Wednesday, September 12, 2007

The Take on East Coast Startups: Lessons for Toronto

Yesterday's post by Scott Kirsner on the lack of successful internet companies in Boston sparked a thoughful reply by Spark Capital's Bijan Sabet. They could have been talking about Toronto.

Bijan believes that Boston's failure to keep investing in emerging niches through market downturns has created a limited investing culture. He points to Boston VC's responses to the dot-com bust as a contributing factor:

"When the crash hit, Silicon Valley kept investing in the consumer web while east coast VCs cleaned up their portfolio's and double downed in infrastructure or didn't make investments at all. Local entrepreneurs that wanted to build a consumer company either morphed their ideas into tech infrastructure or they moved to the west coast. Of course there were exceptions.

East coast investors weren't the only ones that avoided consumer internet companies. Great boston consumer entrepreneurs re-invented themselves as infrastructure people. The press stopped covering consumer internet entrepreneurs and startups. Industry magazines stopped the local coverage. The Boston Globe still doesn't really cover the local tech scene except for Scott's contributions (and I'm so glad he's back).

This combination over the years created a culture."

Now, as Bijan points out, Boston finds itself taking a back seat in the rise of Web 2.0 and new media companies.

A good cautionary tale on the need for a committed base of investors that deploy cash through all phases of the market.