET....

    We should just wall off Mt. Money, so that they can't get out and ruin any more.

    Posted by Mark August 24, 09 08:36 PM
  1. a-freakin-men brother scott! true that on all fronts.

    Posted by kel kelly August 24, 09 08:54 PM
  1. Could you all teach respondents of the opinion pieces on the Editorial Page how to disagree without being disagreeable? I read this piece because I am from Waltham. I admired this piece because I now believe it is possible to have an intelligent, respectful, and informed discussion on line. Thank you!

    Posted by ricardo27 August 24, 09 09:23 PM
  1. As someone who grew up in Waltham and graduated from it's very middling(at best) public school system, I have always been almost dumb-founded by the city's flaccid tax base..With all that "industry"..where was the municipal pay-off??

    Posted by Steven August 24, 09 10:31 PM
  1. I love your energy and passion Scott.

    But I'm not so sure about this anti-waltham post.

    There are so many firms in Waltham that I wouldn't know how to make a set of observations about Winter Street as if they all acted the same. The firms are quite different, the partners in each firm are different and their respective cultures are different.

    There are a number of great firms in Waltham. We have been lucky to co-invest with Matrix as an example. And we have enormous respect for several other Waltham VCs too.

    I'm just not a big believer in painting whole groups with a broad brush.

    Posted by bijan sabet August 24, 09 11:10 PM
  1. links out to a pharma site.

    Posted by Dan August 25, 09 02:28 AM
  1. I myself am the founder and CEO of a Joint Deal between Highland Capital/ Dan Nova and General Catalyst/ Joel Cutler. We are a service company and had term sheets from many VC's listed, it is all a question in my opinion of synergy and the individuals you work with. I wouldnt trade my VC's for any others from here to Palo Alto! As a young entreperneur without the typical HBS or MIT pedigree I can tell you they invest in people! If you have a chance to see either firm you should, they are truly the cream of the crop!

    Posted by Da Bear August 25, 09 02:30 AM
  1. Dan -

    Thanks, I fixed that link. It now goes to

    Posted by Scott Kirsner August 25, 09 07:43 AM
  1. Bijan-

    Thanks for the comment, and I'm glad you have respect for some of these Waltham firms. I do, too.

    But let's have some specifics: can you really make a case that these firms are investing in the next generation? Which ones do you think are doing an especially good job reaching out to students, making themselves accessible, and otherwise "replenishing the entrepreneurial pond" here?

    To mix metaphors, most of the Waltham firms seem to me like loggers who don't quite understand the importance of planting a tree once in a while.

    Posted by Scott Kirsner August 25, 09 07:48 AM
  1. "Dinosaurs" aside, I can definitely second your assertion that there is a new wave of vibrant and empowering VC's and organizations closer to Boston. These groups are leading the charge to support seed stage growth and first time entrepreneurs -- you list all the right organizations: Flybridge, Spark, Venrock, General Catalyst, Highland Capital, New Atlantic Ventures, TechStars...I would add Flagship to the list and also note that the Cambridge Innovation Center and betahouse are doing great things generally. In particular, we at MassChallenge have received immense support from a number of individuals in these organizations including Michael Greeley, Rob Go, Shawn Broderick, David Beisel, Tim Rowe, Dave Berry, Hemant Taneja, and others. Our initiative is innovative, not void of risk, and we are all first-time founders.

    I would also insist that there are a lot of great organizations and individuals active across the state, well outside of Route 128 -- Village Ventures comes to mind as a VC firm. There is a lot of impressive entrepreneurial activity emerging on the UMass Amherst campus, down in the Woods Hold Consortium, in the Worcester medical cluster, and up in the Lowell area and the North Shore. Clearly Cambridge will remain the primary engine of innovation and growth for some time, but there is statewide momentum toward building new enterprises and drawing latent innovations out of the labs and into the hands of society. We at MassChallenge are hopeful that VC's will embrace this untapped potential to create value and ensure that Massachusetts retains and expands its innovation edge in the decades to come.

    Frankly, it's inspiring to see this resurgence and we are excited to collaborate and contribute as it develops. Thanks, Scott, for continuing to highlight the contributions of this vibrant community toward a cultural change. The economy is at an inflection and we all have an opportunity to invest in entrepreneurship to regain share and to define and direct the next generation of growth engines. This is our time.

