Wednesday, July 15, 2009

A Quick Report from WebInno 22

Web Innovators Group has turned into not just a great place to see demos from early-stage companies, but also a bit of a see-and-be-seen schmooze-fest among developers, entrepreneurs, attorneys, investors, and PR folks. The 22nd edition of WebInno tonight was especially good -- people enjoy opportunities to get out in July, when the event calendar is rather barren.

Here's a quick list of some of the people I bumped into:

HubSpot co-founder and angel investor Dharmesh Shah... Eric Hjerpe, Jo Tango's new kemosabe at Kepha Partners...Michael Gaiss from Highland Capital Partners...PR guru and Emerson College instructor David Gerzof...MyPunchbowl founder Matt Douglas...TechStars Boston kingpin Shawn Broderick, who was wearing a gentlemanly blazer and was gracious enough not to use the 'f' word around me... Akamai co-founder and Globespan managing director Jonathan Seelig... Tom Lewis from Bostonist... UI genius Karen Donoghue...Andreas Randow from the photography start-up Aggarwal from Localytics - a TechStar company that was one of the demo'ers tonight...Wade Roush, who is apparently involved in launching a new social network for recently-released prisoners called Ex-conomy... Evan Morikawa from Alight Learning, an Olin College student currently on HubSpot employee Ryann Price... her beau, Paragon Lake co-founder Matt plate and Tourfilter founder Chris Marstall...WaySavvy Travel founder Michael Raybman...Wellesley High School entrepreneur Mark Bao (aka Steven Bao)...PR dude Chuck Tanowitz...Daniel Weinreb from CommonAngels, who was bragging that he brings more deals to the angel group than just about anyone else...and WebInno organizer David Beisel, hanging out by the side of the stage and talking to all comers for a good hour after the demos ended.

Jeff Yolen, formerly an exec at Sphere and Real Networks, was wearing a nametag that said Vulcan Capital Managament, which of course is Paul Allen's Seattle investment firm. He explicitly told me that I am not allowed to tell you that he is working for Vulcan Capital Management until they issue a press release. So you didn't hear it here... but rather from his public LinkedIn profile, which lists him as a venture partner at... Vulcan Capital Management.

And Alex Lindahl of Acquia told me the best story of the night. While still a student at BC, he was pitching a start-up, TextWorks, to Highland Capital Partners. On the slide presenting the founders' bios, each founder had added a personal detail. Lindahl's was that he could bench-press 370. Highland partner Peter Bell said that part of the VC's job is to validate what the entrepreneur says. And, by the way, there's a gym downstairs. After the pitch, Bell and a few other Highland partners accompanied Lindahl to said gym -- and watched as he added weights up to about 345, before Bell told him he could stop: "I don't want you to hurt yourself."

Highland passed on the deal.

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Wednesday, May 13, 2009

Prism: One More Local VC Firm Hits Fundraising Brick Wall

Dan Primack at PEHub reported yesterday that Prism VentureWorks of Needham has put fundraising for its sixth fund on hold. Primack wrote:

    “We plan to spend the next year focusing on our portfolio companies, and evolving the firm,” says Woody Benson, a general partner with Prism since 2004. “I don’t know exactly what that evolution will mean for us, but the venture world is obviously beginning to change, in terms of things like new models.”

    Benson added that the aforementioned “evolution” is not expected to include layoffs of investment staff.

Benson joined what used to be Prism Venture Partners in 2004. The company was still led by co-founder Bob Fleming in 2005, when it raised its fifth fund ($250 million.) Fleming is still listed on the Prism Web site, but he effectively left in 2006 along with Duane Mason, another founder of the firm. Benson then took the reins, and started focusing more on what he dubbed "digital living" investments.

There have been a few successes in Fund V, PEInsider observed last year, including selling "Softricity to Microsoft in 2006 for an undisclosed amount and video-hosting company Maven Networks to Yahoo this year for $160 million - both of which yielded more than three times its investments."

If Prism isn't eventually able to raise a sixth fund, the Boston VC scene gets a little bit smaller.

All eyes right now are on Highland Capital and Polaris Ventures' fund-raising efforts...Primack at PEHub reported last month that Highland is trying to raise a smaller $400 million fund; the firm's last fund, raised in 2006, was $800 million.

