What no one says about startups and venture capital in Boston

one couple man and woman whispering at ear

At cocktail parties and in the hallways at conferences, people who toil in the trenches of the startup world will speak much more honestly about their experiences than they will in a blog post — or in print — with their name attached to it.

So I sent out a wave of e-mails this week, and talked to a handful of people on the phone phone and in person, to ask a simple question: What are the things you’ve experienced about the way tech entrepreneurship, angel investing, and venture capital works in Boston that no one openly talks about? I offered everyone anonymity. All of the entrepreneurs I contacted are people who have successfully raised money, since I wanted to try to avoid sour grapes there. But my sample was decidedly unscientific, since I contacted only people I thought would provide an unvarnished answer.

Everything below is a direct quote. In all, I heard from 22 people, and because I was asking about “things we don’t say out loud,” the results were a fair bit more critical than what you might hear at a panel discussion. One Boston venture capitalist, a former entrepreneur, anticipated that things might tilt that way, and added the caveat, “I’m super-bullish right now on what has clearly become a vibrant seed/early-stage scene.” Another former entrepreneur who sold his company and recently signed on with a Cambridge venture capital firm proclaimed, “The startup environment has truly never been better in Boston.”

Here’s how entrepreneurs and investors responded…


It seems to me that most Boston VCs are content to play .500 ball, versus being the worst in baseball one year and winning the World Series the next.

Boston companies challenge themselves to make true innovations and we feel confused and jealous when consumer web apps are acquired for huge valuations on the West Coast.

The West Coast funds ideas and the East Coast funds revenue.

Boston angels and VCs simply don’t invest in consumer plays. It’s enterprise only, because that’s what they know.

VCs in Boston still play the game of complicated legal terms and clauses that masquerade as innocuous provisions. Those are actually complex ways of changing the economics in favor of the VC.

The glory of being a founder, e.g. portrayed in “The Social Network,” ignores the larger realities of stress, tedium, selling, travel, loneliness, conflict, and uncertainty.

There are lots of angels who don’t just want equity for the money they put in, but will also ask for extra “advisor” shares because they help make introductions to another investor or a customer. That takes advantage of inexperienced founders. You should say no.

In Boston, there is a HUGE difference between committing to write a check and actually writing the check. Entrepreneurs, be wary. Don’t count your money until it’s in the bank.

There is a lot of entrepreneur skepticism among entrepreneurs. Instead of just focusing on one’s own startup or being helpful to others, I’ve seen some entrepreneurs bash others’ startups. I even overheard, “I don’t know how they’re going to make any money” from some at Techstars’ Demo Day who aren’t investors. To those people, I wanted to ask: why are you at Demo Day if you aren’t an investor, if not to celebrate entrepreneurship?

Raising real angel money in Boston is almost as hard as raising VC money.

Most entrepreneurs, after exiting, would keep their job at the big company that acquired them for the right price.

The West Coast valuation bubble is hurting us in Boston/NYC. We all know that bust follows bubble, but we won’t have have raised enough money to weather the coming storm.

You need to be smart and a little bit arrogant to be an entrepreneur, to believe you can make something the world wants. When entrepreneurs sell their company, or go public, and then they become venture capitalists, suddenly they are ten times as smart and arrogant.

Boston is the center of the hardcore tech talent universe, but we haven’t managed to translate that to economic impact as well as we should have.

Execs at larger companies can’t figure out how to get out of their walled gardens and start deeply participating in the ecosystem around them.

East coast venture firms are enamored by the Valley and are rushing to participate in any way they can. New offices, partners, etc. If we are in a bubble, those firms will be feeling pain for years to come, not just because of the time and money but also because of the deals they should have done in their home market: Boston and New York.

We don’t encourage people moving around between companies, which actually strengthens the industry as a whole (e.g. non-compete is broken, loyalty is overvalued, etc.)

On the East Coast, if you flatline you probably die. There are many fewer “soft landings/acqui-hires” because the bigger companies are out west.

Many so-called “angels” are really service providers in disguise. Ask them about who they’ve funded recently. (This is true everywhere, not just in Boston.)

Very young and first-time entrepreneurs are getting funded with big money by large funds, which is refreshing. Plastiq, LevelUp, Jana — this never would have happened five years ago.

The VC community here is more cautious about big early round bets on first-time entrepreneurs.

As a founding CEO, it’s tougher to respect a VC that has never founded her own company or raised money on their own. We have a ton of them here in Boston.

