Wednesday, July 1, 2009

Two Great VC Posts from Rob Go and Larry Cheng

Just calling your attention to two VC posts worth reading -- one on how to handle your first meeting, and one on how to tell if you piqued the investor's interest at that meeting:

Labels: , , , ,

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.

Labels: , , , , , ,

Thursday, May 7, 2009

Fidelity Ventures: Ignore the Rumors, Everything's Fine

Regular readers of the blog know that I don't traffic in rumors... but I wanted to try to fact-check the info about Fidelity Ventures that I'd been hearing through the grapevine over the past week.

Four separate venture capitalists at local firms have told me that Fidelity is stepping back from its commitment to Fidelity Ventures, and looking for other limited partners who might want to put money into the next Fidelity Ventures fund. (Historically, Fidelity has been the lone LP backing Fidelity Ventures.)

"They debated shutting it down, but their intention is to raise another fund," the founder of one local VC firm told me. "My belief is that they're trying to go through a transition here from a Fidelity-controlled fund to one where it gets smaller, and Fidelity's commitments will be smaller." In 2007, Fidelity Ventures expanded the size of Fund IV from $250 million to $400 million; that's the fund they're currently investing out of.

Another managing partner at a different VC firm said he'd seen a number of resumes from Fidelity Ventures partners and associates. "The returns haven't really been there, and for Fidelity, VC and private equity may have just gotten too big and too expensive," he said.

"They've started a process to explore how they might raise traditional capital," said another managing partner. "These one-LP models don't tend to perform very well." (None of these VCs wanted to be named, since many of them have worked or may work with Fidelity Ventures at some point.)

The rumor mill also has it that Rob Ketterson, the managing partner at Fidelity Ventures, has been stepping back from an active investing role (he currently serves on just one board), and partner Larry Cheng has been taking more of a leadership role. (An aside: Ketterson is married to Elizabeth Johnson, one of Fidelity chairman Ned Johnson's daughters.)

Fidelity Ventures' two most recent investments, in Stylesight and Vibes Media, were made last September. On, a "No New Investments Warning" has been posted, alerting entrepreneurs that TheFunded has received "information that [Fidelity Ventures] may not be making investments into new portfolio companies." The firm's most recent exit seems to be the sale, last April, of broadband cable solutions provider Jacobs Rimell to Amdocs for $45 million.

When I called up Fidelity Ventures partner Larry Cheng on Tuesday, he told me that "things are fine," before suggesting that I talk to managing partner Rob Ketterson for more detail. But Fidelity didn't make Ketterson available, instead dispatching spokesperson Adam Banker.

In response to my questions, Banker said that like many other venture firms, Fidelity Ventures is "taking a cautious stance" with regard to new investments, adding, "We have capital to invest." There have been "no significant changes" in staffing, he said, and "all the partners are still here." Finally, Banker said, Fidelity has "never approached limited partners outside Fidelity" to put money into Fidelity Ventures. (Update: Banker says Fidelity made another A round investment in late Q4, without disclosing the company.)

"When things are good and your liquidity events are such that you're making money and you don't require a lot of money from corporate, everyone loves [venture capital]," says Howard Anderson, ex-VC turned MIT lecturer, talking about corporate VC initiatives. "But when you've got cash calls all over the place, and you haven't had a liquidity event since the last ice age, the treasurer asks what's going on." Anderson continued, "If Fidelity [the parent company] was doing really well, this wouldn't make too much difference. But if Fidelity is facing redemptions, looking at cost-cutting, and needing more money for advertising, this becomes a visible thing."

(I'd been developing this as a Globe column, but since Fidelity says there's nothing to the rumors, this seems unworthy of further treatment...)

Labels: , , , , ,

Tuesday, April 7, 2009

Westphal on the Life Sciences Innovation Paradox

I had a chance to sit down for a few minutes with entrepreneur and ex-VC Christoph Westphal at the Biotech Business Development Conference he organized today at the Charles Hotel. Mostly, we spoke about Westphal's assessment of the current environment for life sciences in Boston.

We're in the midst, he said, of "an unusual and profound downturn" in which big companies will get smaller, and some small companies will disappear.

On the VC industry: "They haven't done a good job of returning capital over the last ten years." Why? Too much focus on what's perceived as safe: specialty pharma, "retreads," and in-licensing. When venture capitalists do well, he suggested, it's by investing in innovative stuff -- and here, as examples, he offered up three companies he has been involved in starting (Momenta, Alnylam, and Sirtris). "People do pay for disruptive technology," he said.

But the paradox of today's climate, Westphal suggests, is that while big pharma companies seem to be saying they're still willing to pay for innovation -- drugs that are truly differentiated -- there seems less willingness of the part of investors to take risks on "big vision" companies. "There's less money available, and more contingencies on taking that money," Westphal said. The hurdles to getting money are much higher today than any time in the past ten years, he believes.

But while the screen is incredibly fine right now, the few companies that can get funding will be able to attract great people, he said, encounter fewer competitors in the marketplace -- and presumably see a payday at some point down the road.

Labels: , , , , ,

Friday, April 3, 2009

Simeonov Peels Off from Polaris

Just a couple weeks after technologist-in-residence Charles Teague left General Catalyst to chase some entrepreneurial opportunities, Sim Simeonov, the technology partner at Polaris Venture Partners in Waltham, is doing the same. He'll continue to hold the title of "technology advisor" for the firm, but won't be in the office day-to-day.

(Interestingly, Teague and Simeonov worked together at Allaire Corp., back in the Web 1.0 days, but Simeonov says they're not collaborating right now.)

I'd been hearing that change was in the air for several months. Back in February, Simeonov confirmed what was happening in an e-mail, noting that he'd helped start four companies at Polaris (Archivas, 8th Ring, Veracode, and Plinky), but wanted to consistently receive equity in the companies he helped launch. (California-based Plinky, the newest start-up, is the only company where Simeonov has a stake. He serves as interim CTO there.)

Polaris' Web site hasn't yet been updated to reflect the change.

Simeonov's blog is here.

He's organizing an event later this month on cloud computing for the MIT Enterprise Forum. (And in the interest of disclosure, Simeonov is also on the board of advisors for the Nantucket Conference...along with me.)

Labels: , , ,

Tuesday, March 31, 2009

Spark to Boston: Let Us Buy You a Beer, At Least

The party thrown at Cambridge Brewing Company last night by Spark Capital was loud, crowded, and fun. You couldn't actually move around the room much, but I managed to bump into Dave Balter of BzzAgent, Doug Levin, Chris Marstall of tourfilter, Eric Giler of WiTricity, Wade Roush of Xconomy, Jon Radoff of GamerDNA, Misha Katz of AdHarmonics, Nabeel Hyatt of Conduit Labs, Jon Pierce of Betahouse, and Dennis Miller, Rob Go, Bijan Sabet, and Todd Dagres of Spark. Dagres, in a short speech to the assembled crowd, plugged Spark's investment in Twitter, as well as its new Start@Spark seed funding initiative.

What was interesting about the party, full as it was of entrepreneurs, was how few of them were Spark-backed entrepreneurs. One guy, founder of NYC-based AdMeld, took the mic for a couple minutes to talk about how Spark helped him get the company going.

In looking at Spark's portfolio this morning, what I noticed (and maybe I'm just slow to pick up on this) is that just one of their current investments, VeriVue, is located in Massachusetts. The bulk of the companies are in NYC, LA, Silicon Valley, and Texas.

So while Spark is making some great moves to be more supportive of entrepreneurship here in Boston, with Start@Spark, TechStars Boston, and the Alliance for Open Competition, the bulk of their bucks so far have gone elsewhere. This is a relatively new dynamic in venture capital... in the olden days, you'll recall that VCs often said that if they couldn't drive to a company (and get back) within a day to attend a board meeting, they wouldn't invest. Spark (which has just one office, in Boston) clearly doesn't mind racking up some frequent flier miles.

(In the photo at right is Spark founder Todd Dagres welcoming party-goers last night.)

Labels: , , , , , ,

Rich Miner to Co-Lead Google Ventures from Cambridge

Some nifty news this morning from Google: they've formed Google Ventures, which will invest up to $100 million over the next year, according to The New York Times. Bill Maris is the managing partner of Google Ventures based in the company's Mountain View headquarters, and Rich Miner is the managing partner in the Cambridge office.