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Monday, May 4, 2009

Clean Energy Council (Quietly) Announces New Class of Fellows

The New England Clean Energy Council has just named its new group of 25 fellows -- experienced execs and investors interested in repositioning themselves for careers in cleantech. (There has been no official press release, though.) The program starts Tuesday at MIT, and runs through July.

This new bunch includes Ahmet Ozalp, formerly an IT investor at Atlas Venture... Paul Sereiko, founder of SensiCast, a sensor networking start-up... Doug Levin, founding CEO of Black Duck Software... and Tan Rao, whose wireless home theater start-up, Radiospire Networks, was funded by Highland Capital but folded last month.

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Thursday, April 2, 2009

Your Golden Ticket to the Nantucket Conference

We've put together a pretty solid agenda for this May's Nantucket Conference, and the event is just about sold out. This is our tenth year doing the event (I've been on the advisory board since we started planning the first one, in 1999), and it seems like it'll be a great mix of fresh faces and veterans.

If you are a first-time entrepreneur and would like to attend the event, Highland Capital Partners is offering one pass to attend this year’s conference (April 30th - May 2nd) at no charge.

[ Update: Congrats to Chuck Goldman of Apperian, who won the pass. ]

To be considered for the complimentary conference pass, you must be a first time founder/CEO of a New England-based company. Also, you must be committed to attending at least two days of the conference if you are selected. In addition, Highland is asking all applicants to help bring their Summer@Highland program to the attention of a university-affiliated entrepreneur or start-up that could possibly benefit from participation in that program.

If selected, you’ll receive a complimentary ticket to attend the conference ($1,950 value). Note: you will be responsible for your own travel and lodging.

If you’d like to be considered for this opportunity, send a short blurb on your company (name, brief description, number of employees, URL) along with a paragraph on why you’d like to attend this year’s conference to The deadline for being considered for the complimentary Nantucket Conference ticket is Wednesday, April 8, 2009. Highland will notify the recipient by April 9th.

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Friday, October 31, 2008

MIT VC Conference: December 6th

The MIT Venture Capital club just opened up registration for the 11th annual MIT Venture Capital Conference. It happens on December 6th, and while registration costs $245 for early birds, there's also an entrepreneur showcase in the evening that's free for anyone to attend.

I'll be there, moderating the closing session with Harmonix Music Systems co-founder Eran Egozy. And I'm going to try to arrive early to see Dan Primack's opening session with Paul Maeder and David Fialkow, from Highland Capital Partners and General Catalyst.

More on the event:

    ...Every year, the conference brings together over 400 venture capitalists, entrepreneurs, and industry leaders to discuss current opportunities and challenges in Venture Capital investing.

    This year, the conference theme is Reinventing Venture Capital. A Keynote Panel of founding partners from leading venture capital firms will open the conference with a discussion of evolving strategies of the venture capital community and the entrepreneurial ecosystem in the dynamically changing industrial, financial, and economic conditions around the world.

    Dr. Jamshed J. Irani, Director of Tata Sons, one of India’s oldest, largest, and most respected business conglomerates, will deliver lunch keynote address. The conference will close with a fireside chat with Eran Egozy, CTO and Co-Founder of Harmonix, a MIT Media Lab startup which created Rock Band and Guitar Hero.

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Monday, September 8, 2008

How Many Mass. Companies in TechCrunch 50?

The TechCrunch 50 starts today out in San Francisco. In its second year, this has become one of the hottest platforms for launching new companies.

How many are from Massachusetts?

Two, by my count: EmergInvest, a Cambridge start-up that aims to help investors put money to work in emerging markets (here's their entry in CrunchBase); and HangOut Industries, the Pano Anthos company that's developing virtual "rooms" for hanging out (and helping advertisers build brand awareness). It's funded by Highland Capital and Polaris, and based in downtown Boston.

Here's a bit more on HangOut from their press release:

    Launched today, at the prestigious TechCrunch50 conference, Hangout gives teens the ability to connect and truly interact with their friends online. On Hangout, teens interact with their friends as they do in the offline world- whether it be watching favorite videos on YouTube, listening to music, sharing Facebook photos, engaging with popular brands and products that they love, playing games or making music, or just chatting “in person”. Kids can now create their own personal 3D rooms leveraging real goods and clothes and hang out with their friends in their own spaces. Hangout combines the immersive nature of the Sims with the personalization of MySpace and the security and privacy of Facebook.

