Bank collapses, funding crashes, new hubs arise and the focus on AI — oh my! Here are the top five stories in Boston’s startupland this year:
Building new tech hubs
Greater Boston has already planted its flag in the ground as a leader in areas like life sciences, robotics and healthcare. This year, the Healey administration, local companies and nonprofits joined forces to try and make the region a hub for other emerging technologies.
In November, CIC, a Cambridge-based owner of lab and office space, and AI venture studio C10 Labs announced plans to establish an AI hub in Kendall Square. C10 Labs plans to incubate startups and spin out its own companies.
Less than a month later, the Healey administration’s economic development plan began laying out how to make Massachusetts the leader in “AI for X” — in other words, AI that's tailored to a handful of industries that play to the state’s existing strengths. The economic development plan also proposes investing more into the Massachusetts Clean Energy Center to make the state a global leader in climate technology innovation.
The nonprofit Massachusetts Competitive Partnership, CIC and Zipcar are also working together to create a Massachusetts Mobility Innovation Hub. The hub will focus on how to make moving people and goods smarter, safer and more sustainable.
Startups (mostly) survived a bank whirlwind
If nothing else, founders walked away from this year having learned valuable lessons about how and where they store their capital. The key takeaway: Don’t put all your eggs in one basket.
After the high-profile failures of Silicon Valley Bank — which had a strong reputation for serving the startup community — inMarch, followed by First Republic Bank a few weeks later, many Boston-area founders spent several days in uncertain agony, wondering if and when they would regain access to their funds. Many founders banked exclusively with one institution.
After the dust settled and the failed banks were acquired, bank leaders and clients scattered, leading to a proliferation of emerging startup banking departments at local financial institutions. Leader Bank, Fidelity Investments and Citizens Financial Group were among those who launched new startup services after bringing on talent from SVB and First Citizens.
3. Startups prepare for long haul amid funding slump
This year has seen a correction in the venture capital world. After several years of sky-high fundraising and valuations, fundraising by startups and firms has dropped in 2023. A 2023 report by Pitchbook and the National Venture Capital Association showed that VC firms invested around $4 billion in Massachusetts companies in Q3. That’s down from nearly $5 billion during the same period in 2022, and $7.3 billion in the third quarter of 2021.
Starting in the latter half of last year, venture capitalists began advising their portfolio companies to make their funding rounds last even longer than they’d originally planned, pair back costs to the essentials and think about ways to establish an extra safety net.
4. Rural regions on the rise
The chance to receive federal funding is playing a role in the rise of tech hubs outside of Boston. Four New England areas were designated as Regional Innovation and Technology Hubs by the Biden administration through the CHIPS and Science Act. The goal of these hubs is to drive investment in technologies critical to economic growth outside of established innovation hubs.
BostInno took a road trip this year to check out different innovation communities in New England. We found an influx of startup support systems in Maine, a rise in robotics in New Hampshire and a plan to build an “innovation district” in Western Massachusetts.
5. Boston startup community reconnects
For the first time since the Covid-19 pandemic shut down in-person events, it felt like the Boston startup community was finally back together in 2023. Case in point: Within a few days in September, you could play lawn games at Lawn on D for Boston TechJam; attend a panel at Startup Boston Week; and meet blockchain and Web3 wizzes at Boston Blockchain Week. Event organizers told BostInno that these events are not just a networking opportunity, but a way to remind tech employees and founders why Massachusetts is a special place to build their roots.
2023 INNO on Fire Event
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