Last week, Charles River Ventures announced that it was changing its name to CRV. The name change was part of a continuing shift in the firm's identity. The rebrand illustrates an increasing focus on investments in Silicon Valley for the venture firm. For example, six of the firm's eight partners are now based in its Menlo Park office. In 2010, 57 percent of CRV's investments were in California and 29 percent were in Massachusetts. In 2013, however, 88 percent of the firm's investments were in California, leaving the Bay State with six percent of those.
“We remain committed to Boston … But the West Coast is where the center of gravity for technology and investing, especially in consumer, mobile and cloud computing, has clearly shifted,” wrote CRV partner Jon Auerbach.
Nevertheless, that’s a slap in the face for The Hub, and our startups.
.@CBInsights called 4 #Boston VC firms "fairweather fans," investing more and more elsewhere.
Fortunately, Boston still has quite a few hometown heroes, or Boston-born venture capital firms focused on funneling money into local early-stage companies.
CB Insights analyzed new investments by geography of several Boston VCs to distill the ones that invest most in startups that share the same roots from those that are leaving The Hub behind.
Atlas Venture
CB Insights found that Atlas Venture has targeted Mass. more than any other region every year since 2009. Just last week, the biotech and high-tech VC ranked 16th in the nation on a list of most active venture firms in Silicon Valley, Boston and New York in the first half of 2014. As it turns out, 67 percent of those H1 2014 investments have been based in the Bay State. Another 20 percent of those deals were done in California. The early-stage firm made a number of notable first investments between January and July this year, such as ThreatStack’s $2.7 million Series A, machine-learning video app Vhoto’s $3.1 million seed, and health analysis startup Whoop’s $6 million round.
North Bridge Ventures
North Bridge Ventures has also remained active in Mass. over the years. This year, the firm, which just relocated to the Innovation District from Waltham this spring, has poured capital into the local likes of human resources software Erecruit ($25 million), soon-to-IPO data storage firm Actifio ($100 million) and stealthy cable startup Layer3 TV ($21 million). In every year but 2012, North Bridge has made at least as many first investments in Massachusetts companies as it has in startups of any other region. Even better, North Bridge has increased its deals in the Boston-area so far in 2014. That fact is not due to want of access to West Coast markets, either. The firm opened an office in San Meteo in 2007.
Polaris Partners
Though Waltham’s Polaris Partners has increasingly invested in West Coast companies since it started a California office in 2011, the VC has stayed fairly loyal to Boston. With a focus on healthcare, the firm took the third spot on the CB Insights most active VCs in Massachusetts in the first half of 2014. Two notable happenings from Polaris’s past six months include the promotion of Pat Kinsel, former EIR and founder of Twitter-acquired Spindle, to venture partner, and the shuttering of the firm’s startup hatchery, Dogpatch Labs Cambridge.
… And now for the not-so-sweet news. After scouring data, CB Insights found that Mass. had four venture firms that classified as “fairweather fans” – in other words, VCs that are active in Boston, but are becoming more and more active in other geos. In this category are Flybridge Capital Partners, General Catalyst, Spark Capital and Highland Capital Partners.
Flybridge Capital Partners
Flybridge may have founded a program to keep entrepreneurial students in the Bay State in 2008 called Stay in Mass., but the firm doesn’t seem to be following its own advice. The VC opened a New York City office in 2012, and investments are all over the map, literally. In 2013, 33 percent of Flybridge’s investments were done in Mass.; the other 67 percent were made across all other geos, not including California. In the first half of 2014, however, 50 percent of the firm’s investments were in California companies, with 25 percent in both Boston and all other geos. From the looks of it, Flybridge seems to be moving farther away from Mass. companies.
General Catalyst
Cambridge-based General Catalyst opened up an office in Palo Alto in 2011. Since then, its deals have shifted largely westward, with the firm's first investments in California more than doubling from 2011 to 2012. In 2013, Mass. companies won a measly 15 percent of General Catalyst’s first investments. Fortunately, 2014 is looking brighter. Of the first half of 2014 investments, 33 percent have been in Mass. companies. This year, General Catalyst added former Zipcar CEO Scott Griffith and Paul Sagan, the former CEO of Cambridge’s Akamai Technologies and Time Warner, as XIRs and partners.
Highland Capital Partners
Highland holds its HQ in Cambridge, but also has offices in California, Switzerland, the UK and China, which naturally brings its dollars outside of the Boston-area and California. The lion’s share of the VC’s first investments are split between areas outside of the states and California and Mass. However, between the two coastal tech communities, it’s California that historically receives more of Highland’s capital. Notably, Highland partner Dan Nova is an investor in DVR-in-the-cloud service Aereo, which has recently made headlines for its Supreme Court loss. It’s still too soon to speak to Aereo’s fate, but it’s not looking good.
Spark Capital
Though Spark Capital is headquartered out of Back Bay, the nine year-old VC has space in New York City and California. In the past 12 months, the company has had a number of big West Coast wins, including Twitter’s IPO and Oculus VR’s acquisition by Facebook. In 2012, the firm made no first investments in Mass. companies, and unfortunately it looks like 2014 is shaping up similarly. Here’s a glimmer of hope for local startups, though: The firm has brought on two new associates, so perhaps they’ll lead a refreshed focus on Boston and Cambridge.
There you have it. Three firms committed to building innovation in Mass., and four increasingly looking beyond Boston and the rest of the Bay State for deals. What companies, or caliber of innovation, will it take to convert the "fairweather fans" into "hometown heroes"? Is there something Boston startups can be doing more, or better, to attract the attention and dollars of locally-based, yet West Coast-focused, firms? Let us know in the comments below.
Images via CB Insights