The dirty little secret about startups is that the only people who make money are: anyone at the top one percent of companies, founders at the top quartile of companies, and any venture capitalists. Everyone else (98 percent of people at startups) would make more money working in corporate America.

Entrepreneurs respect the VCs that don’t spend all their time blogging and tweeting, but would rather spend it helping their entrepreneurs succeed.

The angel community in Boston is becoming a fantastic source of capital and knowledge from experienced entrepreneurs that are thoughtful and give a sh–.

In terms of talent, any type of consumer product/marketing/growth talent is markedly weak in Boston compared to SF or NYC.

Not enough women in startups. That happens because men hire men early on in the company, and they have trouble recruiting women later on.

There is one entrepreneur/employee/investor (potentially helpful person) for every 99 “service providers” (unhelpful people) at every networking event in Boston.

Many entrepreneurs-turned-VC think their brilliance made them successful, and forget that hard work, luck and ideas/contributions of others were much larger forces.

There is a wide disparity between angels who fund and add real value versus those who fund, look over shoulders, and whine & bitch.

Angel investors are often hobbyists, and not investors.

We don’t have enough big anchor companies (e.g. a Google, Facebook, Salesforce.com, etc.) training and developing talent to feed the ecosystem.

Many single product companies in Boston remain single product companies because, first, capital constraints don’t allow them to really experiment, and second, few Boston VCs think about massive disruption to a market and the money and risk that comes with that.

Watching Boston VCs obsess over the non-compete issue is like watching Kodak assert the key to fighting the digital photography war was Kodak-branded photo printers

Most VCs don’t know much about running a company, but they know a lot about recycling the best-case scenario that they saw at another of their companies. (From a former VC now working at a startup.)

Only people in Boston talk about the differences between Boston, NYC and Silicon Valley. No one else cares.


Angel groups are mostly made up of old guys who have no success in investing and are experts at groupthink and what cannot be. (From a VC, obviously.)

We need companies that get big enough that they become a training/breeding ground for another generation of startups, and generate enough wealth that there is plenty of money to recycle into the startup economy.

Entrepreneurs should NOT get referred to a VC via an attorney. VCs know the attorneys are spamming everyone with a “hot” referral.

Sales is the lost art at most companies these days, especially real business development deals, like “top of the mountain” ones.

Most startups are so dilution-sensitive that there is no chance of building a real team and a real company. They raise less than they need to scale. They don’t build a big enough management teams, and they argue with VCs about about the size of the option pool.

Charles River Ventures is now really a West Coast firm.

There are almost no great product craftsmen in Boston. Not designers, not product managers, craftsmen (and women).

Running a company is a lot more exciting than being a VC.

Most seed and micro-VC funds in Boston are struggling: low ownership positions and lack of ability to re-invest means they are subject to being washed out in re-capitalizations (which is what happened to that cohort in 2000-2002).

Thanks to Boston now becoming one of the best hotbeds in the country for entrepreneurialism, anyone these days who is wasting time fretting about East Coast/West Coast in terms of their ability to launch a company, might be confusing geography with their ability to be a successful entrepreneur.

How do you beat the Katie Rae/Reed Sturtevant combo? So, has Techstars Boston peaked?

Boston-based entrepreneurs need to travel more and work harder to stay in the knowledge flow. But they typically do neither.

The fact that so many Harvard Business School and other business-oriented students are now starting companies is probably the surest sign that we are in a bubble.

Where are all the “mafia”? Endeca is the closest thing to having a mafia, in terms of people funding and starting new companies. But companies like Wayfair, Dataxu, and Acquia going public could change that…

Techstars performance has been pretty weak recently, and they are no longer the best accelerator in town. Who is? Bolt. Better human capital, and other stuff that actually helps with “acceleration.”

No successful angel or early stage VC has an issue with one of their companies being scooped up for a billion dollars.

[Minimum Viable Product] is one of the worst pieces of advice given out. Often, it is an excuse to ship crap.

There are certainly a lot of startups being seeded. But there are very, very few good quality Series A investments happening. The lifecycle investors that used to do Series As, Bs, and Cs — there’s not a great fabric here right now.

Boston became the center of tech innovation the minute all the VCs started moving into Cambridge.

Your thoughts

What do you disagree with? What did they miss? Post a comment below…

Scott Kirsner writes the Innovation Economy column every Sunday in the Boston Globe, in which he tracks entrepreneurship, investment, and big company activities around New England.
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