    Posted by David Constantine August 25, 09 08:08 AM
  1. Key point for me that Scott motivates is the idea that the key for Boston area VCs is to invest in the NEXT generation of young talent coming up in Boston – the folks that have done it before are valuable to the community – but the people who are going to drive and innovate the next great independent new startups in Boston are people who’s names are not yet known – it’s the confidence to take risks in young talent that will determine the health of the Boston startup community in the long term.

    Posted by Andy Palmer August 25, 09 08:10 AM
  1. Scott,

    I totally agree, but I think the issue is not location, it’s compensation. Bigger firms, bigger funds, bigger management fees. If you make millions/year in management fees you have zero incentive to work. Upstart firms have to work harder because they have to in order to make it. The partners at larger firms made it already, it’s that simple. Follow your Facebook and you’ll see that while upstart VC’s are meeting students and entrepreneur and running summer programs, the partners of the firms Scott mentions are in the Cape, golfing and boating without a care in the world. These partners could never have a Summer@ program, unless it was in their 3rd or 4th homes. ;-)

    I think we are indeed seeing a passing of the torch as you elude to. The dinosaurs will not go away and some, give them credit, have brought in more dynamic partners and associate who (gulp!) actually work. What the next generation of entrepreneurs needs is not money but HELP AND MENTORS not huge rounds. Most consumer web based products can now be created with less than $100K in investment and THAT is why these firms are increasingly irrelevant or are moving to later stage investing. The dinosaurs simply won't give up a round of golf or an early start on Cape traffic (i.e. Wednesday) to help an entrepreneur, they make enough to not have to.

    The new upstarts will need to prove themselves, but there is no doubt who are the dinosaurs and who are the mammals. Mammals might be smaller, but they are nimbler and spend much more time nursing their young.

    Posted by Anonymous August 25, 09 08:25 AM
  1. Scott,
    Its great that you are shaking things up, much like taking a baseball bat to hit a fly in a glass shop, but there are a number of elements that suggest your logic could use some refinement. Perhaps, go after the fly with a flyswatter and be a bit more precise.

    First, with Nabeel I agree that location is not the issue -- it is the partner and then the partnership. The same holds true with the West Coast. There are good and bad vc’s on every coast, regardless of the firm.

    Second, blogging and/or tweeting and/or sharing information in general are no indication of an inclination to take early stage risk. I know of half a dozen top drawer, high-risk VC’s who don’t tweet or blog. Moritz among many do not blog, yet I don’t think you would suggest that they are risk averse. In fact, if you look at Sequoia’s new website it is the antithesis of your thesis – they don’t share any information readily.

    Sharing info is a great way for new VC’s to break out of the pack and make a name for themselves and most of them have done it rather well. Kudos to them.

    Third, passing on a deal is no sign of stodginess. A huge number of West Coast firms passed on Ebay. The question is more about how they learn from their mistakes. I would suggest that firms in Waltham have learned that they should not.

    The problem is less about who is investing in what but rather where do early stage entrepreneurs go to get funding. I suspect Y-Combinator’s move was not because of a lack of local talent to start the startup – it is a lack of an ecosystem to grow and evolve it. The consumer ecosystem is not here. The big companies that startups can draft off of, steal great people from and beat at their own game are mostly on the West Coast.

    My experience may be such an illustration. I had no trouble getting funding for Hangout from two great funds here in Boston. But after a year of trying to find great senior level managers who could build a team in the Boston area, I gave up and hired a great team out of Disney and moved development to the West Coast. I tried exceptionally hard, using three great recruiters to find the mid-level to senior exec who would move from the West Coast to Boston to no avail.

    But I ask you, why would a director at Google or Slide move to Boston, except for personal reasons. The Boston area does not seem like the logical place to go to further one’s consumer career.

    Any startup that leverages social networks should have a presence out there because the rules are changing too quickly and the talent that knows these new rules are out there – which creates a vicious circle that is tough to break if you are on the East Coast.

