We 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.
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 Kayak.com, FanSnap, and Cash4Gold.com, 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?