On the official Google blog, they explain:

    At its core, Google Ventures is charged with finding and helping to develop exceptional start-ups. We'll be focusing on early stage investments across a diverse range of industries, including consumer Internet, software, clean-tech, bio-tech, health care and, no doubt, other areas we haven't thought of yet. Central to our effort will be our fellow Googlers, whom we view as a critically important resource to help educate us about potential investments areas and evaluate specific companies.

Rich Miner has been an R&D exec at Avid Technology, Wildfire Communications, and Orange. He then co-founded Android, which Google acquired in 2005 -- and which led Google into the mobile phone business.

While Miner is extremely well-networked in town, it's not clear whether he's done any investing before (I never hear his name mentioned as a local angel, for instance.)

Labels: , , , ,

Monday, March 30, 2009

Charles River Ventures' New Fund (and the Twitter Back-Story)

Charles River Ventures just closed a new $320 million fund, its fourteenth. The firm has had some big liquidity events over the past two years, generating about $600 million in returns, including the IPOs of local start-ups Virtusa and Netezza, and acquisitions of EqualLogic,, and Acopia Networks.

Among CRV's more recent investments they list in the official press release are Nantero, Scribd, Vlingo, and Twitter.

Curious story about Twitter... CRV only has about $250K in that company, which has raised $55 million in total. CRV had invested in Twitter founder Evan Williams' earlier venture, Odeo, which didn't take off. Williams decided to repay the investors and go off and do Twitter. (The technology for it had been an offshoot of Odeo.) When Twitter started raising funds, Charles River put in that quarter-million early on, but hasn't participated in any rounds since, and doesn't have a board seat. (But Twitter is listed as one of CRV partner George Zachary's investments.)

Also interesting that TechCrunch lists CRV as a Menlo Park firm. While a lot of its activity has been out West, five of the eight investing partners for this new fund are based in Waltham, Mass. (all but Bill Tai, George Zachary and Saar Gur.)

Labels: , , , , , , , ,

Wednesday, March 4, 2009

R.I.P. Zero Stage Capital

Cambridge-based early-stage investor Zero Stage Capital has been functionally defunct for a few years now, but Venture Wire today has the official obituary. (Thanks to Keith Cline for the link.)

Jonathan Matsey of Venture Wire writes:

    ...[S]everal other companies from Zero Stage's portfolio are still privately held: cytometer maker CompuCyte Inc., site management company First Service Networks Inc., spinal device maker HydroCision Inc., motion technology company InterSense Inc., college administration system manager Jenzabar Inc., solar technology company Konarka Technologies Inc., kiosk software developer NetKey Inc., pollution control company Powerspan Corp. and DNA analysis company U.S. Genomics Inc.

    One LP says returns from one of the life science and IT firm's funds were "a disaster."

Labels: ,

Monday, March 2, 2009

How the VC Scene in Boston is Changing

Sunday's Globe column dealt with the shrinkage of Boston's VC universe. Column got snipped quite a bit, so I'm publishing the full version below, along with the video.

Venture capital sector makes adjustments

For Boston’s venture capital community, headquartered on the placid plateau of Mount Money in Waltham, 2009 will be a year of wrenching change. The stream of capital flowing to venture capital firms, who invest it in innovative-but-risky private companies, is turning to a rivulet – and that means the firms themselves will have to get smaller.

“Last year, our industry raised about $28 billion in new investment capital,” says Michael Greeley, chairman of the New England Venture Capital Association and managing director of Flybridge Capital Partners in Boston. “I think we’ll raise between $8 billion and $12 billion this year, nationally. That’s a dramatic reduction. My sense is that the average fund size will be cut in half, and they’ll have to cut the number of partners who work for them as a result.”

The shrinkage of Boston’s VC sector will be tough for the VCs, obviously, and also for entrepreneurs who ascend Mount Money with their PowerPoint presentations, looking for funding to launch a company or keep one going. But it could also have a silver lining.

Here’s what’s happening.

Two local VC firms have already put together smaller investment pools than they’d hoped for. Atlas Venture, in Waltham, had aimed to raise about $400 million but wound up with $283 million; as a result, last month Atlas jettisoned two of its partners and shifted two others to less active roles. Boston-based Bain Capital Ventures will likely wind up raising between $475 million and $550 million for its latest fund, rather than the $750 million it had set out to collect. Money in a venture capital fund is typically invested over the course of a decade.

Kodiak Venture Partners of Waltham has reduced the number of investors on its roster and is shifting its focus toward life sciences and medical technology as part of an attempt to burnish its appeal to would-be investors. Andrey Zarur, a partner there, says Kodiak isn’t out looking for new money right now, but plans to be at some point in the future.

“Kodiak just hasn’t had enough liquidity events to make their limited partners say, ‘I’m ready to step up again,’” says Howard Anderson, an MIT lecturer and former venture capitalist. (Limited partner is the term for the university endowments, wealthy individuals, and pension funds that funnel money into venture capital.) One example Anderson cites is Egenera, Inc., a Marlborough company selling technology for data centers that raised $176 million but never managed to go public. Anderson should know: his old firm, YankeeTek Ventures, was an early investor in Egenera.

Many other local VC firms are on the road, talking to prospective sugar daddies. Some have been at it longer than others. Among the firms trying to scare up more money in 2009 are Boston Millennia Partners, Highland Capital Partners, Polaris Venture Partners, Prism VentureWorks, Oxford BioScience Partners, Charles River Ventures, and North Bridge Venture Partners. New firms, like Genovation Capital and a medical device oriented fund called Makaira Venture Partners, are also out trying to raise their first funds.

Venture capitalists are prohibited by the Securities and Exchange Commission from discussing their fund-raising activities. But one partner at a Boston area VC firm that’s trying to put together its next fund told me last week that fundraising is happening “on a molasses pace,” adding that “universally, everyone is going to be lower than what they’d hoped to raise.”

One reason that the limited partners are avoiding commitments to new VC funds is that many of them have formulas for how they allocate their assets. If a certain percentage is devoted to bonds, a certain percentage to stocks, and a certain percentage to venture capital and private equity, for instance, things start to look out of whack when the stock portion of the portfolio plunges and the value of the VC portion stays roughly the same. (The valuations of the private companies in a venture capital firm’s portfolio isn’t updated very frequently, unlike publicly-traded stocks.)

If a limited partner needs to get their mix of asset allocation back in order, investing in new VC funds simply doesn’t happen. (Some limited partners, including the endowment managers at Harvard, Duke, and Columbia, are actually trying to sell the stakes in VC funds they already own – but there are few buyers.)

And investors who can’t get their money into the best-performing venture firms may simply be disappointed with the financial returns they get. “I’ve heard limited partners say that the VC business, in some cases, is like getting Treasury bill returns with venture capital levels of risk,” says Michael Feinstein, an ex-VC. “If you look at the median venture capital return over the past eight years, it’s about one percent a year.”

Josh Lerner, a Harvard Business School professor who studies the venture capital industry, describes what’s happening among limited partners as “a changing of the guard.” University endowments and U.S.-based pension funds are becoming smaller players in new venture capital funds, Lerner says. But what’s not clear is who will take up the slack – though sovereign wealth funds and pension funds from Australia are two potential candidates. “We can see who’s going out,” Lerner says, “but not who’s going in.”

The upshot is that VC firms will be managing smaller funds, and some firms will go out of business. Anderson, who refers to Atlas’ situation as a harbinger of things to come, predicts that some funds that aren’t in the 25 percent when it comes to delivering financial returns will simply fade into the sunset. “Everyone will swear to be in that top quartile, but this isn’t Lake Wobegon – not everyone is above average,” he says.

Fewer firms and smaller funds will obviously mean fewer jobs for venture capitalists and the staffers who support them. It’ll undoubtedly get harder for start-ups to raise money. It will take longer, and those that do manage to attract an initial jolt of capital will get less of it than before.

“There just won’t be as much money flying around,” says Todd Dagres, founder of Spark Capital in Boston. “And there’s good in that. If you can raise money for your start-up now, there’s going to be a lot more uniqueness value than there used to be.” In other words, entrepreneurs will run up against fewer well-funded competitors than they once did. That could help the entrepreneurs and their backers both.