There may be more companies from Massachusetts who'll be appearing in the conference's Demo Pit, but none that I recognize.

Update: Givvy founder John Treadway, a start-up geared to increasing charitable giving, just e-mailed to let me know his company is part of the Pit action.

Update #2: David Beisel of Venrock e-mails to let me know that RaizLabs, Snipd, and Magic & Miracle Ventures (three more Demo Pit companies) also have some Boston roots. Snipd, as far as I know, is a Y Combinator company that was in Boston this summer, but will likely end up elsewhere. (Its founder is from Austin, TX.) Beisel also mentions that you'll be able to see Givvy at the September 15th WebInno meeting, which he organizes.

New Hampshire's own Don Dodge is on the panel of judges that will offer feedback on each of the fifty company presentations. Perhaps he'll post about any other Boston companies he encounters....

What do you think - is there a West Coast selection bias in this group ... or does Massachusetts just not have very many Web 2.0 companies?

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Friday, July 25, 2008

Highland Capital: We Do Cleantech Now, Too

Paul Maeder, co-founder of Highland Capital Partners, was a guest on NPR's 'Talk of the Nation' yesterday, analyzing the state of the economy. Maeder used the radio spot, essentially, to announce that Highland's now interested in doing energy and cleantech investments. In talking about innovation in the post-war period, Maeder suggested that there have been three major cycles:

    1. The personal computer in the 1980s
    2. The biotech boom of the 1990s
    3. The Internet bubble of the late 1990s

"The next wave of innovation is going to be around energy and the environment," Maeder said, suggesting that there are big opportunities in "energy production, and making energy consumption more efficient."

I e-mailed Maeder this morning to ask him whether Highland is planning to actually dedicate money and partner time to the cleantech/energy space, as Polaris and General Catalyst have. He said they are, and that he's "on it full-time now."

Highland's only real cleantech investment so far was a Utah company called Amp Resources, which developed geothermal power generation facilities; Amp was sold last year for $90 million to an Italian company, Enel. (An earlier deal to sell Amp didn't go so well.) Maeder and Dan Nova from Highland had served on Amp's board.

As a side note, I spotted Highland's other founder, Bob Higgins, having breakfast this week with ex-Presidential advisor and Harvard prof David Gergen. As for whether Gergen will be joining Highland as a venture partner, Maeder would only say, "I can neither confirm or deny." But I think that's a long, long-shot.

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Tuesday, July 8, 2008

Paragon Lake: A New Paradigm for Student-Created Start-Ups?

Sunday's column in the Globe focused on the adventures of two Babson students, Matt Lauzon and Jason Reuben, who hatched a start-up idea in their Babson dorm and just raised $5.8 million in venture capital funding.

One thing that helped them build a foundation for the company, Paragon Lake, was Highland Capital Partners' summer entrepreneurship program.

My premise is that we need more initiatives like it targeted to helping sharp students put together businesses, and making sure they take root here (Lauzon and Reuben were considering setting up shop in LA, and even have the cell phone numbers to prove it.)

I talked with Lauzon about his participation in the Highland program ... and a unique hiring tactic: MP3 audio.

One small but interesting change in Highland's summer program: participants last year didn't owe Highland anything -- there was no right-of-first-refusal on investing, no exchange of equity for office space, nothing. This year, though, according to Highland SVP Michael Gaiss, Highland has the option to participate in up to half of a start-up's first round of funding:

    ...[I]f an institutional venture capital round (not angel, f&f) is raised within 180 days, we have option to participate. It’s one of a couple variables we changed this year including preference to initiatives with some momentum (could be bringing together board/advisors/team, prototype stage) behind it (versus raw concept/idea), and letters of recommendation from administration/faculty, advisors/board members or others close to the initiative that could speak to it or the team.

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Sunday, April 27, 2008

Today's Globe column: From IMO to EMO

Today's Globe column digs into the story of a start-up, IMO, that was once heralded as bringing a revolution to the way mobile phones are sold. IMO quietly disappeared earlier this year; its founder, Mort Rosenthal, is now building a new company (Enterprise Mobile -- which we might call EMO) with a big financial assist from Microsoft.

