Today the Index of the Massachusetts Innovation Economy, prepared by the Massachusetts Technology Collaborative’s John Adams Innovation Institute, is released. Notwithstanding the global economic crisis which we just weathered, the state of Massachusetts seems to be doing quite well, thank you very much. Check out the report – there is a pile of useful data on Massachusetts.
I was asked to contribute some perspectives as a local VC (and current chairman of the New England Venture Capital Association) and when I wrote my piece (check out page 12), Massachusetts was in second place to Silicon Valley, at least according to 2008 funding data when we invested in $3.0 billion compared to California’s $14.3 billion. Over the past ten years California went from attracting 38% of total venture capital invested nationally to over 50%; in that same period Massachusetts went from 9.6% to 10.5%. Importantly, though, analysts estimate that nearly 18% of the $200 billion of US venture capital assets are actually managed by firms based in Massachusetts which can only be seen as a strong position.
The 1Q 2010 funding data was released a few days ago to great fanfare. Overall there was $4.7 billion invested in 681 companies (according to PricewaterhouseCoopers/NVCA “MoneyTree Report”) which compares unfavorably to the $5.2 billion invested in 832 in 4Q 2009. In Massachusetts there was $700 million invested in 81 companies in 1Q 2010 as compared to $678 million in 98 companies in 4Q 2009 (or the $450 million invested in 66 companies in 2Q 2009). Quite clearly the market is heading back toward a more interesting and robust investment climate.
Why is that? My sense is that with increased economic stability, increased clarity around healthcare reform, and importantly, encouraging evidence of renewed liquidity, investors are getting “their groove back.” You see VC’s don’t like uncertainty and volatility; we are not hedge funds which thrive on that.