Do Massachusetts-based entrepreneurs raising a seed round suffer from a lack of local early-stage investor support? And if yes, are they forced to look out-of-state for funding? We looked at seed round investment data from 2010-2013 to see how active (or not) Massachusetts-based investors are at the early stage. The data shows that 68% of Massachusetts-based seed investments included a MA-based VC investor which doesn’t seem all that shabby. Of course, entrepreneurs may complain that Boston area investors don’t get consumer tech. On that one, maybe they have a point.
See below for a full analysis of seed vc-backed investments in Massachusetts.
[Tweet “Venture-backed startups in MA raised $73M across 76 seed deals in 2013”]Venture-backed startups in MA raised $73M across 76 seed deals in 2013, up 9% on a funding basis and 13% on a deal basis YoY. 2013 represented multi-year highs in both total funding and deal volume largely due to a big 2H 2013 which saw 51 of the 76 deals, and $53.6M of the $73M of funding.
Internet Companies Capture Majority of Seed Investments
Internet companies made up the majority of vc-backed seed investments over the past two years with a 52% deal share, down from 59% two years prior. Notably 3 of the 4 largest angel/seed deals of 2013 were in Internet companies including seed investments in Panorama Education ($4M, October 2013), wymsee ($2.51M, December 2013), and real estate marketing startup Placester ($2.5M, April 2013).
CommonAngels and Atlas Venture Are Most Active
CommonAngels was the most active investor in Massachusetts on a deal basis and shared the top spot with Atlas Venture on a unique company basis with over 25 unique portfolio companies invested in at the seed/angel stage over the four year span. CommonAngels, formerly an angel group, recently became a VC fund in 2013 and closed a $16.2M fund in October 2013. Their largest investments in the past four years include the previously-mentioned $2.51M December 2013 seed round in entertainment technology startup Wymsee, as well as a $2.5M November 2012 seed round in data storage and sync startup ownCloud. See the top 10 ranked investors below (based on deal activity).
Massachusetts Investors Claim 68% Participation Rate
[Tweet “Massachusetts VCs participated in 68% of MA angel/seed deals from 2010-2013”]Of the 12 most prolific investors in Massachusetts seed rounds, 9 are located in-state, with 500 Startups, Google Ventures, and Founder Collective being the only non-MA based top investors. When looking at the broader data, out of a total of 227 deals between 2010-2013, Massachusetts-based investors participated in 154 of them, a 68% participation rate. Silicon Valley investors were second with 27%, while New York-based investors were third with a 15% participation rate. International investors were 4th, participating in 22 deals (10%) in the past four years, while no other state had over a 5% participation rate. Due to the nature of participation rate, the percentages will not equal 100% as multiple investors from multiple regions can be in the same deal.
While 68% may seem like a healthy participation rate, without multiple markets to compare it to, we can’t definitively say if Boston entrepreneurs have a reason to complain. Stay tuned for more analysis around local investor participation rates across some of VCs largest markets.
This report was created with data from CB Insights’ emerging technology insights platform, which offers clarity into emerging tech and new business strategies through tools like:
- Earnings Transcripts Search Engine & Analytics to get an information edge on competitors’ and incumbents’ strategies
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