Here's the opening:

    Successful start-ups have 100 fathers, someone almost said. But flameouts are orphans.

    IMO was an idea that seemed to click from the start: bring together in one retail outlet a vast selection of mobile phones and service plans - and help consumers compare them.

    But after four years and about $10 million in funding, IMO quietly closed its two stores - in Framingham and Columbus, Ohio - earlier this year. No one issued a press release, and the company's name vanished from the website of its single backer, Highland Capital Partners of Lexington. Tom Stemberg, the founder of Staples, scrubbed the company's name from his bio. (He'd served on the board.) And IMO founder Mort Rosenthal moved on to a new business - this one supported by a $20 million allowance from Microsoft Corp.

Here's the video, in which Rosenthal talks about the difference between raising money from a VC firm (IMO was backed by Highland Capital) and a strategic investor like Microsoft:

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Thursday, April 3, 2008

Summer Programs for Entrepreneurs in the Boston Area

I'm only aware of two summer programs here in the Boston area for entrepreneurs who want to spend the warmest months of the year penned up indoors, working to get a company off the ground.

One is run by Y Combinator in Cambridge. Unfortunately, the deadline for submissions was yesterday. They've helped launch companies like Reddit, Loopt, Justin.TV, and I'm In Like With You. YC invests $15,000 in a company with two team members, in return for usually about 6 percent of the equity in the company. "The goal is usually to give you enough money to build an impressive prototype or version 1, which you can then use to get further funding," they say.

The other is run by Highland Capital Partners in Lexington. It's called Summer@Highland, and applications are being accepted through April 22. Unlike Y Combinator, though, this one is open only to current graduate and undergrad students (as well as folks who graduated between December 2007 and the present.) But only one member of the team has to meet that criterion. Teams get office space either in Lexington or Menlo Park, CA.

And here's an important element: "...if a team goes on to raise venture capital within 180 days from the end of the program, then Highland [must] be provided the option to co-invest in up to 50% of the total financing round."

If you know of other summer programs in Boston/Mass./New England whose goal is to help entrepreneurs get companies off the ground, post 'em in the comments.

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Wednesday, February 20, 2008

Audio: TIE's VC Outlook Panel from Jan. 31st

TIE's annual "VC Outlook" dinner was packed to the rafters late last month.... Mike Gaiss from Highland Capital was kind enough to post an audio recording of the discussion.

I moderated, and my panelists included Paul Maeder from Highland; Ajay Agarwal from Bain Capital Ventures; Hemant Taneja from General Catalyst Partners; and Bob Hower from ATV.

We started by talking about the climate for VC investing (2007 was the best year since 2001 for VC firms raising money, and start-ups raking in investments)... the economic outlook... some new areas the panelists are learning about (and perhaps investing in)... some businesses they feel are over-hyped and over-invested (mobile advertising was mentioned)... the globalization of VC... and the impact that sovereign wealth funds may have on tech companies and VC firms.

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Friday, February 15, 2008

Display Demo Night at Cambridge Innovation Center

Two interesting news tidbits emerged at this past Wednesday's "Entrepreneurs on the Edge" demo night at Cambridge Innovation Center.

We brought together five representatives of companies working on new kinds of display technologies. I was least familiar with QD Vision, a Watertown company working on "quantum dot" based LED screens, so it was nice to hear more about their technology. (Their backers include Highland Capital and North Bridge.)

Dan Bricklin was there, and he recorded a podcast of the panel discussion part of the evening.

Two of the companies there shared some interesting news, both related to spin-outs.

Adam Bogue, formerly vp of bizdev at Mitsubishi Electric Research Labs, is spinning out a new company called Circle Twelve, Inc. Circle Twelve will commercialize the DiamondTouch table developed at MERL over the past seven years, which turns a tabletop into an interface, allowing four users to sit around and interact with data by touching it. Bogue says that Mitsubishi will have a stake in the new company, and earn royalty payments from every sale. He's looking to raise about $1 million to get the company off the ground.

The system sells for $10,000, which doesn't include the LCD projector it uses to project images onto the table, or the laptop or PC that serves as a CPU. (A Computerworld article mentioning DiamondTouch is here.) Bogue was getting a lot of questions last night about how the table is different from Microsoft's Surface technology, and also the Perceptive Pixel technology used on CNN during election nights. For one, DiamondTouch is available now...

