The VC panel at BostInno's State of Innovation. Photo by @brentgrinna.
BostInno put together a panel of venture capitalists and entrepreneurs in a crossfire-style format. The first question from moderator Greg Gomer was one we'd hoped would be contentious: Is there a bubble in startup funding? The consensus among investors and founders seems to be: There is not.
For EverTrue's CEO & founder, Brent Grinna, the story of a collapsing startup-funding bubble sounds familiar. "When we were trying to raise our seed it was RIP Good Times," he said. "When we were trying to raise our Series A it was the Series A crunch.”
VCs agreed, timing is everything. "There's a lot of money when you don't need money," said Atlas Venture's Ryan Moore. "It's punchy, but I don't think it's a bubble."
Things got interesting when VCs and entrepreneurs started talking about alternatives to the traditional venture-capital model. Bryant McBride noted he's been in the startup business a long time. "I was 6' 4" when I started. I’m now 5' 10," he deadpanned.
His latest company, Burst, raised a $3.5 million angel round in 2012. He's never raised venture capital, he said. Venture capitalists, McBride said, are pursuing the top 1 percent of companies. "I've never been in the top 1 percent of anything I've done in my life. I encourage everyone to think broader (than VC)," he said.
What's more concerning, Moore said, is whether Boston has the venture-capital investors capable of taking companies to large scale. “This is a town that has not produced a lot of unicorns," he said. “Is the underlying VC community strong enough to support seeds? A (rounds), Bs? I think the jury’s out.”
Boston's tradition-mired VCs have had to change practices in order to make big, independent companies even possible. That includes dropping the "New England conservatism," Andy Palmer said.
But the panel also discussed more specific fine tuning of the approach to the portfolio. It wasn't that long ago, Jamie Goldstein from North Bridge Venture Partners said, "It was a total no-no for any employee to sell their stock before their exit. You'd do anything you could to stop it." With that mindset, it's easy for an entrepreneur to prefer the modest exit–life-changing for the firm's employees, but no unicorn.
To illustrate that point more broadly, Bryant McBride offered an anecdote in which a venture capitalist asked an entrepreneur during a pitch meeting, "What's the exit here?” To which the entrepreneur replied, “To have choices.”
