The Two Sides of Boston's Venture Ecosystem
Plus Nine Boston Companies That Raised $110M+
Last week’s Boston Tech 360 Clubhouse meetup was really neat. Folks from Drizly, SVB, Techstars, Flybridge, Knoq, and more discussed what gets them excited about tech in the city. Huge thanks to Ryan and Jesse for putting it on and hopefully more to come there.
Boston’s Venture Ecosystem
One thought I had on the call was about the size of our ecosystem (at least from a capital investment perspective) when split by life science vs tech. I think it’s part of what makes the city unique compared to the other top startup metros in the US.
To illustrate with some data:
Total VC dollar investment in Boston was about ~$17B for 2020, according to the NVCA and Pitchbook (a big 48% YoY change).
If you filter out the life science/pharma deals, that number then drops down to ~$8B.
In other words, there are two separate venture ecosystems simultaneously growing in Boston at the fastest rate in the country, and both of them are still independently larger than every other venture ecosystem outside of California and New York:
In some ways, the lines continue to blur between these markets
The pace at which new companies are emerging at the crossroads of life science and tech seems faster than ever. New products are being created to help doctors diagnose diseases, researchers explore data, and pharmaceutical companies make new drugs. I think this city’s tech community is uniquely positioned to create value for the medical and life science industry in a sort of closed-loop system. We have a killer combo of tech talent and leading research institutions that create companies in between these two markets.
For many companies in Boston, they might not have all the characteristics to be labeled strictly as a “tech startup,” but they’re also not quite in the realm of life science. They exist because of the two vibrant ecosystems we have in the city. Maybe they’re a strict software play but sell exclusively to life science companies, or maybe they have a lab component but also hire a suite of software engineers and data scientists. I usually only write about these kinds of companies if there’s pretty obvious tech angle. I’m thinking about companies like the ones below that have raised in the last 12 months:
Perhaps one of the reasons that makes our tech scene a “less told story” compared to NY/SF is because it’s tougher to get your average reader a digestible bite about neuro-stimulation devices, AI-driven drug development, skin disease image recognition, FDA-approved videogames, or CRMs for doctors. Delivering a fifth of tequila or a new bed set is an easier story, there’s just maybe less of them to tell.
Is the rate of new company formation where they differ?
One thing that might make Boston life science company creation different from tech company creation is the founder demographics, which I’d argue are diverging. Creating a novel therapeutic isn’t something that’s hacked together in a dorm room by a twenty-something kid. It takes years of compounding knowledge, domain expertise, support from research institutions, and massive capital infusions. Making the tech to support these companies, or arguably any tech company, requires far less formal qualifications or up front investment.
I’d love to graph tech vs life science funding YoY for the past decade and see if we’re approaching any sort of inflection point here.
Stuff I’m Reading:
Who says Boston can’t turn out cool consumer companies? — Boston Globe
Grace Isford’s Part Two Analysis of the API Economy, the API-First Directory.
Folx Health 🏳️🌈
I’ve been following Folx Health since a Form D in May’20 showed that the (stealth company at the time) had raised $4.4M from Define Ventures. I wrote about them again in December’20 when that deal became official as a seed round from Define, Bessemer, and Polaris. Less than a year since that fundraise, the Direct-to-Consumer LGBTQIA+ healthcare provider has raised $25M in Series A funding led by Bessemer, with returned participation from Define and Polaris — sparing no expense with a rebrand from the legendary startup branding agency Red Antler.
I think the big deal here is institutional money recognizing a massively underserved market where the model of companies like Ro and Hims & Hers can be replicated. (Funny how the name “Hims & Hers” alone kind of shows why Folx saw a market opportunity here.)
A.G. Breitenstein, a self-identified non-binary lesbian and healthcare veteran, seems uniquely qualified to build this company. They co-founded and scaled Optum’s venture capital arm and served on the board of Buoy Health, LetsGetChecked, Vim, and WellSky.
For $60 a month, users get access to a platform that assists with doctor visits, at-home lab work, hormone medication, STI tests, and family creation services. Ro was valued at $1.5B in July’20 while $HIMS is trading at a $4.35B market cap. Breitenstein said in July that there are an estimated 11 million non-binary people under 30 that don’t have a PCP.
Parsec, a professional trading interface for DeFi (Decentralized Finance) traders, raised $1.25M in funding at the tail-end of January led by Polychain Capital, with participation from Volt Capital, Robot Ventures, and others. According to Pitchbook, the Company is based out of Concord, MA. They’re hiring for three engineering positions.
Parsec's app represents an attempt to craft an experience in DeFi "similar to that of a professional brokerage account without the friction of custody." — The Block
Verb Data 📊
Year-old developer-first SaaS analytics company Verb Data has raised a Seed round of an undisclosed size (only listed on Crunchbase from what I can find). It’s a data experience platform that lets technical and non-technical team members develop and manage data dashboards to uncover insights about user experiences. According to Linkedin, the founding team is currently Dave Hurt (ex-VP of Product of Panera Bread) and Oleg Fridman, who was SVP of Technology Innovation at Panera Bread. I would love to know if their work was connected to MyPanera.
Metalenz, a Harvard spinout that is commercializing new optical lensing technology for the consumer electronics and auto market, just raised a $10M Series A from 3M Ventures, Applied Ventures, Intel Capital, M Ventures, TDK Ventures, and others.
They believe that their use of “optical metasurfaces” will enable cameras in smartphones to be of higher quality while also being completely flat because they’re using nanostructures that guide light into image sensors instead of the multiple layers of refractive lenses currently in use.
The Engine just led a $14M Seed round into biotech company Cellino, with additional participation from Khosla Ventures, Humboldt Fund, and 8VC. The company is combining stem cell research, machine learning, and laser physics to format cells like you would format a DVD disc to make personalized cell therapies.
SpectraWAVE, which develops imaging technology for cardiologists, just raised $13.2M in Series A-2 funding led by Deerfield Management. The thesis is if cardiologists can better understand where and how much plaque is inside of Coronary Artery Disease patients, they can more accurately create and maintain stent sites.
Reverie Labs 🖥️
Reverie Labs, a YC-backed company using AI to develop anti-cancer therapeutics, just raised a $25M Series A led by Ridgeback Capital with support from First Round, and Neo. Pretty cool that the founder and CEO Jonah Kallenbach was inspired to make a drug discovery product partially after working with a supercomputer at a quant hedge fund to run simulations. Crossover knowledge FTW.
Evolv Technology 🛡️
Waltham-based Evolv Technologies has raised $14.5M in a $30M round according to a recent filing. This could potentially be related to their round of undisclosed size from Stanley Security that I wrote about back in August, but not sure. They make a threat detection system that can use computer vision and other tech to scan thousands of people in a crowd per hour for threats. Since founding, they’ve raised over $84M from the likes of Lux Capital, DCVC, General Catalyst, and the Gates Foundation. When crowds virtually disappeared over the last year, they quickly pivoted to helping businesses safely re-open by introducing thermal imaging that can scan visitor skin temperature in three seconds.
Five-year-old cloud bioinformatics platform Elucidata raised a $5M seed round led by IvyCap Ventures, with participation from Hyperplane VC. They’re the developer of a cloud repository of structured biomedical molecular data that scientists can tap into for drug discovery purposes. They sell to customers across the omics sciences who are working on identifying therapeutic targets, biomarkers, patient segments, and more.
This was around 850 deals that I took the time to arbitrarily categorize. It’s not a science, but if you’re a regular reader, you’ll have a pretty good idea for the type of companies I consider tech vs life science.