Still, a contracting VC universe isn’t going to be as fun to inhabit as an expanding one – at least for most people, at least in the near-term.

Labels: , , , , , , ,

Tuesday, January 20, 2009

Raising Capital in the Current Climate

Sunday's Globe column focused on raising money from VCs, banks, angel investors, and other sources.

Here's the opening:

    Finding money to start a company (or keep one going) is worry number one right now for entrepreneurs, whether they're designing robots, starting a restaurant, opening a clothing boutique, or developing cancer drugs. And with banks, angel investors, and venture capital firms clinging more tightly than ever to their bankrolls, that worry is occupying much more mental bandwidth.

The video features entrepreneur (and occasional angel investor) Bill Warner offering some fund-raising advice of his own:

Labels: , , ,

Monday, December 22, 2008

Video from the 2008 MIT Venture Capital Conference

The organizers of this month's MIT Venture Capital Conference, headlined 'Reinventing Venture Capital,' just posted the videos from the event.

Labels: , ,

Saturday, December 6, 2008

Keynote Interview from MIT VC Conference: 'Guitar Hero' creator Eran Egozy

At today's MIT Venture Capital conference, I had the fun task of conducting an on-stage interview with Eran Egozy, co-founder and CTO of Harmonix Music Systems, the Cambridge company that brought you 'Guitar Hero' and 'Rock Band' (as well as earlier music-oriented games like 'Frequency' and 'Karaoke Revolution').

We had a chance to talk about the creation of the company; some of their early attempts to license technology they'd developed and create a hit game; how they raised $10 million in funding from angel investors and VCs; how they almost ran out of money before their 'C' round; what made 'Guitar Hero' a hit; the company's acquisition by MTV for $175 million (in cash); what's next; and why there will never be a game called 'Clarinet Hero.'

The MP3 file is here; it includes Q&A, and is about 30 minutes long.

Labels: , , , , ,

Friday, December 5, 2008

Paul English, Kayak, Sequoia, and the Triple-Digit Club

My most recent Globe column focused on what I call the "Triple Digit Club" -- companies that have raised $100 million or more in venture capital funding.

The club includes Boston-area companies like E Ink, Kayak, A123 Systems, GreatPoint Energy, and Luminus Devices. (Kayak is the current club president, having raised $223 million.)

My favorite tidbit from the column is that Sequoia, one of the investors behind Kayak, apparently used them at the famous "RIP Good Times" presentation in October as an example of a company that already operates lean and mean. From the column:

    The entire start-up world...took notice last month when several partners of Sequoia Capital, the venture firm that funded companies like Google, PayPal, and Electronic Arts, called a meeting to warn its companies about the coming recession. The text on the opening slide? "R.I.P. Good Times." Spending cuts, the firm advised, are a must, and acquirers will gravitate to profitable companies.

    Sequoia, as it happens, is an investor in Kayak (A123Systems, too). According to [Kayak co-founder Paul] English, people who were at Sequoia's cautionary meeting say that partner Michael Moritz mentioned Kayak several times.

    "They were talking about us as a company with a lean profile," he says. "In their portfolio, we are the skinniest as far as costs." That frugal posture will be an asset if even gloomier times are ahead.

The video features English talking about his approach to hiring and firing engineers.

Labels: , , , , , , ,

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.

Labels: , , , , , , , , ,

Sunday, September 14, 2008

Career Opps in Cleantech, and the Most Significant Cleantech VC Firms in Boston

Today's Globe column deals with people moving into cleantech from other fields. From the opening:

    In the late 1990s, everyone wanted to be part of the Internet revolution. Now, there's a similar level of enthusiasm building around companies tackling the world's energy challenges. And many people from the biotech, software, and hardware fields are seeking out - and finding - opportunities to make a career switch.

In the video, Peter Rothstein and Jim Matheson of Flagship Ventures talk about how to navigate that switch:

While working on the piece, I asked everyone I spoke with who the most significant cleantech VC firms in the Boston area are. Here's the list (in alphabetical order, not in order of significance), and who the point person is where there's one primary energy-oriented partner.

Labels: , , , , ,

Wednesday, September 10, 2008

Last Night's Event with Ed Roberts of MIT

There was a nice crowd last night at the Vilna Shul for the Fireside Chat with Ed Roberts. Ed is one of the gurus of entrepreneurship at MIT.

What we discovered during the conversation is that I tend to think locally, while Ed thinks globally.

I wanted to focus in on what more we can do to encourage the creation and cultivation of big, important, innovative companies here. Ed wanted to talk about the growth of China, and how Tsinghua University aims to become the MIT of China.

I started by asking Ed about the most successful companies he has been involved with. In Massachusetts, he was a founder of the hospital IT company MediTech, with 2700 employees and $400 million in revenue. But an even bigger hit has been, the Chinese Web portal.

I asked Ed about his biggest concern for the Boston/Massachusetts economy. His answer: our entrepreneurs and VCs sell companies too soon. Ed said that his friend, the late Alex d'Arbeloff (co-founder of Teradyne) would always encourage the companies he counseled to "fight the fight" and ignore the VCs encouraging them to sell.

But Ed said his bigger worry was one related to how a single federal policy position will affect the future competitiveness of our country. Since 2001, it has gotten harder and harder for smart people (like MIT grads) to stick around in the US after they graduate, and either get experience working at a company here -- or start a company of their own. MIT alums who hail from foreign countries, he observed, have a higher rate of entrepreneurship than U.S.-born alums, and we're now essentially telling them, "Go back to India, China, or Africa."

Someone from the audience said he is starting a consumer tech company, and has been having trouble getting funded by Boston area VCs. Ed said that even on the West Coast VCs can be reluctant to back consumer-oriented companies. (Perhaps, but I'd say they're less reluctant there than here.) He talked a bit about how slow established VCs can be to expand the scope of their investing. "VCs have as much of a problem as large corporations do in shifting their focus to new areas" like nanotech or cleantech, he said.

Ed mentioned he is working on a new study, to be released in the coming months, about the economic impact that MIT entrepreneurs have had on the world. (It's an update of an old study conducted by BankBoston.) Basically, it's huge.

I suggested that our next challenge in the Hub is helping our other great academic institutions -- not just MIT -- get better at spinning out companies.

And I also noted that if our region is already the center of the universe for life sciences innovation (it clearly is), and is becoming an important hub for cleantech, why don't we do a better job of communicating that to the rest of the world, to attract more people, money, big companies?

Doug Levin, the organizer of this event, mentioned that the next two guests will be Marvin Minsky and Nicholas Negroponte, dates TBD. Info here.

Labels: , , , , , , , , ,

Tuesday, September 2, 2008

ProteoStasis Therapeutics: $45 million first round, video interview with CEO

In late August, the Globe was the first to cover a new Cambridge biotech company, ProteoStasis Therapeutics, as it emerged from stealth mode and announced a first round of financing of $45 million, from firms like HealthCare Ventures, NEA, Fidelity BioSciences, Genzyme and Novartis.

Here's the video... an interview with ProteoStasis CEO David Pendergast:

And here's the official press release, and some coverage of the company from BioWorld.

Labels: , , , , , , ,

Tuesday, August 26, 2008

Filling Out Your Fall Calendar: Events Worth Knowing About

Here are a couple events for September, October, and November that I think will be worth going to. I'm planning to be at each of them in some capacity (reporter, moderator, organizer, etc.)

9.23-9.25: Emerging Technologies Conference @ MIT
Werner Vogels from Amazon, Rich Miner from Google, and Craig Mundie from Microsoft top the list of interesting speakers (according to me, at least)

9.25: Tech @ The Movies
This is the first entertainment industry panel that Mass TLC has organized, focusing on the role Massachusetts tech companies are playing in the movie industry. I'm moderating a panel, and giving a short talk about the historical contributions our state has made to the movies, based on my new book Inventing the Movies.

10.2: Mass TLC's Innovation UnConference
Mass TLC is reinventing its big fall event this year (previously known as the investor conference), trying to make it more valuable for entrepreneurs.