    Paul Maeder at Highland was right to call out that the big failure of Boston VC’s was a willingness to sell too early, creating a dearth of large consumer firms from which an ecosystem is built.

    It may take another 5 years before we can create a behemoth in Boston that will be the mother ship that startup barnacles like mine can grow on.

    But its great that you are swinging the bat!!

    Posted by Pano August 25, 09 09:19 AM
  1. Oh and my vc's are on Rte 128 and they are as consumer focused as any fund on the West Coast.

    Posted by Pano August 25, 09 09:27 AM
  1. Oh and my vc's are Highland and Polaris. Two of the best...

    Posted by Pano August 25, 09 11:06 AM
  1. Pano-

    Thanks for the really thoughtful comments. Two points: I mention your two funders, Polaris and Highland, as firms that are making solid contributions to the culture of entrepreneurship here, and who aren't afraid of consumer-oriented investments. I imagine you may have pitched some other firms in Waltham. Even as someone who has had prior entrepreneurial success, what was your experience?

    Posted by Scott Kirsner August 25, 09 11:46 AM
  1. Scott - "Why Waltham Doesn't Matter" is a bold, thought provoking title to this post that clearly stirs the pot. I don't think it's a fair title though as the investment talent in Waltham is very strong and the vast majority of historical returns have come from the Waltham firms. So, I'm not ready to dismiss them.

    I think perhaps a fairer title would be "Why Boston/Cambridge VCs Try Harder". I do think the truth of your post is there is a cultural difference that has some location ties. Increasingly, newer firms are locating in Boston/Cambridge. By virtue of being new, they are taking a fresh approach and trying new things. Also by virtue of being new, they have a lot to prove and may in fact try harder. And in large part, these newer firms are working for carry off of small funds, not working for fees off of compounding large funds. So, many of these firms do project a different vibe/culture than the more established firms.

    That being said, it's not clear yet that the Boston/Cambridge VCs matter either. The VC firms that matter over the long run are those that generate venture returns for their limited partners. Starting innovation workshops and seed capital programs are nice - but it remains to be seen whether they lead to superior returns. Engaging with students, blogging, having office hours, etc. - are all nice, but the proof is in the pudding on returns. Young firms can rise quickly by being different and innovative, but they can fall just as quickly when the returns don't show up. So, you have to tip your cap to the Waltham firms that have produced great returns over long periods of time for their LPs.

    The ultimate question is if you could buy an index fund that mirrors the median returns of the Boston/Cambridge VCs or buy an index fund that mirrors the returns of the Waltham VCs, which would you choose? The first group is shaking things up but haven't made as much money. The second group has the brand and history of returns, but are battling the law of large numbers with their larger funds. Tough call, but based on your post, I clearly know where you'd put your money.

    Posted by Larry Cheng August 25, 09 12:56 PM
  1. Larry, I love your humility, admitting that the Boston/Cambridge VCs (of which you are one, at Fidelity Ventures) haven't proven that they matter yet. ;)

    It's a great set of comments, and I don't quarrel with any of it.

    You're right, if I had a million bucks to invest with the Boston/Cambridge index or the Waltham index, I'd take the former. I like the (mostly) smaller fund size, the aggressiveness, and the entrepreneurial bent.

    Shall we check back in, say, 10 years? I'm counting on you and your Boston/Cambridge colleagues to work your hardest to make my virtual investment pay off!

    Posted by Scott Kirsner August 25, 09 02:00 PM
  1. SK & LC,

    Interesting exchange……..isn’t the shrewd investor’s play to invest some in both index funds…....otherwise you’re making a binary bet and that’s never been a good way to risk adjust returns………so, as an admittedly Waltham’ish risk/reward guy, I’d consider apportioning the notional capital proposed by LC with 30% in the Boston/Cambridge fund and 70% in the Waltham fund………the former for some extra Alpha in the portfolio and the latter for predictable returns………interestingly, I wouldn’t be surprised if that’s how the Waltham set apportions its time these days between vetting the uber risky new gen entrepreneurs and the tried and true money making execs with proven markets and business models…….as more is known about the robustness, or not, of the next gen crew and their ideas, then smart investors will re-weight the mix to transition their investing practices thoughtfully if warranted; they don’t rush to, or from, one side of the boat to the other if you will……………portfolio construction matters in the investing business and I think different views on how to do that may account for some of the distinction between the new gen VC’s, who have done it quickly or even from inception, and the perceived dinosaurs…..…..SK, thx for starting the interesting thread……..will look for your next one……………LC, please pass along my regards to your Partner RH, I think he may be a traditional risk/reward guy too……............