Here's a video of Bogue's demo that I shot:

And David Rose, founder of Ambient Devices, said he's helping to launch a new company called Vitality, to bring to market smart pill bottle tops called GlowCaps. (Rose stepped away from day-to-day responsibilities at Ambient earlier this year.) GlowCaps will not only remind you when to take important medications (and perhaps e-mail your doctor to let her know you're sticking to the regime), but could send a reorder request to the pharmacy when your stock of pills dwindles. (More from Engadget. Rose said he has raised some seed funding already to do some consumer trials from a West Coast angel investor.

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Monday, December 24, 2007

Sunday's Globe column: Stonebraker, StreamBase, and Vertica

Yesterday's Globe column focuses on two start-ups created in pretty quick succession by database guru Mike Stonebraker; both were funded by the same two VC firms, Bessemer Venture Partners and Highland Capital Partners. The video is an interview with Chris Risley, who is the second CEO that StreamBase Systems has had -- he succeeded Barry Morris late this summer.

My favorite quote from the column comes from Risley, who says, "Stonebraker works best a fair distance from the enterprise." Don't we all know people like that?

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Wednesday, December 12, 2007

Mid-week links: Convoq closing, Alliance for Open Competition, O Beverages

A couple Wednesday links...

- When I ran into Chris Herot at the Tech Crunch party last month, he told me he was hoping to sell the collaboration company he co-founded, Convoq. It looks like a sale didn't come together, and Chris has posted some reflections on his blog about the five years he invested in trying to get the start-up off the ground. It's thoughtful writing -- and worthy reading.

- Spark Capital and Bijan Sabet are creating a new group, The Alliance for Open Competition to advocate for eliminating non-compete causes in Massachusetts. They're looking for people to sign on in support of the campaign.

- Xconomy reports on a new start-up from Highland Capital Partners' Consumer Fund, O Beverages. The founder is Tom First, one of the two Toms from Nantucket Nectars. O sounds like a new twist on Vitamin Water, which Coke bought for $4 billion earlier this year.

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Thursday, November 29, 2007

Last Night's "Thinking Big" Party: How Do We Build a New Generation of Really Big Companies in Massachusetts?

I've been interested for a while in the question of how we can build a new generation of "pillar" companies in Massachusetts...companies like EMC, Lotus, DEC, Akamai, Genzyme, and Boston Scientific.

Last night, a group of folks put together a cocktail party to talk about the issue.

It was an amazing crowd -- it felt like someone had summoned the 'Super Friends' to the Hall of Justice. George Hatsopoulos, founder of Thermo Electron, was there, as was Bill Warner, founder of Avid Technology, Carol Vallone, CEO of WebCT, Scott Griffith, CEO of Zipcar, Tim Healy, co-founder of EnerNOC, Rick Hess, CEO of Konarka Technologies, Aron Ain, CEO of Kronos, Jonathan Seelig, co-founder of Akamai, and Robert Coughlin, the new head of the Mass Biotech Council. At one point, Russ Wilcox of E Ink was showing off a new Amazon Kindle e-book reader, which uses a screen made by his company. Wendy Caswell, CEO of ZINK Imaging, was our host, and the firms KMC Partners, Goodwin Procter, and BSG Team Ventures helped underwrite the event.

Dan Bricklin has some photos and an audio recording of the discussion. Paul Maeder from Highland Capital Partners touched on some of the same issues he brought up at a lunch last month: "We have been selling the seed corn," is his assessment.

Here are some of my thoughts on the evening's "main event" -- a conversation that Maeder and Michael Greeley of IDG Ventures led, with my help and lots of input from the crowd.

First, the question of why pillar companies are important:

    1. They get big, employ lots of people, and tend to be supportive of their community (through philanthropy, supporting local schools, etc.)
    2. They tend to attract media and Wall Street attention, which lets the world know something important in their sector is happening where they are based. They also hold conferences for customers/users... think of the annual MacWorld conference in San Francisco as an example. All of this sends a message that a particular place is a center of gravity, which brings more people interested in that area -- and more small companies -- to that place.
    3. They tend to think like acquirers rather than acquirees.
    4. They tend to spin off smaller companies in their space. (But we need to get rid of non-compete agreements to foster this.)
    5. They serve as a source of experienced employees and executives to other companies in their space. (Again, we need to get rid of non-compete agreements to foster this.)
    6. They make it easier for companies in their space to recruit people to the area. Say a consumer tech company in Boston -- like Bose -- is trying to bring a marketer in from the West Coast. That person, should things not work out at Bose, will not have a lot of other wonderful choices of other employers here in the Boston area. Same is not true when a chip company like Intel tries to recruit people from anywhere in the world to move to Silicon Valley.
    7. They pay more taxes.