10.21 New England Mobile Summit
Part of the Mobile Internet World 2008 trade show, organized by the Yankee Group.

10.30 Ideas Boston
A chance to meet big thinkers like IBM's Martin Wattenberg, Daniel Schrag from Harvard, and John Maeda, the new president of RISD.

11.12 Innovation in Hollywood: Past, Present & Future
I'm giving an illustrated book talk about Inventing the Movies at the Museum of Science... chock full of movie clips, photos, and trivia.

11.15 HBS Cyberposium
Last year's speaker roster included Walt Mossberg, Ray Kurzweil, and Curt Schilling.

11.19 Future Forward 08
A gathering of entrepreneurs, investors, and CIOs/CTOs to explore new directions in technology. Audience limited in size; invite only.

12.6 MIT Venture Capital Conference
No Web site up yet for this year's event... but last year's included Google exec Chris Sacca and VMWare CEO Diane Greene.

Labels: , , , , , , , ,

Thursday, August 14, 2008

Y Combinator's August 2008 Demo Day in Cambridge

Here are the three things that hit me hardest about today's Y Combinator Demo Day in Cambridge.

1. The Boston VC community has finally woken up to this event, and the promise (and engineering skillz) that many of the YC start-ups show. Represented in the audience today were Matrix, Sigma, Kepha Partners, Spark Capital, and a zillion others -- many of whom weren't present last August. General Catalyst sent at least three folks, including co-founder Joel Cutler. More conspicuous this year were the VC firms who didn't sent a partner or associate, like Polaris, Prism, Highland, North Bridge, and some alleged early-stage funds like .406 Ventures and DACE Ventures.

2. Many of the start-ups were focused on radically simplifying the sign-up process to use a new Web service, or set up a new blog or Web page. I found myself wondering, "When will a YC start-up figure out how to enable me to join a new service before I've even heard of it?" Maybe in the Spring 09 crop...

3. I think Paul Graham is the Schumpeter of the 21st century. Every start-up seemed to be trying to destroy (or at least improve upon) something that has been around for a couple years....including Evite,, Reddit, Blogger, existing digital photo frames, and Tumblr. That's a good thing, but it was funny to hear Posterous, the first start-up to present, diss Tumblr with Tumblr investors (two guys from Spark) in the audience.

Here's the video I shot at the event, followed by some notes on all of the non-stealth companies that demoed. (Video includes TicketStumbler, Fliggo, Picwing, MeetCast, CO2Stats, Job Alchemist, Slinkset, Frogmetrics, Anyvite, Popcuts, Snipd, and Ididwork -- though not in that order. There's also a brief cameo from John Puskarich, co-founder of Bountii -- a Y Combinator alum.)

- Posterous was first out of the gate, and impressed a lot of people. A slick, simple way to start and maintain a blog using only your phone (or any device that can send an e-mail). Handles photos, MP3s, and video really well. Great company name, too. Already covered by TechCrunch and VentureBeat.

- TicketStumbler is, simply, Kayak for sports tickets, searching lots of sites across the Web and then helping you sort the options, for instance, that exist for seeing the Red Sox game. (Where do you want to sit, and how much do you want to pay?) Covered by TechCrunch here. They say they are already profitable.

- Fliggo runs an existing video-sharing community ... planning to introduce something new soon, geared to people who're dissatisfied with YouTube. A bit more about what they're up to is in the video, above.

- Picwing is trying to do for photo frames what Apple did for MP3 players... marry nicely-designed hardware with easy-to-use software. Frame is $249, and has a Linux computer inside. Their demo involved shooting a (blurry) pic of the audience and then having it appear a few seconds later on the frame. Neat! The somewhat cyncial VC next to me seemed ready to place his order.

- MeetCast: trying to make Web conferencing simpler than WebEx yet more sophisticated than Tokbox. Start a conference in a few seconds... invite people to call in or participate via video... or share presentations or docs from their desktops. This was one of those apps that you really want to get your hands on to see if it's actually as easy-to-use as the demo made it seem.

- CO2Stats felt like the most mature start-up of the bunch. And they have an actual business model that involves people paying money for a valuable service, not simply placing "targeted ads" on Web pages, or hoping someone will buy them before it becomes obvious they can't produce revenue. They certify that a Web site is run with green power, and will actually sell the site renewable energy credits to offset the site's carbon footprint. Already profitable, apparently the early leader in its space, and just signed IBM as a customer. I suspect they will be acquired before 2008 is out...

- Youlicit: Trying to best Mahalo and Squidoo by using algorithms rather than human editors to create guides to a given topic (like "picking up girls".) The results are similar to the topical directories that humans built for Yahoo in the mid 1990s. Maybe Yahoo should throw everything away and simply buy Youlicit? They'd hardly have to change the ticker symbol...

- Job Alchemist: Helping blog publishers make more money by putting targeted job listings on their sites... and collecting a bounty when a candidate gets the job. Also makes setting up niche job boards easier. Can't wait to try this.

- Create Digg-like rating systems, or votable lists, in a few minutes with Slinkset. Another thing I need to tinker with for

- Frogmetrics uses Nokia N810 devices (about $350 each) to collect survey data from consumers after they've engaged in transactions. Six employees.... they say they're already profitable... and just landed a Fortune 150 client. They say their survey response rates are better than 90 percent... and that they use the N810 because they think people are less likely to swipe it than an iPod touch, which is cheaper. Establishments can collect e-mail addresses from their customers, and also analyze how people rate individual employees or product quality at a particular time of the week. Like, does a restaurant's food get bad ratings on Sunday night, but great ones on Monday? They've been testing it in two Cambridge restaurants, which they wouldn't name.

- Anyvite is yet another Evite-killer. Focused in part on making invitations easy to create and respond to on mobile phones. Covered here on TechCrunch.

- Snipd is doing content-sharing/social bookmarking, with a focus on honing in on specific passages of an article, or segments of a video, that users find most interesting. That lets other users hone in on the "hot zones" of a video -- the part that other users found most compelling.

- Ididwork allows employees to track what they've accomplished, and publish it to a Facebook-style feed page. Managers can also use the system to review employees, giving them more frequent feedback than the quarterly review. Already profiled on TechCrunch.

- Backtype wants to be Google for comments, hunting down blog comments and making them searchable and trackable (so you could track all of my comment posts across any site, or create alerts about a given company that may be mentioned in comments.)

- Popcuts is a bit like the music site AmieStreet, except they reward people who purchase music early (and presumably tell their friends about it) by giving them a cut of future sales. If a song takes off, not only could you have the 99 cent purchase price refunded, but you could earn a return for being a "taste-maker."

A few other presenters are still in stealth mode, and we were asked to leave their presentations off-the-record. We'll see if folks do that...

Here are some of the people I saw in attendance:

David Beisel of Venrock, Don Dodge of Microsoft, Bijan Sabet and Rob Go of Spark Capital, Jeff Yolen of Sphere, Saar Gur from the California office of Charles River Ventures, Steve McCormack from Commonwealth Capital, Margaret Lawrence from Pilot House Ventures, Matt Witheiler from Flybridge, Tali Rappaport from Matrix, David Baum from Stage 1 Ventures, Jonathan Golden from Greylock, Jonathan Seelig from Akamai, Bill Warner of Warner Research, David Hornik from August Capital, Rich Levandov from Avalon, Neil Sequiera, David Orfao, and Joel Cutler from General Catalyst, Matt Hjerpe from Atlas, Jeff Glass from Bain Capital Ventures, Roger Krakoff from Sigma, Fred Wilson from Union Square, Dharmesh Shah from HubSpot, and Jo Tango from Kepha.

Also saw John Puskarich from the shopping search site Bountii, a Y Combinator graduate from a previous class. They've gotten some angel funding. John, an MIT alum, has been working in Cambridge, with his co-founder Samir Meghani in the Bay Area. Sadly, John told me today he's heading west soon to keep building the company out there.

We'll see if some Boston investors put money into this summer's batch of start-ups...and maybe keep them around the neighborhood. So far, Bijan Sabet of Spark is the one Boston-area VC to put money into a YC company, I'm In Like With You, which is actually based in NYC.

Here's some previous InnoEco coverage of Y Combinator and video with Paul Graham.

Labels: , , , ,

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.

