A few weeks back, Aileen Lee of Cowboy Ventures published a TechCrunch article exploring the statistics surrounding “Unicorn” companies, otherwise known as software companies started within the past decade that have since earned a valuation upwards of $1 billion from public or private investors.
After some digging, we found that so-called unicorns with ties, both former and present, to Boston — and the East Coast, in general — are fairly rare. Only 12 companies that made Lee’s unicorn list lived nearby the Eastern seaboard in cities like Boston, New York and Washington D.C.
Flybridge Capital Partners' Jeff Bussgang, along with a Harvard Business School student, recently reframed the definition of what qualifies a unicorn within the Greater Boston area in a blog post. Writes Bussgang:
In order to have a reasonable population of companies to assess, we tweaked Aileen's definition. We looked at the companies in New England (call them "Boston and surrounding") that had exited in the last 10 years (2003-2013) with greater than $500 million in market valuation.
Essentially, Bussgang extended the search across all sectors (not just software), halved the valuation and got rid of the time constraint. The new parameters unearthed 43 companies in the Boston area, and just beyond, that have garnered more than $500 million in the last decade, with 19 of those having achieved over $1 billion – Lee’s original benchmark value.
Of those 19, only three of them were software companies: TripAdvisor ($12.5 billion), athenahealth ($5.0 billion) and Starnet ($2.8 billion). The crowning sector was life sciences, an obvious stronghold in the Boston area.
In his analysis, Bussgang points out a number of fascinating takeaways, including the essential role of immigrants in creating these high-performing, high-achieving companies – 51 percent of Boston-area unicorns either had or have an immigrant founder.
The VC also revealed a startling fact about Boston's business environment, as well: There have been no multi-billion dollar valued technology companies founded within the last 13 years in Boston.
But what lies ahead for the big billion dollar winners of the bunch, as well as the up-and-comers with $500 million to their names? Further, what is fueling the growth of startups to become the next massive companies here in Boston?
“The Boston metro area has always been a great place to build a technology company given the deep pool of talent," Mike Baker, co-founder and CEO of DataXu, told BostInno. "What’s changed in recent years is a growing belief among local executives and investors that we can grow these cutting edge startups into successful public companies."
Vice President of Global Communications at TripAdvisor Desiree Fish also called upon the unmatched talent within Boston's borders as a catalyst for the company's, and the future of Boston's innovation ecosystem's, growth:
At TripAdvisor, we think of Massachusetts and the Boston area as a flourishing tech incubator. We are proud to be part of the developing N2 Innovation Corridor. There is a tremendous talent pool in the Boston area, with many of the nation’s top universities in our backyard...the great news is that TripAdvisor is hiring and aggressively recruiting locally. While TripAdvisor is currently located in Newton, we are looking forward to moving into a new global headquarters just down the road in Needham in 2015, which will accommodate 1,500 employees, including 400 news roles. For the future, we see the Boston tech scene continuing to expand its presence and influence as an innovation hub.
What can Boston do to bring more of our own brand of "unicorns" into being? Let us know in the comments below.