Now, as for what we can do...

    1. Entrepreneurs need to have a jones to build a big, important company. The typical New England VC will not push them to brush off acquisition offers and stay independent.

    2. Big companies get their start by discovering emerging sectors and opportunities. I don't think we're going to build an important, independent new PC company in Boston, or a networking equipment company, or even a medical device company. Boston Scientific got big because they saw the opportunity for less-invasive medical procedures before anyone else. Invent a cool new medical device today, and you're basically gonna get integrated into the product line of someone like a Boston Scientific or Medtronic before you have a chance to launch a second product.

    3. So that means we need to support entrepreneurs dedicated to building pillar companies in new, as-yet-undefined market sectors. (Avid, which helped establish the market for digital video editing, is a great example.) I think the media -- that's me -- plays a role, and I'm gonna do my best to focus on entrepreneurs working on these new frontiers. But angel investors and VCs also play a role (can they avoid the temptation to fund a serial entrepreneur doing his seventh enterprise software start-up, instead of a first-time entrepreneur who is breaking new ground?) And finally, entrepreneurs and executives who have built really big companies need to give back. This does not just mean donating to or speaking at their alma maters. They ought to be serving on boards, or as informal advisors, to a handful of interesting start-ups in or near their areas of expertise. Some do, but too many don't.

Dharmesh Shah, founder of HubSpot, offers a different perspective on his blog.

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Wednesday, November 21, 2007

Tight-Lipped Tango Looks to McKinsey as a Model

I had a conversation earlier this week with Jo Tango, founder of the early-stage venture firm Kepha Partners and an alumnus of Highland Capital Partners. The entire conversation was off-the-record, though. Tango says he wants to let the companies in which he invests do the talking. The comparison he used was McKinsey & Company, which never even divulges the names of clients it serves.

I acknowledge that VCs can often hog the spotlight, subtly trying to make themselves look like the geniuses, rather than the entrepreneurs they choose to back.

But Boston needs a new generation of high-profile VCs, and I had been hoping that Tango would be part of that group.

VCs ought to be a presence at public events (Tango usually turns down speaking invites, and doesn’t go to gatherings like Web Innovators Group or OpenCoffee), and they ought to blog/write/podcast/vlog about what’s on their minds and what they’re seeing.

That sends a message that:

    A. They’re approachable, even if you’re not a done-it-before entrepreneur, and
    B. It communicates that there is a vibrant, plugged-in VC community here that’s interested in new stuff, and brainstorming about it in public.

Unlike McKinsey, Tango does at least have a Web site listing the investments he has made so far. (He also lists a number of investments he made while at Highland.) Kepha’s two investments so far, AutoVirt and Peermeta, have both been made alongside Sigma Partners, another ultra-quiet local firm. Peermeta was a $6 million first round; AutoVirt’s wasn’t disclosed. Peermeta was founded by Cheng Wu, the successful serial entrepreneur who has been with Cisco, ArrowPoint, and Cascade.

The same day I spoke with Tango, CEO Evan Schumacher asked who I thought were the next-gen VC firms in Boston… the firms that are worth watching because of their new approach to investing. Off the cuff, I listed Spark Capital, IDG Ventures, .406 Ventures, Longworth, and General Catalyst. (Old school firms trying to reinvent themselves include Prism VentureWorks and Polaris.) While some of them don’t have dazzling track records yet, they are communicating with -- and presumably working with -- entrepreneurs in new ways.

Tango, I worry, is doing things the old “Waltham way."

(Am I being too cranky on the day before Thanksgiving? Maybe. So I'll note that Tango gets very high marks on, mostly for his work while at Highland. Also, I compare Kepha with other new early-stage venture firms here.)