Labels: , , , , , ,

Wednesday, June 25, 2008

Will Twitter Be Spark Capital's First Home Run?

You can't have a conversation with a techie without Twitter entering into it somehow. Either:

1. They've just begun Twittering
2. They're skeptical Twitter will ever make money
3. They're complaining about Twitter's frequent outages
4. They believe Twitter is the future of communications

Yesterday, Spark Capital of Boston announced that it was one of two investors in Twitter's new $15 million funding round. (Twitter's parent, Obvious Corp., is based in San Francisco.) The other investor is a dude called Jeff Bezos. PaidContent says the new round values the start-up at a shade under $100 million. TechCrunch had it last month at closer to $80 million. Clearly, they'll use some of the fresh cash to make Twitter more reliable.

Spark partner Bijan Sabet, who'll join Twitter's board, talks about the investment here. Twitter co-founder Biz Stone tells the story from his perspective on the Twitter blog.

I spoke with Sabet this afternoon, and suggested that his avid use of Twitter might've helped him get in on the deal (several other Boston VC firms were angling to invest). Sabet said it'd be self-serving to explain why he thought Obvious chose Spark to invest in this latest round, but he did mention that three other partners at Spark use Twitter; I'm not aware of any other Boston VCs who do. It's hard to imagine a Boston VC lobbying to get into this kind of deal without having some first-hand experience with the product. Sabet says that for Spark, using Twitter "made us feel comfortable that we knew what was going on, beyond just reading the business plan." When I asked again if he thought his status as a Twitter user contributed to the company choosing Spark to be part of this round, Sabet dodged the question...

Of course, the Boston VCs who lost out here will say they didn't like the valuation, or they weren't comfortable putting money into a pre-revenue company... which is their prerogative. But it's worth reading this post from Jason Calacanis about Twitter's potential to be a billion-dollar business.

Getting into this round is a big deal for Spark... an investment that could put the firm on the map. I'll be shocked if Twitter isn't acquired before 2009 is out.

Labels: , , , , , ,

Thursday, June 5, 2008

Edocs founder Kevin Laracey shacks up with Sigma

Sigma + Partners, the Boston VC firm, just announced they've added Kevin Laracey, formerly founder and CEO of edocs, as a venture partner.

Edocs was acquired by Siebel Systems back in 2004, for somewhere between $115 million (the amount reported initially) and $145 million (the amount Sigma lists on Laracey's bio -- which could include later incentive payments for hitting certain milestones).

That means that the company, which made Web-based account management and billing software, was a middling success for its investors. Edocs raised $80 million in VC from Sigma, Charles River Ventures, JAFCO Ventures, and others. So it was slightly less than a 2x deal when Seibel acquired it.

As with all newly-minted VCs, it'll be interesting to see Laracey's first few deals...

Labels: , , , ,

Monday, June 2, 2008

Sunday's Globe column: Y Combinator & New England VCs

Yesterday's Globe column explored the question of why start-ups that go through the Y Combinator "boot camp" seem to get funded by west coast VCs, but not VCs here in New England.

Probably it is the youth and inexperience of the founders. Twenty-somethings often fail the first time they try to start a company. (Of course, when they succeed, look out: Microsoft, Yahoo, Facebook, Google, Apple, iRobot, etc.)

Massachusetts venture capitalists, Y Combinator co-founder Paul Graham told me recently, think "like bureaucrats."

"Bad VCs think about covering their a**es if things go wrong. They want to minimize the downside. Good VCs chase high returns," he says.

"Silicon Valley investors know about Y Combinator and take it more seriously. They're much more curious about new things." In Silicon Valley, firms send partners to the YC demo days, where start-ups show what they've been working on. Here in Boston, he says, they send associates.

"I worry about the future of the city," says Graham. "What makes Boston not just Baltimore is technology. If Boston falls behind in investing, the city will fall behind." Each year, the Y Combinator team questions whether they should continue to hold their summer program in Cambridge, but Graham says, "I think we'll keep doing it in Boston." Getting investment from East Coast VCs isn't essential to the program's success, he adds, because the summer crop of start-ups also take a trip west to pitch investors there. (No YC company has yet gotten investment from a Boston-area investor.)

He gets more into these issues, and his advice for entrepreneurs, in the video clip below:

Labels: , ,

Thursday, May 22, 2008

How Can We Attract An Additional $1 Billion in CleanTech Funding?

The New England Clean Energy Council has just put out its first major report, which makes the case that building a strong clean energy cluster in New England can bring as much as $1 billion in incremental investments to our region between now and 2012.

The study, produced by Topline Strategy and NECEC, makes the case that Silicon Valley is the only obvious concentration of clean energy companies so far, with about 26 percent of all venture-backed companies located there. New England is now #2, but only by a hair. We've got 9.7 percent of all the VC-funded clean energy companies, and the LA area has 8.9 percent.

One way to support the creation of more companies here, the study suggests, is to do a better job pairing up scientists and researchers with the entrepreneurs and managers that can help build big companies (possibly by pulling in leaders from other sectors of the economy.)

I'd also suggest that marketing, conferences, and networking events are also going to be key to letting folks know that this part of the world is conducive to building cleantech companies.

You can read the study here.

Labels: , , ,

Friday, May 9, 2008

Mass. VCs Looking Further Afield for Deals

(I'm slow to post the link to last Sunday's column, since last Saturday afternoon there was a new addition to the Kirsner family. Babies and blog posting are not so compatible, I'm finding...)

The column was headlined, 'Investing Further Afield'. From the opening:

    Massachusetts venture capitalists are starting to rack up more frequent flier miles. A business that was once exclusively local - a decade ago, most venture capitalists adhered to the adage that they'd never invest in a company they couldn't drive to - is becoming global, fast.

    Battery Ventures of Waltham is planning to open an office in Mumbai, India, this fall, and shipping one of its senior partners to Israel to help build a small team there. Earlier this year, Matrix Partners of Waltham raised $275 million from investors for its first fund dedicated to start-ups in China. Billionaire publishing entrepreneur Patrick McGovern, founder of the Boston company International Data Group, is planning to announce a $150 million fund for Eastern European investments soon - but he no longer is putting new money into New England companies.

    There's also been a tilt toward California at some local venture capital firms, like Greylock and Charles River Ventures, where the center of gravity had once been Massachusetts.

After the column ran, the PR rep for Kodiak Venture Partners wrote to remind me that Dave Furneaux at that Waltham firm has been investing in China for a while now, and that Kodiak has a partnership with Dragonvest Partners in Shanghai to co-invest in Chinese companies.

And as I was wrapping up the column, Carl Stjernfeldt at Castile Ventures had mentioned that his firm has three deals at the term sheet stage, all of them in California.

Here's the video that accompanied the column, which features Charlie Lax of Grand Banks Capital and Vinit Nijhawan, a VC and entrepreneur now working at Boston University.

Labels: , , , , , ,

Wednesday, April 23, 2008

Play Hard: The New Game Company in Town

Hiawatha Bray has the first piece about Play Hard Sports, the new game company being formed by Jeff Anderson. Anderson was formerly CEO of Turbine Inc., which operates 'Lord of the Rings Online.' While Turbine had raised money from Highland and Polaris, both in Massachusetts, Anderson's new company just banked $5 million from New Enterprise Associates, a predominantly West Coast firm that has offices in Maryland.

Bray writes:

    The company will begin by offering a football simulation game, with plans to eventually add baseball, basketball, and other sports. Players will be able to create their own teams and pit them against other gamers via the Internet. "I can go online, find people of similar skills and abilities, and play them immediately," said Anderson.

    Anderson may have picked the perfect time to offer an online football game. Earlier this month, Electronic Arts Inc., the leading maker of sports games, announced it would no longer sell a version of its hugely popular football game Madden NFL for desktop computers. "That changes the dynamic and the landscape dramatically," said Anderson. "It leaves a very big vacuum."

Company is based, appropriately enough, in Foxborough (home to the New England Patriots). Here's a quick glimpse of the types of folks they're trying to hire, from the Play Hard Web site.

Labels: , , , , ,

Monday, April 21, 2008

Mascoma: Lone Massachusetts Company in First Quarter's Top Ten Venture Deals

The PriceWaterhouseCoopers/NVCA MoneyTree Report covering Q1 activity just came out.

