Sign of the times
A billboard overlooking the Mass. Pike is just one example of the changes sweeping through Boston’s venture capital industry
Venture capital firms have had plenty of firsts in their roughly 75-year history in Boston, financing companies from the early days of biotech to the current artificial intelligence craze. But the latest first isn’t about schmoozing entrepreneurs over breakfast at Henrietta’s Table or prowling the labs of MIT.
It’s happening on the Mass. Pike, I-93, and in MBTA stations. Billboards, rented by Curie.Bio, a young venture capital firm with offices in Kendall Square, are advertising to attract entrepreneurs who might need $5 million or $10 million to get a company started.
“It may be biotech winter, but Curie.Bio is funding founders,” one of the signs reads, referring to a stingy stretch in that industry.
“This is absolutely the first time that I’ve ever seen that,” said Shardule Shah, cofounder and CEO of Lime Therapeutics, a biotech startup raising money, and an executive fellow at Harvard Business School.
Blaring billboards seem the antithesis to the closely held world of venture capital, where personal connections, past successes, and quiet vetting often determine where the money goes. But the local VC landscape post-COVID looks very different than it did a decade ago — and not just because of the high-profile highway ads.
In the technology sector, one major VC firm in Boston, OpenView Venture Partners, shut down in December, and others have laid off staff or had key partners depart. In life sciences and health care, however, a river of cash has continued to flow: Curie raised $350 million
last year; a new biomedical research institute called Arena BioWorks has $500 million to conduct research and form startups; and Flagship Pioneering, the Cambridge firm that launched vaccine-maker Moderna, filed paperwork last November to raise another $3 billion.
And when local entrepreneurs do raise money, increasingly it involves a patchwork of firms around the world, not necessarily those with offices here, as it might have in the past. Jeff Orkin, an Arlington entrepreneur, says that the $3.3 million his startup, Bitpart.ai, raised in January came from investors in London, Berlin, San Francisco, and Cambridge.
The data tells the story of what changed in Boston over the last decade. Overall, startups in Massachusetts still raise more venture capital than in 47 other states — surpassed only by California and New York. But the amount of money raised by health care startups here — which includes biotech, medical devices, and new health care services — has zoomed past information technology, according to numbers from the National Venture Capital Association.
Over the last four years, Massachusetts health care startups raised $7.1 billion more each year, on average, than IT startups. In the four years before that, the spread was $2.7 billion. If other sectors are like triple-decker homes and small apartment buildings, then health care is a skyscraper looming over them.
“You’ve had the growth and development of a rich, life sciences-specific venture ecosystem, which didn’t really exist” before the 2000s, said Alexis Borisy, a cofounder of Curie.Bio.
Many of the tech VC firms that were born here, including Spark Capital and General Catalyst Partners, have been steadily adding investment team members to their California offices — and many entrepreneurs say their center of gravity has shifted west.
In tech, December saw the dissolution of OpenView, a Boston firm that had been providing growth-stage funding for companies since 2006, and a split between the last two partners running Accomplice, also based in Boston. (Accomplice once had four partners making investments; it splintered off from Atlas Venture, as Atlas decided to focus solely on life sciences.)
Vivjan Myrto, managing partner of VC firm Hyperplane, said both situations were
“about a generational shift” from one set of investing partners to another “that didn’t happen successfully.” For their part, Accomplice’s last two partners, Ryan Moore and Jeff Fagnan, both say they plan to continue investing as individuals.
Myrto says Boston’s tech venture capital landscape is healthy when it comes to firms like his, which invest in young startups that have an idea, but are not yet bringing in revenue. But he says when those companies need to raise additional funding to add more employees and expand their sales and marketing, “95 percent of the time, it’s West Coast funds that provide that follow-on investment. That was less true before 2018-ish.”
While Myrto said he is optimistic about the new companies being founded in Boston to apply artificial intelligence in fields like robotics, health care, and education, he worries a bit about entrepreneurs leaving Massachusetts to “chase capital” in places like California, New York, or Texas.
“We don’t have a very good safety net to keep the best early-stage startups from leaving us,” he said.
But exactly what “leaving us” or staying rooted in Massachusetts means in the era of Zoom is less clear for tech companies than in life sciences, where employees typically need access to expensive lab equipment and benefit more crucially from in-person collaboration.
Orkin’s startup creates “stock characters” that can be integrated into video games — like a townsperson or barkeep. The company occasionally brings employees together at a shared workspace in Worcester for meetings, but he said he’s considering new hires who live on the West Coast and in Europe.
Tech entrepreneur Tom Wilde said that he gave up his office lease in 2020, and while his startup, Indico Data, does rent shared space in a Boston coworking facility, “virtually no one goes there on a daily basis.” He has colleagues who live in New York, Silicon Valley, Nashville, and London; about half of his 70 employees are within driving distance of Boston.
Geography, he says, doesn’t matter much in hiring — or in raising capital.
“There was a time when you’d visit VC firms in [Silicon Valley], along Sand Hill Road, or in Waltham by the reservoir,” Wilde says. But now, fund-raising happens over a series of 30-minute Zooms. His company, which helps insurance companies clean up their data, has raised money from investors in Chicago, Philadelphia, Austin, and Boston.
In the tech industry, says venture capitalist Jean-Francois Formela of Atlas Venture, there’s always the “giant sucking sound” of California and New York pulling people there — including investors like Nabeel Hyatt of Spark Capital and Hemant Taneja of General Catalyst, who moved west to help those firms grow their offices and write checks in the Bay Area.
But in life sciences, Formela says, the metrics are overwhelming. “Boston has become the world center of biotech,” he said. ”You can’t refute it.”
There’s a healthier mix, Formela and others contend, not just of VC firms, but of academic research, young startups, public companies, and big pharma players like Pfizer, Novartis, and Takeda with branch offices here.
As that transition has happened, many local investment firms, including Atlas and Flagship Pioneering, have become more specialized. In its early days, Flagship put money into TripAdvisor, the online travel review site. These days, it’s focused on cultivating and funding new kinds of lab equipment, diagnostic tests, and drugs.
Noubar Afeyan, Flagship’s CEO, said the firm has never considered running a billboard campaign to build awareness of its brand. But, he said, the firms investing in startups and forming new companies in Boston “do compete over human talent” — the people it requires to make those companies successful.
“If we did put up billboards,” he said, “it would be for people.”