For years, Boston and Cambridge have competed for the title of best technology startup community. Now, Boston has forged ahead and grabbed the top spot due to increasing venture capital financing and funding, according to recent data by CB Insights.
Venture capital deals, which are outside sources’ financial investments in startup companies that are high potential yet also high risk, are valuable to startups growing their businesses. In 2013, 97 companies in Boston closed venture capital deals, a 64 percent increase from the 59 that were closed in 2011. Comparatively, the amount of venture capital deals in Cambridge decreased from 99 in 2011 to 78 in 2013.
Geoff Mamlet, the managing director of the Cambridge Innovation Center, which provides and manages the offices of startup companies and is opening a new center in downtown Boston in a week, said Boston is a vibrant place for startups.
“What we see here is a growing strength of the startup community in the Greater Boston Area,” he said. “And the [businesses] that are flowing into Boston Proper tend to be a bit more mature startups, which need more investment capital to support their growth … that’s the measure on which somebody has now said Boston is running ahead of Cambridge.”
Mamlet said the growth of these more mature startups, both in numbers and in pure dollars, shows that Boston is continually becoming a better area for innovation.
“[This] reflects the strength of Boston as a place for larger more mature startups to spread their wings and grow still further than they are able to grow in Kendall Square [in Cambridge],” he said. “We believe there are increasingly strong opportunities for continued growth.”
For all startup companies, no matter the size, finding passionate people to join the team is often one of the most difficult aspects of building a business, Mamlet said.
“The one problem for any startup is finding great people to be part of their organization and help them accomplish their goals,” he said. “Boston is a wonderful place for that. There are extremely smart and well-trained people coming out of our universities. It’s a city which is very attractive for people who have a lot of choices about where they can go in the world to do their work…Boston is a magnet for great talent.”
Beth Goldstein, a professor in the School of Management at Boston University, said the various universities in the city play a key role in making Boston an innovative capital.
“Any city that is about educating its entrepreneurs, meaning a place where there’s a lot of amazing universities supporting entrepreneurship, thinking outside the box and innovation, is clearly going to be a leader in that category,” she said. “Boston is a natural for that. Our environment in the surrounding area is very focused on technology that is cutting edge.”
Goldstein is also director of the New Venture Competition at BU, a competition between students’ business ideas for prizes that will help them further their entrepreneurial goals. She said universities are moving more toward individual thinking, a change that makes a big impact.
Many residents said they were pleased to hear the region is a fertile place for startup businesses because that will lead to job and economic growth.
“Jobs are really competitive these days,” said Aly Glover, 29, of Beacon Hill. “These days, getting a job is a lot about who you know already working wherever you want to work. Startups are really welcome because they give more options to those people who are deserving but may not have enough connections.”
Mark Barnes, 46, of South Boston, said these results are not surprising because institutions in Boston are constantly looking for better ways to complete tasks.
“The technology market is booming right now, especially if you think of something that solves a problem or streamlines a process that nobody else has invented yet,” he said. “As businesses get bigger, they want more efficient ways of doing things, and these technology startups probably give them that.”
Edward Whang, 39, of Boston, said the growing amount of innovation stems from the struggle of breaking into already existing companies.
“As people struggle to find jobs, the innovative ones will just create their own jobs by starting their own business,” he said. “Obviously it’s not as easy as it sounds, but if you pick the right market, like technology, and have the right product, it can really pay off.”