Boston, Hub of the (Tech) Universe?

(iStockphoto)
(iStockphoto)

Poet and physician Oliver Wendell Holmes is widely credited with bestowing on Boston its moniker as “Hub of the Universe,” and while outsiders like to mock the nickname, it’s becoming harder to ignore one reality: Boston is officially becoming a launching pad for international startups. Maybe even, ahem, the Hub of the Tech Universe?

At Wednesday’s Techstars Demo Day, five of the 12 companies that appeared on stage, born out of the program, were international. MassChallenge had about 30 companies from throughout the globe in its class this year.

Why Boston?

It makes sense for Boston to become the center for a global startup ecosystem, mainly because it has three advantages over its competitors, some more clear than others.

First, Boston is an ideal destination for entrepreneurs with roots in Europe or Africa, especially those whose families remain across the Atlantic while they launch their companies in America. It holds a distinct advantage over Silicon Valley in terms of ease of travel and operating a multi-continent business. The time difference between Europe and California, as well as the travel time are major roadblocks for European startups to head west.

“One of our great advantages, versus Silicon Valley, is our proximity to Europe,” Techstars managing director Semyon Dukach said.

Certainly New York has this same ease of access advantage, but the days when New York had far more international flights than Boston are changing. (Just last week, Israeli airline El Al announced direct flights to Logan.)

Boston’s second advantage as a global startup hub is its size. For a small business looking to get off the ground in a new country, launching a startup in New York City can be overwhelming and daunting.

Organizations such as MassChallenge, the Cambridge Innovation Center, and Techstars, all offer soft landings for foreign companies. More importantly, Boston startup organizations are becoming better known throughout the world, with MassChallenge launching in London in 2015, the CIC opening an office in the Netherlands, and the Startup Institute starting operations in the UK and Germany.

“It is harder, for people without local roots, to have a network, raise money, and be successful,” said Dukach. “But a program like Techstars can really help them make a transition, help them hire people here, and help them mix into the local tech landscape.”

Boston’s third, and maybe biggest advantage as a global startup hub is the higher education system in the region that not only attracts students, and the next generation of entrepreneurs, but also creates another way for foreign founders to find a connection to the area, maybe through a family member attending college here. Is there any question that the most visible global brands connected with Boston aren’t EMC or Gillette, they are Harvard and MIT.

“Internationally, the Boston brand still carries a lot of influence, chiefly because everyone knows the reputations of Harvard and MIT,” John Harthorne, chief executive of MassChallenge, told me.

(One problem here, of course, is that Boston’s nightlife and culture scene can’t compare to New York’s, which is why so many students attend college here and then flee for Gotham upon graduating. Initiatives like Future Boston have been trying to change some of the realities and perceptions of “boring” old Boston by pushing for later bar and restaurant hours as well as the successful push for late night subway service.)

“Fantastic founders from Europe have a lot of exposure to Boston through the grad schools and universities that they and their friends come here for,” added Techstars’ Semyon Dukach.

It’s a two way street in terms of benefits. Many Boston tech organizations are reaping the benefits of international companies that are arriving here with a lot more traction than many of the early stage startups coming out of the colleges and universities.

As MassChallenge director of marketing Robby Bitting said of the global companies joining the startup accelerator, “In many ways, they are the more mature startups; they know exactly what they want and why they want to come to Boston.”

Building on the successes

There are more and more examples of success stories from internationally built companies that have come to Boston that are trickling back to Europe, Asia, and Africa.

CyberArk, for instance, went public a few months ago, and, with its recently announced earnings report, is looking like a big cybersecurity success. Founded in Israel, the company has set up its headquarters in Newton, with its R&D lab remaining in Israel.

Two recent acquisitions that were deemed big wins for Boston, GrabCAD and DocTrackr, were built in Europe but moved to Boston. GrabCAD, which was acquired by Stratasys, was founded by Hardi Meybaum in Estonia, while DocTrackr’s Clement Cazalot originally started DocTrackr (acquired by Intralinks) in France.

There are also more European startups popping up at incubators, accelerators, and shared spaces throughout the region. Two of the more interesting are Moritz Plassnig’s Codeship, a Techstars alum, and Databox, a mobile business intelligence company founded by Davorin Gabrovec.

Plassnig, who started Codeship in Austria, said he came to the US because most of Codeship’s customers and partners were here. “We just had to be here,” he said. Plassnig was approached by Techstars’ Bob Mason to join the program, and said it was “The perfect fit.”

After they completed Techstars, Plassnig said that there was no reason for Codeship to move back to Europe or anywhere else.

“We’ve got a huge network here, we know a lot of people here, and now it’s easier for us to hire here,” he said.

“I never understood why people asked us why we didn’t move to San Francisco,” Plassnig said, “I think it should be more like, ‘Why should we move?'”

 

Dennis Keohane was a Senior Staff Writer for BetaBoston.
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