By Zimo Zhou
April 29, 2015
Compared with other concrete indicators such as urban planning and cost of living, determining the startup business environment is more complicated. It is hard for people to measure it visually or by numbers. Yet over the past few decades, Boston has been working to provide a more comfortable environment for startups.
When referring to the startup environment, people may ask what a startup really it is. Although it can be generally defined as a newly established business, people may still have their own perception toward this question.
“If you have an idea that you think solves a problem, whether it’s a product or service, then how are you going to turn that into reality is described as a startup,” said Lu Ann Reeb, executive-in-residence and program director of business studies and entrepreneurship at Emerson College. “A startup is usually driven by one or two people who get together, have one or several different ideas, want to turn it into a business, think they have the right market, customers, resources, and they want to solve the problem for customers,” Reeb said.
For Jenn Mason, co-founder and co-CEO at Her Startup Life, an entrepreneurial community for women, a startup is technically defined as an early-stage company. “It’s really unsettled time, the beginning where you are stilling changing what you’re doing based on how you have success or failure, and usually there is also a funding issue,” said Mason.
Many entrepreneurs have already transformed their rough ideas into real companies. The map below shows the general distribution of various startup tech companies with offices in Boston in 2013. In recent years, startup businesses have become a crucial part of the city’s and even the nation’s economy. According to the data from Global Insight, an economics organization providing financial information on countries and industries, high-growth startups generate revenues equal to an estimated 21 percent of U.S. gross domestic product (GDP) in 2011.
The map below is an overview of the various startup tech companies with offices at Boston in 2013 (Reproduced with permission from Kelly Rice, Kinvey Backend as a Service).
Even though recently many startup companies have selected Boston as their home, the city was actually not always the ideal place for entrepreneurs. In the 1950s, Massachusetts Institute of Technology started deploying the Kendall Square area for innovative companies, trying to attract more tech companies to concentrate in Cambridge. Although MIT has done some early actions in the middle of the last century, the sustainable ecosystem for startup businesses in Boston did not build momentum until the early 2000s.
In May 2010, Boston Mayor Thomas Menino announced the plan to build Boston’s Innovation District, the first official innovation district in the country, on approximately 1,000 acres in the South Boston waterfront area.
“The Innovation District is full of established businesses, and it’s a newly renovated growing area in Boston,” said Reeb. “The city made some buildings that they could offer to startups and innovators at low cost in order to invite them into the district as opposed to the city’s rent is very expensive.”
Within the district, Boston city government also uses different approaches to inspire startup entrepreneurs, such as MassChallenge, perhaps the world’s largest startup accelerator and annual competition. The competition winners can receive money, free rent for their offices, marketing resources, or other funding opportunities.
All of these efforts have attracted several startup companies to move into the Innovation District in recent years. The data released by the Innovation District shows that over 200 new companies have settled in the district since it was launched and over 5,000 new jobs have been created by these companies.
In addition to the Innovation District focusing more on tech startups, Boston has also built the Fenway area for startups of medical science. Surrounded by hospitals and medical schools, this area offers huge marketing and resources for medical startups.
The infographic below shows the result of second annual survey made by New England Venture Capital Association with Hawk Partners in 2013. The numbers reflect the generally positive attitude that entrepreneurs have toward Boston’s startup community.
Meanwhile, Boston government is preparing to offer more help to startup entrepreneurs who are in need, though it is in a developmental phase.
Concerning about the lack of cohesion with area startups, Boston Mayor Marty Walsh announced Rory Cuddyer as the city first Startup Czar on March 2. Cuddyer said in an interview for BostInno that he would be the first point of contact for startups if they had a question for the city, and his role would not be successful unless people know that there is a resource available to them. However, one month after his appointment, Cuddyer’s contacts information is not easily available yet. StartHub, another initiative Mayor Walsh announced in his January 2015 State of the City Address to support the startup community in Boston, also does not have its website yet.
