Massachusetts is the #2 destination for venture capital in the US but within the state, there appears to be a shift happening as cities like Cambridge and Boston steal venture capital share from other destinations like Waltham and Woburn.
Below are two heatmaps of funding and deal activity. The first is from the Q3 2008 to Q3 2010 where we see Cambridge and Boston have the lead but where we see some healthy levels of activity in cities like Woburn and Waltham as well. The second heatmap screenshot taken from our Geography Analytics tool shows that Cambridge and Boston have solidified their presence as the #1 and #2 over the subsequent nine quarter period from Q3 2010 to Q3 2012.
With the shift that the heatmaps suggest, we then look at individual funding and deal trend to these four cities.
The clear winner in Massachusetts has been Cambridge with the lead in both VC deals and dollars. Over the last five years, the trend for deal activity has been fairly consistently trending up as the graph below illustrates. In the most recent quarter, Cambridge saw $305 million invested in 30 deals. Over the last four quarters (Q4 2011 to Q3 2012), Cambridge has seen $991 million across 122 deals. Versus the four prior quarters, Cambridge saw funding increase 5% and deal volume increase 27%. Deal volume is the better predictor of regional health as it’s less prone to wild shifts from the presence or lack thereof of large financing transactions.
Boston’s investment trend has been holding strong (graph below) as well over the last five years but overall, the level of deal activity and financing has lagged Cambridge. Boston also has not seen the growth in deal activity that Cambridge has exhibited as the four most recent quarters actually were down 13% on the number of deals versus last year (while funding was up 8%). In the last four quarters, Boston saw $541 million of funding and 63 deals. Cambridge’s funding levels were 183% higher and deal activity was 194% higher clearly showing Cambridge’s dominance over Boston.
Waltham’s venture capital, angel investment and corporate investment activity (graph below) registered an increase in deal activity of 14%
Woburn (activity graph below) has shown the poorest results of the big 4 cities in Massachusetts seeing only $60 million of funding over 9 deals in the last four quarters. Versus the prior quarters, Woburn has seen funding levels decline 26% and deal activity dive by 36%.