    Posted by John Ward August 25, 09 05:30 PM
  1. Scott, I know you didn’t mean to tar everyone and everything based in Waltham when you got out your big stick to give a poke at the members of the VC community but as the “mommy” of Mass Innovation Nights I take umbrage at the headline here. And, while your status as local innovation guardian angel/torchbearer makes you a uncomfortable target for me – allow me to grumble (and whine) about the bashing Waltham took here.

    Not fair – things like Mass Innovation Nights ARE helping to support and promote the vibrant new culture of entrepreneurism. (And we’re not the only thing either but I’ll let the others bring up their own stuff.)

    We hold our free monthly product launch party and networking event in Waltham. And maybe I’m not a VC and I can’t give away millions of dollars but entrepreneurs need more than VCs to get their companies rolling. Good marketing, PR, Finance, HR, developers, etc. – you’ll find us all at Mass Innovation Nights,

    I also think we’ve all been conditioned to automatically think of taking our great ideas to the VCs and we forget that lots of companies self-fund, bootstrap or go with private investors. And hey, if you are going to bootstrap a new organization, it might be easier to do that in the suburbs. Waltham’s got great young talent coming out of its schools, lots of experienced talent living nearby, restaurant row (Moody Street), and lots of office space (cheaper than downtown.)

    And, one more point -- do I detect a bit of ageism in this piece? Older, experienced entrepreneurs shouldn’t be dismissed as unimaginative. What’s wrong with being experienced? And, what’s wrong with looking for a complete package before you invest millions of dollars? (Obviously not at the expense of a good idea.)

    Posted by BobbieC August 25, 09 10:08 PM
  1. Hi Bobbie-

    You're right, a better title for the post might've been "Why Mount Money Doesn't Matter."

    Lots of good stuff happens in other parts of Waltham, including the Boston Post-Mortem game gatherings at the Skellig, and your Mass Innovation Nights at the excellent Charles River Museum of Industry (which ought to have a sign larger than an index card to help people find it.) And of course, I love the restaurants of Moody St. and the Embassy Cinema.

    And yes, you *do* detect ageism in the piece. The Waltham investment community has long been biased towards the done-it-before veterans, and I think we should give the whippersnappers a chance once in a while. Some of the most revolutionary ideas come from those who haven't done it before, and don't heed all the reasons why it *can't* be done or *shouldn't* be done.

    Posted by Scott Kirsner August 26, 09 09:07 AM
  1. Pano,
    You mentioned Paul Maeder's point about Waltham's willingness to sell out too early and I think it's a really important point that goes beyond just that part of it... it really describes the investment mentality that has been present here in Boston for a long time.

    The willingness to sell out early - I think - is joined with the propensity to invest late. Traditional Boston-area VCs (the Waltham VCs in this original post) are relationship-oriented. They like to cultivate relationships with entrepreneurs and they fund teams they believe to be strong based on past experience. They like to be part of those teams, providing advice, sourcing people, and driving high-level corporate strategy.

    In many ways - they are looking for a lower risk team to fund. Consider the alternative... a younger entrepreneur who hasn't done it before, is not plugged in to a strong set of veterans, and whose judgement, rationality, etc are unknown at best. Not that they are that way... it's just an unknown - and that equals risk.

    In finance, lower risk equals lower reward. So the VCs, the limited partners, and the investment community sell earlier because it is a more appropriate risk/reward ratio.

    Now the by-product of that is this: the real juicy parts of running a large scale company are things like scaling a sales organization, channel marketing, consumer advertising -- broad scale, market/consumer/buyer touchpoints. And what happens is when, in the Boston community, we have a propensity to sell early, we don't keep the talent that knows how to do those large-scale marketing and sales efforts.

    I think many people would agree... there is a lack of strong marketing & sales talent here in the Northeast. I think that is why.

