Boston tech saw a breakout year in 2014. It was the year Boston "reversed the curse" (of the Zuckerberg) and turned two unicorns into public companies. At least one of them is on its way to becoming a household name.
Boston tech saw two IPOs in 2015, but those were overshadowed by the acquisitions of two Boston tech stalwarts. At $67 billion, EMC's merger with Dell is the largest private equity buyout in history. And Constant Contact, once thought to be a potential anchor company, sold for $1.1 billion.
Meanwhile, even as Boston celebrated its consumer tech success stories, one of its promising stars imploded: Gazelle sold out to Redbox's parent company in an $18 million fire sale. (Here's how that happened.) The Hub notched two new IPOs in Cybersecurity: Rapid7 raised $103 million and Mimecast raised $78 million, but both remain below $1 billion in market cap.
"But biotech...," is the caveat Boston boosters have been offering for years. "$7.4 billion...," you'll hear people say. And while the past five have brought a rebirth of early-stage tech investing in Boston (as elsewhere), it's hard to deny that high-tech investors' attention is drawn elsewhere, as some of our own storied shops beef up their West Coast presence.
Another caveat: When the bubble bursts, Boston will be fine: We haven't seen the crazy valuations here. That's another way of saying we don't have very many unicorns. (Instead, we have reindeer. Thanks Jeff Bussgang.)
Can Boston build the next anchor company in 2016? A lot of promising startups launched this year and a handful of companies raised big funding rounds. There's a short, but growing, list of firms whose track record for growing fast and seeding new startups makes them promising contenders for anchor status. They're listed here, along with some of the events and trends that shaped Boston tech's year of waiting in 2015.
A is for Actifio: There are a couple other companies starting with "A" that have been talking IPO for a year or two now, but Actifio is the one that looks most likely to get there in 2016. It's also got a billion-dollar-plus valuation, which makes it a standout among Boston companies. It's an enterprise business, riding the same data-storage technology wave that's made EMC a dinosaur.
B is for Bolt and BOSS: 2015 was the year West Coast investors saw the writing on the wall and started to hunger for something more substantial. Bolt, Boston's hardware-focused investor and incubator, was ready to fill that need. Boston investors woke up, too--and started getting on AngelList. AngelList has done to angel groups what Airbnb is doing to hotels. Accomplice was ready with the BOSS syndicate to help Boston angels and entrepreneurs put together deals for Hub tech companies. More: TJ Mahony has the best job in venture capital.
C is for CAKE, Converse, CIC and CRV:
- We need a few newborn startups on this list and CAKE is one of them. Suelin Chen founded this Tinder for end-of-life decisions and I've been hearing about it from more than one investor, since we wrote about it.
- Converse hasn't been known for innovation--beyond new patterns to put on the Chuck Taylor. This year, they opened a new headquarters in Boston (peek) and redesigned the iconic shoe.
- Cambridge Innovation Center doesn't get the press WeWork does (or the astronomical funding) but it's been at the tech flex-space game a lot longer. CIC announced its first international location this year.
- CRV took some heat in 2014 for changing its name (taking out the dirty water) and leaning west. This year, they hired a couple new Boston partners and came out with a pretty interesting thesis for what makes Boston different from Silicon Valley (besides the billions and billions of dollars we don't have).
D is for Daily Fantasy and Drizly: What a wild year it's been for DraftKings. At the beginning of 2015, it looked like the Boston unicorn was on the offensive versus first-mover FanDuel. Then came that one errant tweet. Drizly's another company that's got a regulatory challenge ahead of it, but unlike its would-be competitors, the Boston upstart seems to have figured it out. They've raised just $18M. (Remember Amazon raised less than $9M.)
E is for EMC and ezCater: EzCater is another Boston delivery startup, but unlike Drizly they've flown under the radar--that is until this year, when the company was one of BostInno's 50 on Fire winners. EMC, for its status among the biggest tech employers in Mass., also stays quiet. It stings to lose another global HQ to M&A, but it's not like tech startups in Boston and Cambridge lost a grandfather. More like a distant, wealthy uncle. It remains to be seen what the inheritance may be worth.
F is for flying cars and Founder Collective: Founder Collective was another 50 on Fire winner, in the investment category. Terrafugia is awesome and after so many years and an improbable story to begin with, they keep moving toward the unlikely goal of a flying car. The FAA just approved them for testing a scaled-down concept car in US airspace. If you don't believe me watch the video.
G is for Gazelle: It's also for goodbye.
H is for Harmonix, Hubweek and HourlyNerd: This was the year Harmonix took a risk on a shift from Microsoft to Apple. This company continues to be an innovator in Boston's always-underrated video game scene. Hubweek was a superior freshman stab at the perennial effort to bring a SXSW-style culture and technology conference to Boston. HourlyNerd is another early-stage company to watch: If anybody can put the white-shoes out of business, this team can.
I is for Inbound.org and InsightSquared: Inbound.org is part Dharmesh Shah's pet project, part a canny, long-range marketing strategy by a Boston tech anchor. HubSpot had a tough personnel move to make as it faces a forthcoming tell-all book, but both the sprocket and Boston's best CMO, Mike Volpe, seem to have moved on. Joe Chernov, one of Boston's best content marketers, got scooped up by InsightSquared, which has ridden a wave of fervid enthusiasm for sales analytics and sales ops into 45,000 square feet of office space in the Back Bay. Read: InsightSquared CEO Fred Shilmover explains how to think about sales ops.