Part of the news is that there was a worrisome drop in the amount of capital poured into New England companies during the first quarter.

But the other interesting tidbit comes from the list of the top ten money-raisers in the quarter: companies like Slide (developer of Facebook apps), Asthmatx (medical devices for asthma sufferers), and Infinia Corp. (Stirling engines and generators), each of which raised $50 million.

Company #10 on the list is a mysterious Brighton, MA biotech company that raised $44.99 million from firms like Atlas Venture, General Catalyst, Kleiner Perkins, and Khosla Ventures. It's the only Massachusetts company to make the list.

Though the MoneyTree survey labels the company and its business as "undisclosed," all signs point to Mascoma Corp., a company turning cellulosic materials (plant-based schtuff like wood, straw, and switchgrass) into biofuels. (This was earlier reported as a $50 million combo of equity and debt, but there's no press release on Mascoma's site.)

Interestingly, the #1 money-raiser in the quarter was another cellulosic ethanol company, Colorado-based Range Fuels, which took in an eye-popping $130 million. Range and Mascoma have one investor in common: Vinod Khosla's Khosla Ventures.

(Both Range and Mascoma are classified by MoneyTree as "biotech" firms, but it seems to me they'd fit better in the "industrial/energy" category, though they do rely on living organisms and biotech processes to make their fuel.)

Labels: , , , , , , , ,

Thursday, April 17, 2008

What Happened Between IDG and Flybridge?

I'm developing a few columns related to the venture capital world, so this afternoon I had a chance to chat by phone with IDG founder and chairman Pat McGovern.

One topic I wanted to ask him about was the split between IDG and the former IDG Ventures Boston team, which rebranded itself last month as Flybridge Capital Partners.

I'd run into Jeffrey Bussgang last week, one of the original partners at IDG Ventures Boston. He said that there were no hard feelings between IDG and the Boston investing team... but that IDG had chosen not to put money into the new $280 million Flybridge fund, after participating in two prior IDG Ventures Boston funds.

McGovern told me this afternoon that when the IDG Ventures Boston team asked how much he wanted to invest in their third fund, he said that he'd been getting better returns investing outside the US. (McGovern and IDG have funds in China, Vietnam, India, and Korea, among other places.)

"We didn't think the returns were competitive with the returns we could get elsewhere," McGovern said.

He was also bothered by the Boston team's desire to do more investing outside of New England and the East Coast. "They didn't want to stay east of the Mississippi," McGovern said, and they wanted to invest in some sectors outside of pure IT. (Another IDG fund is based in San Francisco.) "Your goals and the IDG brand are no longer aligned," McGovern said he told the Boston team.

"We agreed, they'll change their name, and raise money from people other than IDG," he said. (In 2005, when the Boston team raised its second fund, a $180 war chest, IDG had put in $25 million.)

Oddly, McGovern, who gave $350 million to MIT to start the McGovern Institute for Brain Research, said he thought the Boston team's forays into med-tech and diagnostics, like Predictive Biosciences' urine-based cancer tests, were too much of a stretch. "They were getting into areas where was no longer the major competitive advantage."

But McGovern said that "we're hoping that they do extremely well," referring to the new Flybridge fund. "We still have a lot of cash at stake in funds I and II." He said the team's historical returns had been "better than average."

McGovern is not totally pulling out of U.S. venture investing, however. McGovern said he's supporting a second IDG Ventures San Francisco fund, currently being raised. "We're putting 25 percent of the money into the new fund, which is a month or two away from closing at $180 million," he said.

I also spoke today with Flybridge managing partner Michael Greeley. (Disclosure: Greeley and I serve on the advisory board of the Nantucket Conference together.)

Greeley said, "It's a mischaracterization to say we've gone off-strategy," adding, "[Pat] has great personal interest in the healthcare convergence scene," given his philanthropic activities. Greeley also said that he expected about 80 percent of the new fund's investments to be companies that the partners can drive to from Boston, though he wouldn't rule out doing a seed deal on the west coast (though he termed it "unlikely").

Greeley says one big reason for the name change, and the split from IDG, was that he worried entrepreneurs would confuse his new fund with the IDG Ventures San Francisco fund. He and the other partners said that raising money for this new fund wasn't a problem, even without IDG's allowance: "We did not to an offering memo" to market the new fund, Greeley told me.

He also told me that the firm is looking for new space in the Back Bay, having outgrown its current digs at One Exeter Plaza, IDG's headquarters. "It's a shame not to be able to bring on entrepreneurs-in-residence because you don't have enough space," Greeley said.

(PEHub's Dan Primack served up some inside info on the relationship between McGovern and the new Flybridge fund last month.)

Labels: , , , ,

Wednesday, April 16, 2008

Paul Graham on 'Why There Aren't More Googles'

Y Combinator co-founder Paul Graham writes one or two essays a month. (They're much more thoughtful and elegantly written than the typical blog post.)

The latest one is on 'Why There Aren't More Googles.'

From the piece:

    [Computer science pioneer] Howard Aiken said "Don't worry about people stealing your ideas. If your ideas are any good, you'll have to ram them down people's throats." I have a similar feeling when I'm trying to convince VCs to invest in startups Y Combinator has funded. They're terrified of really novel ideas, unless the founders are good enough salesmen to compensate.

    But it's the bold ideas that generate the biggest returns. Any really good new idea will seem bad to most people; otherwise someone would already be doing it. And yet most VCs are driven by consensus, not just within their firms, but within the VC community. The biggest factor determining how a VC will feel about your startup is how other VCs feel about it. I doubt they realize it, but this algorithm guarantees they'll miss all the very best ideas. The more people who have to like a new idea, the more outliers you lose.

Given that Graham and Y Combinator need to work with VCs -- the start-ups that Y Combinator funds typically rely on VCs for a next stage of funding -- his candor is refreshing (and a bit surprising).

Labels: , ,

Wednesday, April 9, 2008

Dispatch From Venture Summit East: More Seed Funding in the Works from Kodiak?

Swung by the Four Seasons today to catch a bit of the AlwaysOn Venture Summit East, their first event in New England.

In the halls, I ran into David Andonian from DACE Ventures (who told me his two most recent investments were Howcast in NY and EveryScape here in Mass.) ... Flybridge Capital Partners blogger Jeff Bussgang ... M&A guy Paul Bowen ...former CEO Scott Meyer ... Mr. Punchbowl Matt Douglas ... and Intel Capital's Lucy McQuilken.

My panel was titled "So You Want to be a VC." After a quick, poll, it turned out that only one person in the audience we focused on what the panelists (all representing relatively new VC firms) are doing differently.

One interesting snippet that I wanted to share with you related to seed funding -- especially seed funding of unproven young entrepreneurs.

Bijan Sabet of Spark Capital said his firm had put money into Tumblr, an NYC start-up founded by 22 year-old David Karp. Sabet observed that "seed deals will inevitably have a high mortality rate...and we're not comfortable with that here." (Here presumably meaning Boston/New England.) He mentioned Y Combinator (based in Cambridge & Mountain View) and Tech Stars (Denver) as firms that are trying to build a model around very early, very small seed deals.

Chris Greendale of Kodiak Venture Partners said he thought it'd be smart for VC firms to take a million bucks, and put it into ten ideas. I asked him what would happen if he proposed that at his next Monday morning partners meeting. Greendale said "we're talking about it," and he told me afterward that some news could be forthcoming in the next 90 days. "Why is it such a bloody long process to give away $100,000 to a new company? We can give $100,000 to our existing portfolio companies at the drop of a hat," he mused.

The biggest (and only) applause line of the panel came from Drew Lipsher from Greycroft LLC. Someone in the audience asked about entrepreneurs moving west to find money. Lipsher said something to the effect of, if the entrepreneur doesn't believe in his company enough to believe it can succeed here -- they need to move it to Silicon Valley -- then we don't need to invest.

Labels: , , , , , , , , , , , , ,

Sunday, April 6, 2008

Sunday's column: Georges Doriot and the Origins of Venture Capital

Today's Globe column focuses on Georges Doriot, the founder of the modern venture capital industry...and the subject of a new book, "Creative Capital", by BusinessWeek editor Spencer Ante.

