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    Kayak acquisition could spur new angel investment in region

    Globe Staff Inc.’s $1.8 billion deal last week to buy the travel shopping site Kayak Software Corp. is the latest example of a tech behemoth gobbling up one of New England’s most promising companies.

    Though these deals remove a marquee name from the local tech landscape, they also lay the foundation for a new wave of promising start-ups by investors and entrepreneurs flush with money and the success from selling their companies.

    After Apple Inc. bought the Waltham mobile ad start-up Quattro Wireless for $275 million in 2010, for example, a number of employees eventually left and started similar companies, including Session M in Boston and Adelphic Mobile in Waltham.


    “The early and successful people who were part of that company get an opportunity to go out and try it again, and create these new companies that become market leaders,” said Don Bulens, a former executive at Lotus Development Corp., who has led four tech companies since IBM bought the Cambridge software company in 1995 for $3.5 billion.

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    His third start-up was the data storage company EqualLogic Inc., of Nashua, which was sold to Dell for $1.4 billion in 2007. Bulens­ is now on his fourth company, the virtual desktop provider Unidesk Corp., which employs 42 people in Marlborough.

    “It really doesn’t have to do with how much money you have in the bank,” he said. “It really has to do with the passion you have.”

    Still, for the entrepreneurs at the top of those companies, the newfound wealth can finance­ another career.

    At Kayak, cofounder Paul English stands to gain $122 million, and his partner Steve Hafner $94 million, based on Priceline’s offer of $40 a share. It’s unclear whether the two will remain after the deal is approved; based in Concord, English is Kayak’s chief technology officer, and Hafner its chief executive. Both declined to comment.


    But English’s history is suggestive. His previous start-up, Boston Light Software Corp., was acquired by Intuit Inc., in 1999, and he eventually moved on to found Kayak in 2004.

    “He’s an entrepreneur, so he’ll roll out of there,” predicted Todd Dagres, general partner of the Boston venture capital firm Spark Capital. “If you have a big exit in the area, it means that people generally look around to see what else they can do.”

    Indeed, the vast majority of founders of start-ups leave after their companies are acquired, said Joel Wiggins, who runs a center that helps entrepreneurs in Kansas and is writing a book on the subject. So far, he has interviewed more than 50 founders from around the country who started companies that were eventually bought up.

    “There’s a natural thinning at the top levels of companies after acquisitions,” said ­Wiggins. “But often founders will make sure their teams are protected.”

    The spinoff urge generally extends beyond the executive suite, Wiggins said, as many of the original staff of the acquired companies chafe at the bureaucracy of their new, bigger owner and leave, too.


    “I don’t think it’s ego,” ­Wiggins said. “It’s a desire to own the process of making that difference.”

    Not only do newly rich ­entrepreneurs turn around and start companies; some become benefactors who help nurture newcomers.

    In fact, some of the area’s newest angel investors are tech executives whose firms were snatched up by major West Coast entities.

    “For me, it’s really not for the financial return — it’s more about helping the next wave of entrepreneurs,” said David Chang, an angel investor whose company, Boston’s Where Inc., was purchased by PayPal last year for $135 million. He ­remains a top executive at PayPal.

    “By investing, it gives me a little skin in the game,” Chang said. “I look for investments where I know the space and can help in a strategic way — through functional expertise, providing connections, or helping with strategy or fund- ­raising.”

    The downside, though, is such acquisitions mean Boston loses out on seeing its home-grown companies grow into tech giants in their own right. Local executives say there are more than just bragging rights on the line.

    “We do like to have the companies that stay here and continue to grow,” said Dan ­Bricklin, a veteran local software engineer who runs his own company, Software Garden Inc., in Newton.

    “For the ecosystem, we need the bigger companies to stay here and have headquarters here so they can train the managers who will go off and found other companies.”

    In some cases, big tech companies have used local acquisitions to expand operations here — Dell boosted its presence ­after the EqualLogic deal and PayPal is more than doubling its local operation.

    Still, some deals have resulted in a technological brain drain.

    “In the short term, an acquisition can mean a loss of engineering talent,” said Lars ­Albright, cofounder of Quattro Wireless. “They move their network and capital to a new location.”

    The 2010 Quattro deal resulted in the transfer of about 45 engineering job from ­Massachusetts to Apple’s ­Cupertino, Calif., campus.

    But less than two years after joining Apple, Albright set off to start another company in Boston. His latest venture, the mobile advertising start-up Session M, has raised $26.5 million in venture funding and is already ­attracting suitors.

    “In the longer term,” ­Albright said, “you can see people coming back to where their roots are and starting a business again.”

    Michael B. Farrell
    can be reached at