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Tuesday, October 30, 2007

Desktone fills out the team

I'm out in San Diego this week for a conference, and I bumped into Paul Gaffney, the former CIO at Staples. Paul is now COO at Desktone, a start-up developing "virtual desktop" technology.

BBJ has a piece today about several executive hires at Desktone, which is funded by Highland Capital and Softbank.

The company is starting to look like a sequel of Softricity, a start-up acquired by Microsoft last year. Same CEO (Harry Ruda), same head of bizdev (Les Yetton). Plus, Jeff Fisher and Julian Weinstock.

One thing that's different: the VC backers.

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Friday, October 12, 2007

Why Not Think Big?

I am really glad that people are continuing to have the conversation about what it will take to build a new generation of really big, really important companies in New England.

Last week, Atlas Venture held an event in Vermont called the New England Founding Entrepreneurs Summit on Technology. Speakers included Analog Devices CEO Jerry Fishman, Venture Hacks blogger Babak Nivi, Rich Chleboski from Evergreen Solar, and Michael Zane from Kryptonite Locks.

Xconomy founder Bob Buderi moderated a fireside chat with Fishman, and he also blogged about the discussions around what it'll take to create more Analogs (and EMCs and Akamais) here.

I'm glad Atlas is focusing on the issue; I helped organize a dinner last year on the same topic. But both the Atlas conference and our dinner on "Building Billion-Dollar Companies in the Bay State" (which featured the founders of Boston Scientific and Thermo Electron) were top-secret, invitation-only events.

I'm helping to put together a gathering for Wednesday, November 28th, in the evening, in downtown Boston. I'll be doing a fireside chat there with Michael Greeley of IDG Ventures, who also heads the New England Venture Capital Association, and Paul Maeder of Highland Capital Partners, who is on the board of the National Venture Capital Association.

There will be limited comparisons between Silicon Valley and New England - I promise. But we will discuss what the factors are that seem to compel New England companies to cash out, rather than keep on truckin'.

Our venue on the 28th is limited to 50 attendees. We're going to limit attendance to company founders/CEOs and investors (VCs, angels, etc.)

So while this event is theoretically open to anybody who is building or funding companies, we need to be selective. But please e-mail me if you think you ought to be there: kirsner at At the very least, I promise that we'll do an audio or video recording, and you'll hear about it when it is online.

And you don't need to be completely sold on the idea of building big, independent companies -- essential to the mix of attendees will be people who believe that a sweet acquisition price isn't necessarily a bad thing.

For some background, here's a piece I wrote in the Globe back in January, about growing oaks, not saplings.

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Saturday, October 6, 2007

NEVCA Lunch: A Critical Look at the New England Market's Demise

The New England Venture Capital Association gave its annual networking luncheon a provocative title: "California Dreamin': A Critical Look at the New England Market's Demise."

Two two speakers were introduced as Muhammad Ali and Smokin' Joe Frazier; in real life, they were Paul Maeder of Highland Capital Partners in Lexington, and Tim Draper of the Sand Hill Road firm Draper Fisher Jurvetson (that's Draper on the left). Playing the role of Michael "Let's Get Ready to Rumble!" Buffer was Tom Finneran, host of Finneran's Forum on WRKO. The main event was held this past Thursday, in the Regattabar at the Charles Hotel. (And unfortunately, there was a lengthy musical interlude.)

Maeder and Draper, it turns out, were classmates at Harvard Business School.

Draper spoke first, giving a rambling talk that was anti-architecture and anti-history.

"Everyone I know in Boston is always quoting people from the past," Draper said. There are constant references to the Boston Tea Party, the Green Monster, "the British are coming." He said Boston needs to "maintain the philosophies" that made us so revolutionary in the 18th century, but "blow up the buildings," which he seemed to see as representative of some kind of crusty thinking or ennui. Apparently, bricks inhibit innovation.

But aside from that, Draper didn't take many digs at Boston or New England. He cited a few of the companies that have made DFJ money here, including EnerNOC, AthenaHealth, and Parametric Technology Corp. (He skirted the issue of whether DFJ will continue to have an affiliate fund locally ... there used to be DFJ New England, in Cambridge, but that fund has separated from the mother ship and become New Atlantic Ventures.)

