Bolstered with startup labs, innovation centers, and even an award for disobedience, Greater Boston rewards early ideas spun into startups. And of course, it doesn’t hurt that the city is home to 152,000 college and university students, working on smart watches that detects driver drowsiness to combatting Fortnite addiction.
So for this Boston column, let’s look at how (and if) the uniquely young, student-dominated environment fuels seed deals, the earliest bit of venture capital that a startup raises before an institutional Series A round.
Isolating the school’s out summer months of June through September, we parsed Crunchbase data to see how the size of seed rounds has grown over time in Greater Boston. This past summer, there were 68 known seed rounds by Greater Boston companies, raising an average of $2.2 million dollars per round.
The graph below shows how the average of seed rounds has grown over time in Bean town:
What’s happening in Boston’s seed world is a surprise to no one who is tuned into venture capital: broadly, seed rounds are bigger than ever for all tech sectors, from fintech to cannabis.
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“Dartmouth and the Upper Valley of New Hampshire was a wonderful place to incubate the business, but in order to gain access to the talent we needed to build and grow the business, and to gain access to a much bigger market we could service, we had to move to Boston,” the CEO of Zippity, Edward Warren, told Crunchbase News.
Within the first few months of moving to Boston, Warren says the Zippity team met with almost 300 angel investors. The latest seed round took 18 months to raise, he added.
That in mind, let’s see how Boston’s summer of seed stacks up against other major venture hubs, like San Francisco, New York City, and San Diego.
There’s a variety of factors at play here putting Boston a top. First, a nuance you may expect: San Francisco’s average seed size is somewhat pulled down by all the $150,000 pre-seed rounds that Y Combinator led as part of its S19 batch, which we covered back in August. Additionally, Crunchbase data on seed-stage startups is partially drawn from self-reported totals, and there is a possibility that these numbers will shift as San Francisco and Los Angeles based companies may disclose seed rounds earlier than other markets due to culture.
That said, the volume of deep tech and life sciences startups in Boston can up overall seed averages due to the heavy lift of research and development costs that VCs might have to fund.
While the average from this summer puts Boston at top, an analysis from Joanna shows that for “supergiant” seed rounds—seed rounds that are greater than $5 million—San Francisco and New York beat Boston handsomely.
Now that you have a general snapshot of Boston’s summer of seed, let’s end on some notably big rounds from September—one of which, reports the Boston Globe, even made history.
Ginkgo Bioworks raised a $290 million Series E, valuing it at over $4 billion and making it the most valuable venture-backed company in Boston. The company, founded in 2008, uses synthetic biology to grow products and calls itself “the organism” company.
And to circle back to a claim we made earlier—the number of resources for Boston’s new wave of startups—Gingko is also giving back to early-stage biotech businesses. Through a partnership with Y Combinator and Petri, Ginkgo is offering its “cell programming platform” and mentorship in exchange for equity. As Pitchbook pointed out, Ginkgo was the first biotech company to ever go through the YC program.
Also of note, The Engine, a venture hub spun out of MIT that grows tough tech companies, which it describes as “companies that are tackling the world’s urgent challenges through frontier tech & breakthrough science,” is expanding physically. The venture firm invested in four companies this summer: Cambridge Crops, an agtech startup, E25Bio and Vaxess, biotech and life sciences startups, and Form Energy, an energy startup.
Another nine-figure Series E round came from DataRobot, which wants to help companies save revenue and make enterprise teams more productive. The company raised a $206 million round led by Sapphire Ventures, upping its total funding to date at $431 million.
The company claimed it has had triple-digit annual recurring revenue growth every year since 2015, in a press release along with the announcement.
With that, we’ve come to the close of yet another column looking at Boston’s startup scene. I’ll be in town in mid-November, so drop me a line (natasha at crunchbase dot com) if you want to grab coffee and chat venture capital.