Venture capital money is the fertilizer that helps lots of different kinds of companies in Boston grow fast. Businesses like Biogen, TripAdvisor, Kayak, and ZipCar all relied on it at some stage of their development.

The overall availability of venture capital hasn’t been a problem in recent years. Massachusetts companies collectively raised almost $12 billion last year, up from $7.8 billion in 2017.

But underneath that 50 percent leap there are other dynamics in play — like a tilt away from investing in energy and technology companies and toward biotech and health care.

And individual venture capital firms often rise and fall in influence, based on whether they’re placing winning or losing bets, and sometimes when individual investors depart.


I wanted to dig into these dynamics, so I fielded a survey this month. I heard from 53 Massachusetts entrepreneurs, the bulk of them (58 percent) in the tech sector. Many of the respondents were founders of companies that have raised tens of millions in venture capital — like Yesware, a Boston software company that has raised $48 million in total — so my dataset isn’t just full of wanna-be Zuckerbergs griping about how tough it is to get a VC to take a meeting.

I gave respondents the option of being quoted by name or remaining anonymous.

Health of the ecosystem

I asked respondents to rate the overall health of the venture capital community in Boston, on a scale of 1 to 10, with 10 representing “excellent.”

The average rating was 6.4. When you look at responses from tech entrepreneurs only, it was a 5.9 — while life-science entrepreneurs ranked it 7.4.

What’s the issue, according to the tech entrepreneurs?

“There are so few active funds that it is hard to get a competitive dynamic,” says Matt Crowley, chief executive of Vesper MEMs, a maker of sophisticated microphones. “I go all over the world and money comes much easier outside of Boston.”


Crowley’s company raised $23 million last year from a mix of Massachusetts investors and others outside of the state, including Amazon and American Family Insurance.

“Boston remains a very conservative investment community, with little appetite to invest in consumer businesses,” says Walt Doyle, referring to startups that sell to consumers rather than to corporate purchasers. His most recent startup, Confirm.io, was acquired by Facebook last year after raising about $4 million. It focused on verifying government-issued identification.

Entrepreneur Roy Rodenstein says Boston is “still far behind [Silicon] Valley in options for entrepreneurs, especially for founders with diverse backgrounds and working in nontraditional Boston fields,” but he adds that the local venture capital ecosystem has “improved significantly in the last five years.”

Not every tech entrepreneur was critical.

“There is a tremendous amount of capital being pumped into the Boston tech ecosystem right now, and I believe that it is a very good time to start a business,” says Janet Comenos. Her startup, Spotted, gathers information about celebrities and sells it to advertisers and entertainment companies who hire them. The company has raised nearly $9 million so far.

In life sciences, entrepreneurs such as Yusuf Erkul, cofounder of the drug developer Kernal Biologics, note that “there’s continuing money flow in biotech deals.”

“Entrepreneurship and risk-taking are part of Boston culture,” says Stuart Blitz, chief business officer at Seventh Sense Biosystems, a Cambridge medical device startup that has raised about $40 million. Khaled Kteily of Legacy, a sperm-banking startup, rated the health of the Boston ecosystem as a 6, but says he “would rather be here than the vast majority of cities internationally,” even if the San Francisco Bay Area may boast a larger overall venture capital community.


Albert Nichols is the founder of Hall, a membership-based dining and social club in the Back Bay; he chose “other” to describe his industry. He struck a note similar to Rodenstein’s on diversity:

“VCs are still unlikely to fund under-represented founders, perpetuating Boston’s reputation as a diverse but segregated city, with unequal upward mobility for entrepreneurs,” Nichols wrote.

A female tech entrepreneur who requested anonymity wrote that as she seeks to raise a next round of funding — after having already raised more than $40 million — “Boston has the worst representation” when it comes to women startup founders who have raised venture capital, if compared to New York and San Francisco.

The go-to firms

I invited respondents to say which venture firms they think are the most relevant, active, and making interesting investments in 2019 — and to kindly exclude any venture firms that may have put money into their current or past companies, to try to eliminate the urge to pay fealty.

In life sciences, where I had fewer respondents, four firms earned at least five mentions. Third Rock Ventures was the favorite, with 11 mentions, followed by Atlas Venture, Flagship Pioneering, and Polaris Partners. (Polaris also invests in tech, but it was more commonly mentioned by life-science respondents.)


Third Rock can boast lots of “successful exits” — sales of companies and initial public offerings — wrote the CEO of a Cambridge biotech. The partners “focus on good science,” said another. Two other respondents cited one particular investment Third Rock made, in Bluebird Bio, a gene-therapy company that is now publicly traded.

On the tech side, nine firms received at least five mentions apiece: General Catalyst, with 13 mentions; Accomplice, Founder Collective, NextView Ventures, and Pillar, each with eight; Spark Capital, Underscore VC, and Matrix Partners, each with six; and The Engine, MIT’s Cambridge-based venture capital fund, which was mentioned by a mix of tech, energy, and life-science entrepreneurs.

Of General Catalyst, Eric Groves wrote, “They seem to be one of the only large-scale firms still actively in the mix in Boston.” Groves is CEO of Alignable, a Boston startup that helps small businesses make referrals to one another.

“General Catalyst is just different,” Doyle says. “They are not afraid to take big risks and have performed amazingly well.” Among the companies that the Harvard Square firm has funded are Airbnb, Kayak, HubSpot, and Stripe, which sells simplified payment infrastructure to websites.

Overall, I got many of the same kinds of comments that have dogged Boston venture capital for the two decades I’ve been covering the startup space: “conservative,” “insular and clubby,” “risk-averse and looking for already-proven business ideas or very seasoned entrepreneurs.”

But others acknowledge there is a boatload of fertilizer available for growing businesses — $12 billion ain’t bad — and that many of the newer venture firms are more willing to write checks to entrepreneurs who don’t yet have a track record.


“Good firms, relatively aggressive, decent people,” says Matthew Bellows, the founder of Yesware, which makes software for sales representatives. One female tech entrepreneur who spent part of her career in San Francisco says that Boston firms, comparatively, are “more focused on long-term success.”

That’s the state of venture capital in Massachusetts, from the founder’s side of the table.

Scott Kirsner can be reached at kirsner@pobox.com. Follow him on Twitter @ScottKirsner.