In addition to government initiatives, support from social organizations and education programs is also vital. “Boston is one of the education Mecca for colleges and universities, which tends to be a great location for entrepreneurs,” said Reeb. Today, most universities in Boston area have their own programs or organizations related to startups, such as the Harvard Innovation Lab, MIT Global Startup Labs and MIT Startup Exchange, Entrepreneurs Club at Northeastern University, Emerson Entrepreneurship Experience (E3), etc. The Harvard Innovation Lab also holds annual startup career fair for Harvard students to do network with startup organizations. These school organizations hold weekly or monthly events for students and the public. And they all promote networking with each other.
“We do connect with students at MIT, Olin College of Engineering, or Berklee,” said Reeb, the director of E3 program at Emerson College. “For technology, we don’t have the expertise here in terms of coding, if you want to build an app. So often we will connect our students with MIT. The collaboration between universities and colleges is very helpful to students who want to go through the program.”
Though most students enter the program only with rough ideas, the year-long E3 program helps these potential entrepreneurs explore different segments of startups and encourage them to transform their ideas into real businesses. Usually there are about 30 percent of students doing launch after finishing the program, according to Reeb.
While university and colleges in Boston do provide help and resources to young budding entrepreneurs, some students also feel that school organizations can only do very limited work.
“I’m from UMass Boston, and we have the Venture Development Center (VDC). It’s a really large accelerator, but it’s so funny because everyone I’ve talked to at UMass doesn’t know it exists. They don’t advertise, they never really put their name out there, and they don’t hold a lot of events,” said Sulaimaan Malik, undergraduate student majoring in business management at University of Massachusetts Boston. Although VDC has new facilities, it is not clear many UMass students really know about it. “I certainly don’t think they do that on purpose,” Malik said. “Probably other entrepreneurship clubs at other universities are more or less kind of similar. They are open to any student or anyone coming by, but are they gonna take the time to put a conscious effort of getting other students in? At least I haven’t seen that, so we just decided to do it ourselves,” he said.
Malik has founded his own meetup group named Boston Undergraduate Innovators, with his schoolmate Andrew McSweeney. Malik calls himself “a startup survivor” because of his work experience in several young startup companies. “I really got to see how companies built from the ground up,” he said. Malik’s experiences helped him find his current job at a technology company DrugDev, and he said the company appreciated his experience at a startup.
“I basically kind of jumped over last two years of college and got my career at a job without even having my degree yet,” Malik said, adding “But Andrew is scratching his head like ‘why am I still doing all these crappy jobs in school.’ Then we thought there are probably other students out there who want to know how to get involved and take the first step into the startup,” he said. That led McSweeney and Malik to found Boston Undergraduate Innovators (BUI) and organized two meetups in February and March this year.
Alejandro Fernandez, undergraduate student majoring in management at UMass Boston, said the BUI meetup provided him with a good opportunity to learn from people who had gone through the process of building a company. “The speakers were great and we also had the chance to talk to them afterwards. It is a great way to meet all the emerging businesses and ideas in the Boston startup community,” said Fernandez.
Like BUI, more than 20 social organizations in Boston help potential entrepreneurs new to Boston’s startup community connect with local companies and resources. Meanwhile, some also are aiming to help entrepreneurs on a higher level. Compared with school programs, social organizations have more diverse members at different levels in startups. These efforts to connect and share startup experiences in Boston may help build a vibrant entrepreneurial ecosystem.
According to a 2013 survey by Silicon Valley Bank, among 750 startup executives in 37 states and District of Columbia, North California is listed the most active region for startups with 39 percent of all responses. But Massachusetts ranks the second with 11 percent.
“Boston is very interested in developing those pockets of community where people from all works of life can come and try to start their own business,” Reeb said. “We tend in big cities to have not so much the best resources for all communities to feel equally as capable of doing that,” she said, adding “so Boston is more active in working with neighborhood entrepreneurs to try to get them.”