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Massachusetts' innovation economy in 2012: 6 reasons to be proud, and 4 things to work on

Posted by Scott Kirsner  April 9, 2012 11:26 AM

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This week's Boston Globe column focuses on six reasons to be proud of our state's innovation economy, and four reasons to be concerned. (I'm more optimist than pessimist.)

Among the reasons to feel good:

Boston is already home to MassChallenge, an entrepreneurship competition that attracts more than 100 fledgling companies from the United States and abroad and awards $1 million in prize money with no strings attached. And several new programs are getting started this year, including Bolt, which will focus on entrepreneurs trying to design physical products (as opposed to mobile apps or websites), and Rock Health, for teams interested in devising health-care-oriented software. There’s also Boston Startup School, taking place for the first time this summer, which aims to make recent college grads more appealing hires for young tech companies.

And from the list of things to be concerned about:

We’ve seen a handful of initial public offerings in the past year, including companies like Brightcove, Zipcar, and Merrimack Pharmaceuticals. But the forthcoming Facebook IPO will dwarf them all. Why is that a big deal? The IPOs of companies like Facebook, LinkedIn, and Zynga will create dozens, if not hundreds, of new “angel’’ investors in Silicon Valley, who sprinkle small amounts of money onto new crops of start-ups. Angels often support companies that seem too risky to venture capitalists (they put money into Zipcar years before the venture capitalists did, for instance). We just aren’t minting enough new angel investors in Massachusetts.

I asked readers to share some of the things they boast about — or worry about. Here are a few excerpts...

Dan Hodge of HDR Decision Economics writes:

...The six things that you are proud of seem to all be fairly focused on the Boston metro area rather than the entire state. So, a challenge that remains is extending the environment and opportunities for a successful innovation economy to other areas of the state. As you know, there are a number of inter-related initiatives to enhance opportunities beyond the Boston area. Perhaps the best “test” for expansion of the innovation economy is the Pioneer Valley. The region is billed as the Knowledge Corridor (along with CT) given its many institutions of higher education, and has a few new, world-class computing facilities underway in Springfield, Holyoke and proposed in Greenfield. And we think the strategic plan, currently being implemented, is a good foundation to build from. But with examples of efforts like Maker College that was going to be in Holyoke moving to Boston and now named Bolt, successfully transitioning to an innovation-based economy outside of Boston is not easy.

Jim Maynard, region manager of Silicon Valley Bank, writes:

I am proud of Boston's angel investors. Maybe this network is not extensive enough yet, especially in the context of The Valley, but it's improved significantly in the last several years and we at SVB have seen improvement of investment, mentorship, and quality of companies first hand. We added 100 + early stage Boston / Cambridge cos as clients in 2011 and roughly 30 percent were "angel backed". In 1Q 12 we added another 51 cos (an increased pace) and the angel backed percentage seems to be keeping up this year. Company formation is robust generally and Angels are playing and increasingly important role here. Jit Saxena is the gold standard for me - an entrepreneur and CEO that could have retired several times over after the Applix and Netezza successes, but he keeps on investing and mentoring.

Gary Rucinski, founder of the Boston chapter of Citizens Climate Lobby, writes:

Massachusetts has the potential to become a clean energy leader similar to its status as a life sciences leader today, but this potential will be slow to develop without appropriate federal-level policies that accelerate our nation’s transition to a clean energy economy. Not only will this potential be slow to develop, but the longer we put off needed action the larger will be demands on local and state budgets to respond to extreme weather events as we saw last year and are already seeing this year again.

I know that Massachusetts energy policies are relatively strong, but there is only so much we can do without putting companies here at an economic disadvantage relative to states that continue cheap-energy policies based on continued or increasing use of fossil fuels. That is why we need strong federal-level action.

Yet, when I talk to people in the Boston clean tech sector, they are relatively sanguine about the status of climate and energy legislation today. They cite partisan gridlock in Washington and the need to simply defend the EPA’s budget from partisan attacks. They suggest that rather than fighting for strong federal action, I should be content with protecting a green energy subsidy here or a clean tech tax break there.

As a nation we are not going to get to where we need to be quickly enough if we follow the “all of the above” energy policies (or as I call them “ho-hum business as usual”) in favor today. We need something much, much stronger. In fact, economists across the political spectrum agree that we need to institute a carbon tax.

John Garvey of Garvey Communications Associates writes that he's proud of the Valley Venture Mentors program in Springfield:

I jumped on board last year after reading your article on how hard it is to start an accelerator outside of Boston/Cambridge, etc. Well, these guys have done it – creating measurable results on a bootstrap budget that would embarrass most publicly-funded mentoring/incubator/accelerator organizations. The VVM crew – supported by an active board and over 100 mentors — have created a startup ecosystem that is pulling entrepreneurs out of NYC and Boston/Cambridge. We have created an ideal setting – at the top of the MassMutual building which offers incredible views of the Pioneer Valley – a place where entrepreneurs and mentors and, yes – even investors, can collide. We have the region’s largest law firm – Bulkley Richardson, to thank for this space, and our organization is starting to attract the additional support we need to expand our efforts (we need to do a better job there). Right now, we are a best kept secret – but we are also working hard to build an infrastructure to support the numerous startups we are attracting and ensure that we have the highest quality of mentoring and training.

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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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March 3: Web Innovators Group
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