    And this is a cycle, because those are the people who could really take some big risks with early entrepreneurs to actually build a business out of a great idea from a young kid.

    Scott I love this article and this discussion. Thanks so much.

    Posted by Brian Gladstein August 26, 09 03:53 PM
  1. Yet another non-VC saying "oh you successful, VC, loaded with money, loaded with success, oh you have it all wrong..."

    Not every investor is a fit for every entrepreneur..

    Posted by proales August 27, 09 03:55 PM
  1. Great discussion, but not what I found to be the case. I am a first time CEO with a newly founded company. Neither I nor my co-founder have prior Series A experience, but it was consistently the 128 VC community who competed over our $6.5MM Series A completed this last July. We chose Michael Skok and Northbridge because above all others, Michael went the extra mile throughout the round to network and promote our proposition irrespective of whether he would win or not. Further he was willing to engage in a an East/West co-led round with Steve Vassallo of Foundation Capital. The Boston/Cambridge community, where I have more personal history, while deeply interested, were actually much more risk averse. In this climate, Northbridge represented to us a deep pocketed investor with great returns and a reputation for standing by their companies for the long term.

    Our VC money may be in the burbs, but our talent is urban. We have chosen to start in Boston's South End where we can combine a great talent pool and catchment area with an edgy urban culture and burb prices.

    Great debate.

    Posted by David McFarlane August 28, 09 12:29 PM
  1. Wow, Scott, pretty provocative stuff!

    As you know I am a GP with CRV, a Waltham (and Menlo Park) based VC firm. I have been called names before, even some pretty bad ones, but a Dinosaur is a first… Could I at least pick which one? Velociraptor is my favorite (appropriate for a VC)…

    I think you were trying to make a really important point, which is that big, disruptive innovations sometimes come out of younger, less experienced people who haven’t yet been contaminated by conventional thinking. I could not agree with you more.

    But I really do not see how you can legitimately tie that notion to the Boston/Cambridge vs. Waltham issue. Your article is great free marketing to my (very good) friends at the Boston/Cambridge VC firms, but it is not based on any fact checking. Don’t be fooled by who has a blog (but if you do, at least check, it is not as boring as the professional VC stuff) or who goes to this or that event. There are many different ways of how to source the best projects.

    The good news is that you did force me to look at the mirror. So here is what I saw:

    Hand waiving aside, let’s look at some facts. I’d love to share data from Matrix, NorthBridge, Greylock, etc., as I think it will be very positive (in terms of risk taking), but unfortunately I don’t have it. So let me just give you my own numbers here:

    Over my career at CRV I lead investments into 26 projects; 16 of them (61%) were into startups led by first-time entrepreneurs; 17 (65%) into projects we did not have any prior relationship with the founders; and 7 of them (26%) were pure seed projects. With some expectations, most of my projects were pre-product, pre-revenue companies. I don’t have the numbers for the other investors at CRV off hand, but I believe that my partners’ track record on “risk taking” is similar or better than mine.

    On a firm level, over the last 5 years we have made 67 new investments; 34 of them (51%) were seed projects! As you know 3 years ago we launched a very successful seed program focused on consumer projects called QuickStart (, but CRV has been doing seeds for a long time before that.

    Also, 41 out of the 67 projects (61%) were consumer web and consumer mobile projects, and only 26 (39%) enterprise and carrier systems and software, as well as clean tech.

    I know the track record of my friends in Boston/Cambridge quite well. It is possible that some of them take even more risk, and I would argue most of them take less risk, but I don’t think that based on facts you will be able to draw the conclusion that as a “Waltham firm” we are less risk oriented than anyone else in town. Likewise, if betting on consumer stuff is more risky than enterprise (why?), our record is super strong on that front as well.

    Now, many of our consumer projects and a bunch of the consumer-oriented seeds are on the west coast; but this is not because we are afraid to take risk; or are lazy, golf playing, fat dumb and happy VCs (I don’t golf…). It is because that in general, the quality of consumer oriented projects on the west coast is unfortunately better than what we see in town. Boston’s strength, from an eco-system perspective, seems to be in clean tech, in systems, enterprise and mobile. Whenever we see a high quality consumer project in Boston (like Conduit Labs, EONS, and Vlingo) we will be thrilled to invest in it. It is just that there are more high quality projects like that on the west coast with a better eco-system around them, and our partners over there do an excellent job in getting CRV’s its fare share of those projects.

