Last year was marked by “supergiant” investments of $100 million or more into unicorn after unicorn, and the greater Boston area wasn’t excluded from the boom.
According to reported Crunchbase data, Boston and its adjacent cities raised nearly $8.8 billion in venture funding—a 41 percent increase over 2017 reported totals.
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To help give us some context and color on the year, we caught up with the venture community, an investor, and a founder, all from the Boston and surrounding area.
First, we connected with the New England Venture Capital Association. Ari Glantz, associate director of development & strategic initiative, said the numbers show something they’ve always known locally: Boston has always had a great startup ecosystem.
He says what’s particularly exciting about this year is that the data shows that great companies born and seeded in the area are staying when raising their early- and late-stage rounds.
“That’s a testament to all the players‚ investors, legislators, universities, accelerators, etc— working to promote entrepreneurship in this region,” he added.
Part of that testament is being highlighted in the organization’s “Built By” series on Medium, which highlights the contributions of immigrant founders to New England’s startup ecosystem. The organization also does other policy and advocacy to help build out diversity in the community’s ecosystem. (Disclosure: I consulted on the series creation.)
As Crunchbase recorded data points, a healthy mix of seed and early-stage startups were funded in Boston in 2018. Rob Go, a partner at NextView Ventures, a fund which prioritizes seed and early-stage startups, explained that their goal as investors is to “partner alongside founders at the earliest stages, not just to pile on when a company already has traction but to help shape businesses and world changes products before they are fully formed.”
Go also noted that, in the past year, the number of companies that are getting funded is not expanding. He added that its reflective of a nationwide trend: the bar to raising capital isn’t getting lower, but the companies that do clear the bar are raising more money.
One deal that stood out out to him was Drift, a Boston-based software company. It raised a $60 million series C, led by Silicon Valley’s Sequoia Capital. Go says this show’s Boston’s “ability for world-changing companies to be built (here) and to attract capital from the best SV investors.”
Part of the strength of Boston’s startup ecosystem, Go said, is that the alumni of successful companies often will spin out to start their own businesses, which can multiply the positive effect of any one successful business. In Drift’s case, the founders were core members at Boston’s HubSpot.
Graham Gardner, the CEO of Kyruus, a Boston-based healthcare analytics company which helps match and book patients with the right providers, explained that 2018 meant one main thing: more partnerships. And those partnerships led to funding.
Early in the year, the company announced a collaboration with IBM and in October, an integration with Salesforce AppExchange.
The startup raised $10 million in April from investors, including Providence Ventures, and another $4 million in October. The latter coincided with a strategic investment in Kyruus from Salesforce Ventures, the company says.
Today, Kyruus now counts more than 500 hospitals nationwide as customers.
Gardner says that the combination of leading academic institutions, hospitals, healthcare-focused VC firms, and technology companies at all stages has helped Boston position itself as a unique investment economy when it comes to healthcare. The company pointed to Devoted Health, a startup that helps seniors get health insurance. The Waltham, Massachusetts company gained $300 million in an October Series B at a $1.5 billion pre-money valuation, according to its Crunchbase profile.
And to Graham, that meant one key thing: Boston is a place where new solutions to hard problems continue to gain funding, and 2018 was just further proof of that.
Illustration: Li-Anne Dias