J is for Jim Koch and Julian Edelman: Every chairman has a persona. Boston Beer Co. founder Jim Koch has perfected his: red-cheeked, beer-drinking billionaire small-business sage. We should all be so lucky to find our calling in life. Julian Edelman...continues to be Julian Edelman.
K is for Kickstarter fails and Kyruus: We write about a lot of crowdfunding campaigns. As we learned, not all of them are strictly legit: Again & Again, 3 Boston Entrepreneurs Left Crowdfunders in the Lurch. Maybe 2016 will be the year Kickstarter and Indiegogo do something about abuse of their platforms. Kyruus, I hear, is scaling its patient referral and physician network quickly. And its executives are already making investments in related startups.
L is for Larry Lucchino, Linda Henry, LogMeIn and Localytics: The role of Red Sox CEO is staying vacant as Larry Lucchino leaves it, which is a nod to his unique skill set. Linda Henry masterminded Hubweek (see above) and is probably the most powerful woman in Boston right now. 2015 is going to be remembered as LogMeIn's breakout year ($LOGM): They're doubling their office space and are pushing into Internet of Things. Lovepop won Shark Tank and Localytics is probably Boston's next HubSpot. No big deal.
M is for Michael Dell, Maria Cirino, Maxwell Health and MassChallenge: Dell is moving to Boston, Cirino led .406 ventures to its third fund (oversubscribed), Maxwell Health raised a bunch of money in 2014 and got on our long list for 2016 IPO predictions. MassChallenge announced its program in Jerusalem and is moving fast on Mexico City, or so I hear.
N is for New Balance and Nextview: New Balance is building a whole city out in Brighton, the flagship of which it unveiled this year. Nextview is another investment winner in BostInno's 50 on Fire.
O is for the Olympics: Enough said.
P is for Panorama Education and Pillpack: Pillpack raised $50M back in June and has become the company to beat, West Coast or East, in online pharmacy. Panorama Education has been bringing big data to K-12. Now they're offering teachers a way to share advice--in a field that carries probably the greatest potential for technology to have a positive impact.
Q is for Quantopian: There's been much made of the widening gap between institutional investors and individuals in securities markets. This year, Quantopian got off the ground with software designed to make everyone a quant.
R is for Robots and the Rose Kennedy Greenway: We talked about Boston's rising reputation for hardware; robotics is a part of that field with huge potential for anyone who can look past the tech bubble on his nose. IRobot's two and a half decades of innovation (bringing the first home robot to the mass market, no big deal) have helped spawn a second generation of robotics startups and investors. Boston's robotics sector is not only the most advanced, it's also probably the most diverse: Two of the most promising startups, Jibo (Cynthia Breazeal) and Cyphy Works (Helen Greiner) are led by women. And, we couldn't let the year close without celebrating another innovative woman, Janet Echelman, who helped stretch a multicolored gossamer canopy over the Rose Kennedy Greenway this year--an installation that helped change Boston's reputation for public art innovation.
S is for Simplisafe and Startup Institute: Bootcamp-style education stands a chance at replacing grad school and Startup Institute's new CEO, Diane Hessan, is the best person I can think of to lead that change. And, if Boston is ever going to win in consumer tech, it's not going to be in something sexy. Let's try burglar alarms. Enter Simplisafe, which by my back of the envelope (and Eric Paley's) is at over $100 million in revenue having practically bootstrapped itself to its first institutional financing, a $57M round closed with Sequoia last year.
T is for the Tech Bubble and The Grommet: All hail the tech bubble. It's probably bursting, and that's a good thing. All the CEOs and CTOs and CMOs and CSOs and CPOs who give up on raising a Series A will fold and get real jobs at companies that are growing. Also, big shout-out to Julies Pieri and The Grommet, which built a lasting business in consumer goods marketing and is now facing competition from Amazon. Imitation is the sincerest form of flattery.
U is for Urban Gardening and UnShrinkIt: It was a big 2015 for local growth: extremely local growth of things you can eat. Freight Farms had a breakout year with its high-tech farms in shipping containers and Grove Labs got off and running with a road trip and one of the biggest Kickstarters of 2015 for its MIT-spun home aquaponics installations. UnShrinkIt makes a product for unshrinking sweaters (awesome). Here's how founders Nate Barbera and Desiree Stolar prepared for Shark Tank, where they raised $150K with Mark Cuban.
V is for Virtual Reality: 2015 was the year VR entered the mainstream. 2016 is going to be even bigger. Virzoom is one Boston startup you should know about in the space. And a company you might have heard of is doing some pretty interesting things with furniture shopping there, too.
W is for Wayfair, WebInno (RIP) and the West Coast: Wayfair came off its 2014 IPO and continued to prove itself as the niche owner in online furniture shopping. Stellar customer service is a big part of that. I'm old enough to remember a time when WebInno, the unConference and Mobile Mondays were about the only tech events in town. This year, WebInno changed its name, to BIG--Boston Innovators Group. It's not just about the Web anymore, Toto. And, W is for the West coast, where Spark Capital and General Catalyst announced new partners this year.
X is for Xenophobia: Always a current topic in an election year. Led by founder Elsa Sze, Boston-based Agora is working with Mark Zuckerberg's FWD.us to change the conversation about immigration.
Y is for Yelp and its continued slide into irrelevance in the face of superior review sites like TripAdvisor
Z is for Zagster and its continued spread into new markets and new buildings as property owners recognize the importance of bicycles as alternatives to cars.
That's it. Happy 2016 everyone. Make good choices.