    Posted by Izhar Armony August 31, 09 08:03 PM
  1. Scott,

    I'm not sure if it matter if a VC is in Waltham, or Cambridge or Boston, so long as they contribute to helping build our innovation community. But it does appear to me that physical proximity (of VCs, angels, entrepreneurs, mentors, teachers, etc. to each other) does matter, especially in terms of bringing newcomers into the system. Some further thoughts on this here:

    (And while I'm at it, a shout-out to David McFarlane and the Akiba team: I'm rooting for you.)

    Tim Rowe

    Posted by Tim Rowe September 1, 09 12:14 AM
  1. One interesting piece of history: If you go back 20 years or so, the cool thing for VCs, law firms, accountants, etc. who worked with young tech companies was to move OUT of Boston and into the suburbs - because that's where the clients were (cheap space for the startups and for established outfits, of course; "Rt 128" was the "Technology Highway.") And today, a number of well-known service providers have well-established offices in Waltham or nearby today. It will be interesting to look at trends of: locations of startups; locations of service providers, etc. and see if there's a shift back to the Boston/Cambridge core.

    Also, Scott, thanks for a great update on new capital sources. Money for tech investment abhors a vaccuum, and as established VCs have seemed to move "up the food chain", all sorts of new funds, angel groups (including Launchpad, which I co-founded with Rich Anders), etc. have been stepping in to fill the gap.

    Posted by Rick Lucash September 1, 09 08:53 AM
  1. Does "Place" matter? As one of the newer firms in town that resisted the draw of the Waltham community, we at .406 Ventures don't buy that location will be the arbiter of VC success over the long haul. Rather, we think that what matters most is how entrepreneurs measure the quality and value of their VC relationships which is unlikely to be impacted by proximity of the next pitch or the cost of parking. We located downtown because we had worked in Waltham for the majority of our entrepreneurial careers and we wanted a change of scenery!

    Posted by Maria Cirino September 2, 09 09:36 AM
  1. You highlight some important reasons why the evolution of venture capital has created a major gap. Yes, a better model is needed to fund startups, but there is an even earlier gap - the commercialization gap - that needs to be bridged FIRST particularly if we are talking about technology-based business. There is a huge inventory of promising innovations in universities, hospitals, etc. - much of it needs translation from science to product. Before we decide to turn every opportunity into a startup there is a need to establish independent, for-profit initiatives focused on doing just that - turn science into product. THEN decide whether the product justifies a NewCo or should be licensed to an existing company. It takes entrepreneurial talent to do this conversion, and this conversion can be done very cost-effectively without setting each one up with the baggage of a startup. A few entities and incubators (and even VCs) claim to do this, but their focus is still on creating companies rather than creating products first.

    Posted by Daniel Behr September 4, 09 10:10 AM
  1. Scott, UP dogpatch labs.

    I sent them an inquiry - an actual attempt at human communication between a guy who's starting a thing, and a thing that's looking for guys...

    received back, after 2 days, a canned, blank-faced reply saying "tell us what you're about and come to our beer and pizza event on Oct 15th"

    Great. Lovely. Impressive as all hell. Not.

    I'm starting a business here, not auditioning for the Real World.

    Posted by Withheld upon request, and then some September 18, 09 09:04 PM


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About Scott Kirsner

Scott Kirsner was part of the team that launched in 1995, and has been writing a column for the Globe since 2000. His work has also appeared in Wired, Fast Company, The New York Times, BusinessWeek, Newsweek, and Variety. Scott is also the author of the books "Fans, Friends & Followers" and "Inventing the Movies," was the editor of "The Convergence Guide: Life Sciences in New England," and was a contributor to "The Good City: Writers Explore 21st Century Boston." Scott also helps organize several local events on entrepreneurship, including the Nantucket Conference and Future Forward. Here's some background on how Scott decides what to cover, and how to pitch him a story idea.

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