The opening:

    Without him, Digital Equipment Corp. might never have gotten started, and the electronics-testing company Teradyne Inc. might not have survived beyond infancy.

    He backed an oil rig-manufacturing company run by George H.W. Bush. The current Secretary of Energy, Samuel Bodman, once worked for his Boston firm. And a half-century ago, he put $50,000 into a company called Ionics Inc. that was trying to find new ways to desalinate seawater; GE bought the company in 2004 for $1.1 billion.

    Georges Doriot is the forgotten grandfather of the modern venture capital industry. His Boston firm, American Research and Development, or ARD, helped lay the foundation for the Route 128 technology cluster.

Here's the video:

One correction to the column: Ante notes on his blog that the total amount ARD invested in Digital was more like $400,000; $70,000 was just the initial tranche.

Labels: , , , , ,

Wednesday, March 26, 2008

Some Notes on Boston's Future

I met with some folks this week at Boston's City Hall to riff on some of the themes I've been writing about (most notably, what Boston can do to keep young people here... starting companies and going to work for our most innovative businesses), and also hear what the Boston Redevelopment Authority is up to.

A few notes from that conversation...

1. Boston could do a better job at being a lighthouse... sending the message that this is where you come to learn and to start businesses in life sciences...cleantech...robotics...Web 2.0 services...or anything else that's innovative. We need to communicate what's here more clearly with the rest of the world.

2. We need to help students who come here to learn to get connected with the business community: successful entrepreneurs and investors who're open to backing young people. (Or do we want the Sergey Brins, Mark Zuckerbergs, and Bill Gateses of the present to start their companies elsewhere?) One idea would be two separate annual events that would be open and free for any undergrad or grad students: say, one in the fall where they could meet, hear from, and schmooze with entrepreneurs...and another in the spring where they could do the same with VCs. (I had a conversation on that topic later in the week with Don McLagan of, who is exploring for the trade group MITX ways to build better bridges between students and tech companies.)

3. One resource that'd be helpful to young entrepreneurs (and everyone - let's be honest) would be a wiki that served as a sort of "Entrepreneurs Guide to Boston," offering info about VC firms, networking events, shared office spaces, etc.

4. The BRA folks mentioned that they have a gigantic old building in Charlestown that's in search of a new purpose: the Ropewalk. What if, we brainstormed, five or six universities got together to turn it into a collaborative space for start-up companies founded by students or profs? Wouldn't it be cool to collect start-ups from Babson, Bentley, BU, BC, etc. in one place, and see what happened?

Here's a video that shows what the Ropewalk was like in its heyday:

Labels: , , , , , , , , , ,

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.

Labels: , , , , ,

Monday, January 14, 2008

Boomeranging founders: Sunday's Globe column

Sunday's Globe column looks at companies locally (and nationally) that have put a founder back in the CEOs office after a "professional" manager doesn't work out.

From the piece:

    Boston venture capitalist Jeffrey Bussgang, a former entrepreneur, says firing the chief executive is the "only tool in the toolbox" for investors when a company hits a rough patch. Asked whether he's kidding, he says he's half-serious. "Ultimately, the real core of the board's job is oversight, and that includes hiring, evaluating, compensating, and, if necessary, firing the CEO."

    Of the latest crop of initial public offerings of Massachusetts tech and biotech companies, the majority had founders or cofounders as CEOs. Could it be that hired guns are quicker to sell a company, rather than continue to grow it?

The video is from a chat I had with Akamai Technologies co-founder Jonathan Seelig at last week's panel at the Vilna Shul.

Labels: , , , ,

Thursday, January 10, 2008

Catching up: Sunday's column, Tuesday's panel, Tonight's talk

- Last Sunday, I wrote about Cinital, a start-up that moved from Cambridge to Hollywood to try to improve the way TV shows and movies use "green screen" technology. From that piece:

    Ordinarily, it's hard to tell what live actors will look like once these digital backgrounds are laid in; that work, called "compositing," is usually done afterward by visual effects specialists. But the concept behind Mack's company is to mix the actors and the backgrounds in real time, so the director can see what the final shot will look like by glancing at a high-definition monitor - and reduce or eliminate the costs of all that laborious, after-the-fact compositing.

    Mack's Cinital system could be used on as many as 20 TV productions and a handful of feature films this year, says Sam Nicholson, chief executive of Stargate Digital, a South Pasadena, Calif., visual-effects firm that bought the first system. One of the first projects to which Cinital contributed is NBC's new made-for-TV movie "Knight Rider," which airs next month.

Here's the video:

- Tuesday we had a discussion about venture capital in 2007 and 2008 at the Vilna Shul on Beacon Hill, organized by Doug Levin (who writes about it on his blog.) While no one was optimistic about where the economy is going this year, all three felt confident that going long -- investing in start-ups over five or six or seven years -- is still a good strategy. Larry Bohn said that his firm has placed some big bets in video, and doesn't see General Catalyst doing much more in that space, but he did predict the end of Microsoft's domination of the software world (Bill Gates retires, and everything goes to hell.) Jonathan Seelig from Globespan seemed very interested in how all of the "data utility" services we get at home, like voice, Internet, and TV, will be bundled and managed and marketed going forward. I think one of our audience members recorded the event, and I'll link to it once it's up. (Update: Chris Herot has some notes.)

- Tonight I'm giving a talk about the past, present, and future of the innovation economy here in New England -- and some of the challenges we should all be working on. While it's sponsored by the HBS Association of Boston, you don't have to be an HBS alum to go. (Just register as "Other Alum Guest.")

Labels: , , , , , , , , , ,

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?

Labels: , , , , , , , ,

Friday, December 14, 2007

Two upcoming events in Boston

On Tuesday, January 8th, I'll be moderating a discussion with three local VCs, titled, "Looking Back on 2007; Looking Forward to 2008." My victims will be:

    - Larry Bohn of General Catalyst
    - Jonathan Seelig of Globespan Capital Partners
    - Alan Spoon of Polaris Venture Partners

It's free. More info here. Doug Levin of Black Duck Software is the organizer.

And on Thursday, Jan 10th, I'll be giving a talk to the Harvard Business School Association of Boston. This'll be a new version of a talk I've given twice, about the history and future of the innovation economy in New England -- and what we can do to ensure that it stays healthy. (Non-HBS alums are welcome...just register as "Other Alum Guest.")

Labels: ,

Tuesday, December 4, 2007

Stem Cell Start-Up Fate Gets $12 Million

Fate Therapeutics hopes to use stem cells to fix damaged tissue; the start-up just received $12 million in A round funding from ARCH Venture Partners, Polaris Venture Partners, Venrock, and OVP Venture Partners. The company's scientific founders hail from the University of Washington, Harvard, Stanford, and the Scripps Research Institute.

Fate says it'll have offices in both Massachusetts and Washington (the company was incubated in the Seattle offices of ARCH), but until a CEO is hired, they won't have a decision about where the HQ will be.

From the Seattle Times coverage:

    In Seattle "we're able to attract money to great ideas," [ARCH founding partner Robert] Nelsen said. "The hardest thing is finding the right team and the right CEOs."

    Fate will work on drugs that cause dormant adult stem cells to rebuild damaged tissue, as well as drugs that reprogram mature adult cells into stem cells that can repair ailing organs.

    The therapies could help treat Down syndrome, Alzheimer's and Parkinson's diseases, as well as repair tissue after heart attacks, infections or transplants. Stem cells could also help fight certain types of cancer.

Mass High Tech adds:

    The firm aims to develop chemical-based, or small molecule, drugs intended to "awaken" stem cells in the body to combat diseases and regenerate tissue. Its other molecules would reprogram adult cells to an embryonic state. None of the firm's treatments would be derived from embryonic stem cells, the company says.

    Other local notables involved in Fate Therapeutics include Massachusetts Institute of Technology professors Robert Langer and Ram Sasisekharan, both of whom serve on the firm's scientific advisory board.

Labels: , , , , , , , , ,

Tuesday, November 27, 2007

TVM revamps Boston office, opens in New York

TVM, the VC firm based in Germany but with offices in Boston, is adding a general partner, Marios Fotiadis, to the Boston office, and promoting Jens Eckstein to general partner. Fotiadis has done stints at Advent International and SG Capital Partners, and also served as CEO of Achillion Pharmaceuticals. Eckstein is on the boards of Ascent Therapeutics and Magen BioSciences, and served as an advisor to Sirtris Pharmaceuticals.

