Keller: Why has investment dried up for tech companies in Massachusetts?
The opinions expressed below are Jon Keller's, not those of WBZ, CBS News or Paramount Global.
These are tough times for venture capital, the funding source relied on by many tech startup companies. And one of the biggest slumps has hit one of the best startup states of past years - Massachusetts.
The state's promotional videos tout Massachusetts as "a leader in energy efficiency, science and technology, and our economy is the most innovative in the nation." All that used to make us one of the top draws for venture capital investment in new companies.
But not anymore.
Why is venture capital shrinking in Massachusetts?
Recent research by the National Venture Capital Association analyzed by the Boston Globe tells the story of VC funding shriveling for local startups even as it blossoms in other states like California.
What's driving it away from here, we asked Peter Cohan of Babson College, an author and startup investor himself? "The success of the companies out there," he said, the bulk of the venture capital investments these days are going to AI startups out west in part because while the big-idea creators might go to college here, they too often don't want to stay here. "Talented people want to be where all the other talented people are, that's the fundamental issue."
And the bets government and local investors have made on biotech and clean energy technology haven't always paid off that well. "In Boston, I think investors really like high-tech solutions to difficult societal problems," said Cohan. "Sometimes those solutions also find a market, and sometimes they really don't."
Federal cuts in local research funding are bad news for local startups, a problem that can't be papered over with cultural spin. While those promotional videos promote arts, culture and cool coffeehouses, that doesn't speak to the core issue, says Cohan: "It's nonsense. That's sleeping, they're just dozing away, they've got their head in the sand."
How does Massachusetts recover?
Meanwhile, states like Pennsylvania, Washington and California are raking in venture capital funding. What do we need to do to get back in the game?
As Cohan suggests, an end to the war between the White House and higher ed would help. Quantum computing and nuclear fusion are two promising areas where local researchers have a strong presence.
But in the long run it may come down to those researchers coming up with a great idea and deciding to stay here to develop and market it.
Maybe we need a new slogan to get through to them - don't be a Zuckerberg.