Draper spent a lot of time talking about how "entrepreneurs are heroes," and how most of the "solutions to society's problems come from business," not government; Finneran, former Speaker of the House here in Massachusetts, tried not to wince. Draper listed a number of successful companies that have taken on "something that's old and decrepit and needs to be changed":

    Hotmail reinvented the post office
    Overture reinvented advertising
    Skype reinvented telecommunications
    ...and so on...

None of Draper's examples were Boston companies.

Toward the end of his talk, Draper launched off into la-la land. He talked about how the future is "a la carte government," where citizens will be able to choose to abide by the corporate structure laws of the Cayman Islands, the religious freedoms of America, the healthcare of Sweden, etc. (Not sure exactly how that will work.) He talked about the potential for "near-thought communication," and something called a "food drop," and the need for the human race to "get off this planet."

Draper wrapped up by singing -- no, caterwauling is the better word -- a song he wrote, a capella, to the tune of John Lennon's 'Imagine.' Some random lines: "Imagine there's no business".... "Imagine there's no VCs" ... You get the picture. I fully support Yoko Ono in demanding a couple million in royalties from Draper for this "performance." (Maeder sang back up, so he's on the hook, too.)

Maeder's talk actually had some shape to it, focusing on "how we can make New England better than it is."

He started by slyly taking apart the notion that Massachusetts is somehow lagging California, using a lot of stats.

    1. Nobel Laureates
    California has 74, Massachusetts 56
    But if you adjust it per million population, California has 2.0, Mass has 8.8

    2. NIH grants
    California has received 5192, Massachusetts 7464

    3. Small companies
    California has 1.4 million, Mass has 296,000
    But adjusted per million population, California has 39, Massachusetts has 46

    4. Patents
    California has been granted 25039, Massachusetts has 4368 (not sure of the time-frame here)
    Adjusted, it's 688 to 683

    5. Average temperature
    San Francisco is 53 degrees Fahrenheit, Boston 52

    6. 2007 tech IPOs by region, <$400M
    California has had 11 so far, New England has had 8

    7. 2007 tech IPOs by region, >$400M
    California has had 5, New England 6

    8. VC IRR (internal rate of return) over the last 15 years
    California VCs have chalked up a 44.4 percent IRR, Massachusetts 57.8 percent

Maeder did concede that 39 percent of the US companies that have $1 billion or more in annual sales are headquartered in California, and then he went on to focus on three really interesting problems.

First, Maeder argued that "we sell just a wee bit too soon...we take the money and run." Cisco, he observed, got big not by selling out, but by becoming an acquirer of little companies. "We have been selling the seed corn," he said.

A second challenge is that Harvard, the top-ranked university in the world in terms of faculty publications, hasn't been doing a great job of commercializing its inventions; Harvard falls off the list when you look at number of patents issued, leaving MIT, CalTech, and Stanford on top of the heap. (Draper chimed in later, observing that "we see nothing from Harvard," and theorizing that "the people who get into Harvard haven't there's a fear of failure." It's unlikely that you'd become an entrepreneur if you fear failure, he said. "You don't create a monster business by being smart," he continued. "You create a monster business by being dumb. It's an irrational thing to do.")

Maeder's third hot-button issue is that non-competes are enforced in Massachusetts; not so in California. Enforcing non-competes is "a silent killer, like high blood pressure," Maeder said. "It has a dampening effect on innovation," discouraging employees from big companies from going off to give life to new start-ups.

Draper, loopy as he was, conveyed that uniquely West Coast sense of possibility: pitch me on an all-electric sports car, and I just might invest. Maeder was logical, focused, and methodical: pure East Coast.

The dessert served at the lunch may have biased me (Boston cream pie, one of our city's great innovations), but I thought Maeder won this match.

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Sunday, September 16, 2007

Today's Globe column: Cell Towers, the Home Version

Today's column deals with a few of the local companies developing technology for femtocells -- essentially a tiny cellphone tower for your home -- and some of the VC firms backing them. From the piece:

    Plugged into your high-speed Internet connection, they'll communicate with your existing cellphone whenever you're at home, and send your calls over the Internet. The benefits are better coverage, faster data speeds, and longer battery life for your handset - since it no longer has to communicate with a cell tower that may be a mile away.

And here's Airvana CEO Randy Battat talking about'll be interesting to see whether Airvana's femtocell product looks like the prototype he has in the video, or has a flashier design (Randy is an ex-Apple exec, after all.)

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