TVM also recently opened a New York office. The company's backgrounder:

    TVM Capital, founded in 1983, is one of the first venture capital firms formed in Germany and an early entrant into the U.S. market in 1986. Since inception TVM Capital has raised more than €1.3 billion ($1.6 billion) in six fund generations and has established itself as a leading technology investment group in Europe and the U.S. TVM Capital funds have made investments in more than 235 information technology and life science companies where innovation, effective management and sound financial backing have enormous impact on company growth.

Labels: , , , ,

Tuesday, November 20, 2007

Pop Quiz: How Many of Y Combinator's Latest Start-Ups Got Funding from Boston VCs?

I was chatting this afternoon with Y Combinator co-founder and big thinker Paul Graham this afternoon, for my Sunday Globe column.

Y Combinator runs two three-month-long workshops each year for start-ups, one in Palo Alto in the winter and one in Cambridge in the summer. The firm also makes small investments, usually less than $20K, in the start-ups that it selects for these workshops. At the end of each workshop, they hold a Demo Day, where the entrepreneurs show their prototypes to a group of VCs and established entrepreneurs.

I'd been hearing rumors this fall that Y Combinator might stop doing its summer Cambridge workshop. But Graham told me that isn't happening. Rather, this year, they took the Cambridge class of start-ups to do a second demo session in Silicon Valley, a few days after they'd presented locally. (Interestingly, they don't ship the Palo Alto entrepreneurs out east for a second show-and-tell day.) That seemed to solve a problem Graham had noticed, which was that the East Coast group weren't getting as much funding action as the Palo Alto crew.

So what were the results of this first-year experiment with taking the East Coast cohort for a West Coast field trip? Graham says that not one of the 19 start-ups from the summer workshop has yet been funded by an investor in the Northeast. But about half got funding from an investor in Silicon Valley.

What's the meaning of that? You be the judge...

Labels: , , ,

Monday, November 19, 2007

Feinstein & Fleming: Dynamic Small-Cap Duo?

I've been curious about what blogger and former VC Michael Feinstein has been up to, ever since I bumped into him over the summer at one of the OpenCoffee Club gatherings in Central Square. Feinstein, formerly at Atlas Venture and Venrock, is also a regular presence at the Web Innovators Group.

At the last Web Innovators Group, Feinstein was wearing a stick-on name tag that linked him to Clear Stream Ventures, and when I asked him if that was the name of a new VC firm he was starting, he told me it was a placeholder.

Things got more interesting last week, when I ran into a VC who told me that Feinstein had been to a Deloitte-sponsored lunch, and talked a bit about what he was up to.

After trying for a time to put together an early-stage fund using the Clear Stream name, Michael has now linked up with Bob Fleming, founder of Prism Venture Partners. (Fleming left Prism as part of Woody Benson's extreme make-over of that Needham firm, now known as Prism VentureWorks.) Feinstein and Fleming are apparently now working together to raise a fund to invest in small-cap public companies, using some space at the Waltham office of Foley Hoag, a law firm.

"I will confirm that we are doing something oriented around small-cap public companies," Feinstein writes via e-mail, adding that he and Fleming won't have anything to announce officially until 2008.

Feinstein did acknowledge that he'd been working earlier to try to set up a seed-stage VC firm, but that he may have missed the right moment for that: "I was probably too late compared to some of the new funds in Boston -- .406, DACE, Kepha, etc."

This will be an interesting project to watch ... and I'm eager to find out more...

Labels: , , , , , , , , , , ,

Friday, November 9, 2007

Future Forward 07: Some rough notes

I have to confess that I did not take copious notes during Future Forward yesterday, a conference I help organize, but I did shoot some video, which I'll post here soon. (Update: video is below.)

But there were some great questions raised, some really insightful comments, and lots of interchange between the speakers and the tightly-packed audience.

The big question in the opening panel, which featured CIOs and CEOs, was whether it makes sense to be the "first one in the pool" when it comes to deploying new technology, or to be a fast follower. Bill Wray from Citizens Bank said his budget doesn't allow him to experiment in too many places, so he tries the latter strategy. George Orlov from Forrester Research said he's creating a sort of sandbox, so that his employees (technology analysts) can play with new technologies they are writing about. Ken Chaisson from Legal Seafoods talked about how some of the company's servers gravitate to new technologies, and that others follow when they see that the first group of servers is turning tables faster and earning more tips.

CEOs Paul Sagan (Akamai) and Art Coviello (former CEO of RSA Security, now a division president within EMC) were up next. Sagan talked about Akamai's near-death experience after the dot-com bubble burst, which required letting go hundreds of employees and getting out of high-priced leases. He also talked about how the company had to focus - quickly - on what he called "permanent economy" customers. I asked whether the start-ups in the room represented the "transient economy." "Too soon to tell," Sagan quipped.

The question of whether the enforcement of non-compete agreements hampers entrepreneurship in Massachusetts came up. Sagan said cheekily that we should lobby California to institute non-competes, rather than eradicating them here. Attorney Gabor Garai from Foley and Lardner, in the audience, seemed to think that they're a real problem. When Art Coviello got on stage, the first thing I asked him was his position. EMC/RSA, of course, likes to hold on to its best employees, and Coviello said non-competes help them do that.

Next, Dan Primack ran a very high-energy panel about VCs, IPOs, and M&A. He started by exploring corporate venture investing ... and particularly the fickle nature of it. Corporations open and close venture groups as the economy changes, and one of the VCs on the panel, Maria Cirino, said that in her previous life as an entrepreneur, one corporate venture arm replaced the person who sat on Maria's board three times in four years. The panel also touched on the problem of big funds (Battery was named) trying to do everything from early-stage deals to buy-outs. There was quite a lot of skepticism about that, but no one from Battery or General Catalyst was present to defend the big boys.

Giles McNamee brought up a very salient piece of data - only one or two percent of companies ever make it to an IPO, so it's quite natural that entrepreneurs consider and explore the M&A route.

After a nice long lunch, we came back to hear from the delightful and insightful artist John Maeda, who works at the Media Lab. I've long been a fan of John's work, but this was the first chance I'd had to see him speak. (TED has a video of a shorter talk he gave about his book 'The Laws of Simplicity,' but yesterday John got a full hour.)

Next, George Colony and Fidelity exec Charlie Brenner sparred on stage about the future of IT. Colony is trying to change the term to BT (business technology), since he says IT people should no longer be talking about information-related metrics (how many records are in a database, or how many queries they handle every day), but rather business metrics, like how much they've increased the average order size on the Web site.

Colony blasted the news media, mentioning the NY Times in particular, for "pumping up Google like they pumped up Amazon in 1997." The degree of hype, he said, is "very irresponsible." Colony was very skeptical that Google can revolutionize the cell phone business, since its new Android strategy will require carriers to work against their natural interests.

The last session, as tradition dictates, is a murderer's row of entrepreneurs, showing new products they're working on. Mark Thirman of AirPrint Networks had a pretty nifty demo, of a small printer that can spool out lottery tickets, movie tickets, or little maps; it communicates via Bluetooth with your cell phone. And Mike Phillips showed off Vlingo's speech recognition technology, which speeds up data entry on cell phones.

One VC in the audience made a telling comment. He asked a question of Vertica CEO Ralph Breslauer, dismissing the rest of the panel as "not real companies" (I'm paraphrasing). Everyone else was a consumer-oriented play, and some have slightly hazy business models. Are Boston area VCs just a wee bit prejudiced toward heavy-duty enterprise tech? Hmmm....

One thing we've started doing is allowing the audience to "invest" play money into the start-up company that they like the best.... as a joke, we put General Georges Doriot on the face of the bills (Doriot was the founder of the first venture capital firm, ARD, and a prof at Harvard Business School.) During the cocktail hour, one of the FF attendees, Tom Hagan, told me that he'd actually been in a pitch meeting with Doriot, early in his entrepreneurial career. Pretty cool ending to the day...

Labels: , , , , , , , , , , ,