Genotrope covers the comings and goings of start-ups in theHUB Boston and Cambridge area.
May 2, 2008 at 8:38 pm
· Filed under Editorial, Start-ups
Recently there was an invitation only workshop at Boston University addressing the question, “Is Boston’s Venture Ecosystem Losing More Ground to Silicon Valley?“
At some point we might be privy to some of the discussions and conclusions reached during that confab, but for now, I would like to add an issue to the discussion.
Where are the active angel investors like Master of 500 Hats in the HUB? Silicon Valley is rife with successful entrepreneurs that have now turned to investing and advising the next generation of startups. Individuals such as Ron Conway, Reid Hoffman and the PayPal mafia, Paul Bucheit and several other xGooglers and the list goes on.
Maybe it is just a perception and there is a lot of activity in this area, just not publicly acknowledged. It might be attributed to adherence to that old Yankee adage that “your name should appear in the paper only three times: when you are born, when you marry, and when you die.” as mentioned on the eCoastAngels web site. Or, the reason may be the dearth of successful Web and SaaS companies in the area. But it seems that even in relative terms, the Boston area lacks this kind of angel/advisor/entrepreneur. Is our attitude here to keep our success to ourselves rather than pollinate our neighbors? Lets see if there are more of these individuals than we know about.
So, I am hoping to bring visibility to the angel/advisory activity here in theHub. Following are a few examples of the individuals we need more of. The list is only a start and not exhaustive, please send me your examples of these individual and I will add them to this post.
Who do we have here in Boston filling this much needed space in the investment ecosystem? Well, certainly the premier contributor would have to be Paul Graham of YCombinator. They have the seminal investor/advisor model, which is proving successful. Too bad most of their companies have to move to SV to find investors. A case could be made that based on YC’s track record, if someone started an angel fund, say Dart Angels, by throwing 5 darts into a Demo Day dartboard, and investing in those five companies, they could be successful. That is a shame that the YC companies can find no traction here in Boston.
One example of local individual angel/advisor here in Boston is Andrew Payne After successful stints founding Open Market and Revinio, he is actively investing in and creating new consumer Internet projects.
Dharmesh Shah is a driving force on the local startup scene, both as a founder and angel investor.
Now the call is out. Hey there VistaPrint, Bladelogic, Tripadvisor, Akamai, Upromise, Lycos, Open Market, Storage Networks, EMC, MQube …..etc. whats up?
Readers have nominated the following individuals for the list of Advisor/Angels
Don Dodge local Microsoft Exec and Angel/Advisor of local startups
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thanks for the link Tom.
maybe the weather’s warmer out here in spring / fall / winter? 
regardless, i’ve certainly been impressed with what Paul Graham is doing (on both coasts), and i’m sure there are other great examples of entrepreneurs giving back to the local community.
one reason there may be more activity out west is that there’s been more & larger recent internet startup successes in silicon valley than in boston over the past ten years with giants like Google, PayPal, Yahoo, eBay, etc… which in turn help provide the capital to fuel the next generation of entrepreneur angel funding.
still i think the overall market for angel investing is stronger everywhere than it was 5-10 years ago, not just in the valley… never been a better time to be an entrepreneur 
regards,
- dave mcclure
I could not agree with you more.
I really like the idea of “Dart Angels”. But, have been thinking about a slightly different brand and slightly more refined strategy.
Here’s the idea:
SpeedRound: The fastest follow-on round possible for selected YCombinator companies. I’ll put in 2X of whatever YCombinator invested, at precisely the same terms (so a 100% markup in valuation as a result of building a proto-type). This doesn’t solve the funding problem permanently, but it would be quick and easy.
We could actually sign the deal at Demo Day itself (I’d bring my checkbook).
Thoughts?
TS wrote @ May 3, 2008 at 1:23 am
Thanks Dharmesh, what could be more refined than throwing darts?
Your SpeedRound investment seems to be a great deal for the investor, but I don’t know about the young company.
I’m not a financial person, but knowing what I know about the YC deals, your proposal would be to invest another $30K for 6-10% of the company. So at the end of the 3 month prototype period, after taking your investment, the company would have given up 12-20% of their company for $45K. I don’t think that would be attractive. The value of YC is not the money, that is almost nothing in the scheme of things. So 2x nothing is not that significant. The value is the direction from YC, the incredible network connections and the alumni support network. It is unlikely that an individual can provide half of this value so again, 2x the investment is not enough.
Time is on the companies side not the investors. As you correctly point out with the name SpeedRound, the faster you can close the funding the better, because other investors will be close behind. I just think you will need to write a much bigger check.
Fair enough.
I totally agree that it is extremely hard (if not impossible) to create the value-add that YC does in the early stages. That’s why they’re so popular. If I were working on my first startup, they’d be high on my list.
I could write a bigger check (and have in the past), but I’m still not going to be able to compete with what a VC would do. Nor do I want to. My thinking behind the SpeedRound idea was that the “value” would be in the raw efficiency of the deal because raising larger rounds is just a pain in the butt and some entrepreneurs may rather just get back to working on the product.
But, I could be totally wrong. If entrepreneurs can go on to raise a larger round — or better yet, not even need/want the money, I’d be a strong supporter of that.
The good news is that competition is beneficial to the entrepreneur. They need more options. There’s no real downside to choices.
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