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.