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Boston has had a thriving tech startup ecosystem for some time, but things can change quickly. After setting records for “Zoom Investing” in 2021, how are local startups faring in 2023?
Knowing the thingAhead of TC City Spotlight: Boston’s extended TechCrunch Live event where Boston startups can tap into Boston’s vast resources to hear from local leaders, we gathered insights from five investors active in the area.
Boston seems to be in good shape, and that’s part of the reason remote voting still seems to be the trend. “Fundraising has changed a lot and founders at all levels are now having a lot of initial meetings on scaling,” said Russ Wilcox, partner at Pillar VC.
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However, in-person meetings have made a comeback and are sometimes preferred. Underscore VC general partner Lilly Lyman said: “Physical events have thrived in Boston, especially around the creative hubs on campus, so we expect more stability to come back into the equation.
‘Serendipity’ describes exactly what’s going on in Boston’s tight-knit tech community. As our own Brian Heiter has previously noted, startups are often located “within a five- to ten-block radius of MIT (and Harvard, for that matter).”
That also explains why Boston startups are associated with ‘hard technology’. “Boston, world-class universities and hard tech go hand in hand,” said Sanjiv Kalevar, partner at OpenView.
This combination is arguably what has made Boston stronger in its current slump. According to Rudina Ceseri, founder and managing partner at Glasswing Ventures, Boston will continue to be an active startup and VC market in 2023. […] Despite the tough markets, recession and general business pessimism, I’m sure Boston will see new founders starting new companies.
We talked to:
- Rudina Seseri, Founder and Managing Partner, Glasswing Ventures
- Lilly Lyman, General Partner, Underscore VC
- Sanjeev Kalevar, Partner, Open View
- Katie Rae, Managing Partner, Motor
- Russ Wilcox, Partner, Pillar VC
Rudina Seseri, Founder and Managing Partner, Glasswing Ventures
How would you describe the pace of venture capital business in Boston this year?
Boston in 2010 It remains an active startup and VC market in 2023. The overall funding pace has slowed since 2021, but we continue to see high-potential companies and founders get funding.
We especially see this in the AI and security markets. Recent data published in Pitchbook-NVCA Venture Monitor shows that Boston had a similar share of the number of VC deals in the US between 2021 and 2022, and we expect the trend to continue or improve in 2023.
For a Boston-based founder, does fundraising in 2023 still involve a lot of buzz calls? At what stage do they start?
We will continue to use zoom calls in our due diligence process. They give us the opportunity to qualify with founder time and meet where they are.
Rudina Seseri, Founder and Managing Partner, Glasswing Ventures. Image Credits: Glasswing Ventures
Having said that, meeting in person when we can is a priority. Our founder-investor relationship is sustainable. We enjoy building close relationships with our founders while giving them the opportunity to connect with our building partners.
Are Boston-based tech workers affected by layoffs like their peers in the Bay Area?
Every corner of technology is affected. However, despite the tough markets, recession and general business pessimism, I’m sure Boston will see founders starting new companies.
Creativity shines brightest in dark times, and it is during these times that ideas for change are born. We expect that many of the technologists recently fired from large tech companies will find fire in their bellies and build amazing products. Now is a great time for startup founders to put their ideas into action.
Have in-person and startup community events in the Boston metropolitan area returned to pre-pandemic levels?
We’ve seen an increase in the number of events in the wider community and are excited to bring the community together as we head into spring and winter. We host a wide range of ecosystem events, from networking for the AI and cybersecurity industries, to connecting leadership sessions to making your first marketing hire. At our office in the heart of Back Bay, we continue to push our ecosystem forward through meetings held locally or online.
What connections do you see between two of Boston’s strengths: “hard technology” and university spies?
These are inextricably linked. Boston Academics is a critical component in providing the technology that drives our rigorous economy and society forward.
We work closely with local universities and research labs (including the MIT and Harvard ecosystems) and behind leading developers of AI and frontier technology products for the enterprise and security markets.
What’s the most exciting Boston-based company you’ve invested in recently?
One of our most recent investments is in FeatureByte, founded by the team that built the backbone for DataRobot. FeatureByte is a platform built specifically for data scientists to simplify the creation, serving, management and monitoring of machine learning features.
Are you open to cold fields? How can founders contact you?
Yes, we are open to cold fields, but prefer warm ones if a founder can! We are looking for strong founders who use AI and frontier technology to build applications and infrastructure for the enterprise and security markets. My email is: rudina@glasswing.vc.
Lilly Lyman, General Partner, Underscore VC
How would you describe the pace of venture capital business in Boston this year?
Looking at the data, it’s clear that the pace of venture transfers in Boston slowed in Q3 and Q4 of last year, as elsewhere, as investors and founders try to get a sense of the market’s dynamics.
But so far in Q1, we’re seeing strong, high-quality investment opportunities in the early stages. It’s a great time to invest in early-stage startups. Great founders start cash-efficient businesses from Day 1, thinking about business models that help them attract strong talent at affordable prices, face less competition, acquire customers affordably, and solve big problems.
What has changed, especially in the later stages, are the length and depth of due diligence processes. We are no longer seeing the rushed timelines we saw in 2021. Investors of late are digging deeper into business fundamentals and forecasts. Price discovery is very difficult in this market and latecomers are afraid of overpaying.
For a Boston-based founder, does fundraising in 2023 still involve a lot of buzz calls? At what stage do they start?
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