The winds shifted a bit in 2011, with Polaris announcing that it had raised a new $375 million investment fund — much smaller than the $1 billion it had collected in 2006. (The firm had initially hoped to raise a tidy half-billion, but the market didn't cooperate.) Shortly after that, partners began to splinter off from the firm, including Mike Hirshland, the guy who'd developed the Dogpatch Labs concept in the first place.
Also, over the last two years, while about
150 75 companies have circulated through the Dogpatch Cambridge space, Polaris has found just one company in which to invest: Biff Labs, a stealthy search-and-social media related start-up that recently graduated out of Dogpatch and into its own Central Square office space. (Biff's founders had previously worked together at Microsoft's New England R&D outpost, on social media oriented projects like Bing.com's Twitter search.) For context, Polaris has put money into nine start-ups that gestated in the Dogpatch Labs offices in California and New York. [Update: Dogpatch has 40 alumni companies and 35 currently in the facility. The original 150 number earlier in this paragraph was my mistake.]
Dogpatch Cambridge is great for the local innovation scene, but is it meeting Polaris' expectations — and more importantly, those "limited partners" who give Polaris money to invest?
To see where things stand, I got in touch with David Barrett, the Polaris partner who oversees the Cambridge location. He served up some stats from the first two years, and underscored Polaris' commitment to keep supporting the space.
- While Polaris has made just one bet at Dogpatch Cambridge, 22 companies that have shacked up there have received seed funding so far, and 11 have raised bigger "Series A" rounds.
- Dogpatch Cambridge is currently home to 110 people working on 35 different companies. There are about 100 companies on the waiting list to get in.
- The typical length of stay is between six and nine months. Of the 40 companies that have moved out of Dogpatch Cambridge, Barrett says roughly 90 percent are still alive and kicking.
- The typical seed round for a company at Dogpatch Cambridge has been $500,000 to $750,000. Series A fundings for Cambridge companies have ranged from $1.5 million to $8.5 million.
- There are over 30 open jobs with companies at Dogpatch Labs Cambridge.
- Over $140 million has been invested in companies across all four of the Dogpatch Labs locations.
- While Polaris has only made one investment in a Dogpatch Cambridge denizen, other firms have rushed into the void, including Venrock, Spark Capital, Shasta Ventures, CommonAngels, and NextView Ventures. So the early worries about "signaling risk" — what will other investors think if I move into Dogpatch but Polaris chooses not to invest in my start-up — seem to have dissipated.
Earlier this month, Gus Weber, an entrepreneur-in-residence who helps Barrett run Dogpatch Cambridge, posted this status update, which reports on some recent fundings and new residents.
I asked Barrett how Polaris evaluates the success of the various Dogpatch locations (Cambridge, New York, Palo Alto, and Dublin). His reply:
We measure success by asking several questions:
We think the track record across each of these measures is strong.
- Is our DPL location a strong community, with residents and mentors supporting each other?
- What is the quality of ideas we are seeing?
- Have we created a magnet for other investors and repeat entrepreneurs?
- Are we contributing to a richer, deeper ecosystem in each community in which we operate?
- Are we seeing a good ratio of financings and acquisitions?
- Are we building deeper relationships over a “rationalized” period of time with entrepreneurs we find to be compelling?
...Dogpatch is attracting very high quality, repeat entrepreneurs that have typically shied away from traditional incubator/co-working type spaces.
For us, Dogpatch has proven to us that it's a great vehicle for meeting, building relationships with, and working closely with next-gen entrepreneurs. For potential investment now as well as down the road as they continue to progress.
For entrepreneurs, our “open source” construct has proven very attractive as it enables relationships to be built with a cross-section of investors, advisors and mentors.
...The feedback we’ve received is that all of our DPL communities are contributing to a richer ecosystem in each operating area. We believe you'd hear from folks in Cambridge that we've been active participants in the area’s ecosystem — and active partners in helping all DPL companies succeed (regardless of [Polaris] investment).
Lastly, as we look at potential DPL investments, it goes without saying that it’s about quality of fit — not quantity...
Dogpatch gives Polaris a view into the where/what/how compelling innovation is happening. It gives us a great opportunity to share networks, learnings and experiences with entrepreneurs. And to help catalyze them to do so with each other.
Bottom-line, we’re early stage investors with a long-term view. Building these relationships helps us to not only help support the community at-large — but also helps to make us better investors for Seed, Series A & Series B opportunities today and down the road.
I asked Barrett whether his firm is committed to keeping the Cambridge location going indefinitely. (Here I should note that Microsoft, as a sponsor of Dogpatch Cambridge, underwrites the cost of rent, with Polaris paying utilities and other operating costs... so the space isn't a huge commitment for the VC firm.) "We're 'all in' with Dogpatch Labs in Cambridge and the other Dogpatch Labs communities," he said.
About Scott Kirsner
Scott Kirsner was part of the team that launched Boston.com 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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