Brave New Web
I spent the day today at the MIT Enterprise Forum's Brave New Web conference in Boston. It was a great day of discussions and networking. There's clearly a lot of interest in building companies in Boston leveraging the latest Web technologies and business models.
One recurring theme was whether or not Boston was a good place to start new Web businesses. Is Boston overly disadvantaged compared to Silicon Valley? Entrepreneurs said that local VCs tend to not be interested in Web businesses and aren't willing to take the same level of risk as their Silicon Valley brethren. On the other hand, VCs say that they don't see enough business plans with big ideas in the Internet space. I think that both sides are probably right. Many local VCs aren't well-versed in the Web space and tend to stick to segments more in their comfort zone. They don't have a deep enough rolodex to do suitable diligence and don't have a gut feel for these business models. At the same time, very few entrepreneurs in the Boston area are well-versed in the nuances of Web marketing with a strong track record suitable for VC backing.
The solution is probably for VCs to dip their toe in the water and start funding some capital efficient Web businesses with the best teams they can find. This will help them develop a feel for this market and will undoubtedly lead to some successful businesses. If they watch the capital intensity, they can limit the losses from any of the mistakes. This will also help some entrepreneurs cut their teeth in this market and develop a track record.
Jeff Taylor, CEO of Eons and former CEO of Monster.com, had the best line of the day. When he heard an entrepreneur say that local VCs weren't interested in Web businesses, he replied that it was up the the entrepreneur to find a funding source, even if that meant going to Silicon Valley VCs. Don't let this kind of obstacle stop you. If you are committed to your business's success, you'll overcome challenges even bigger than this before you are done.
It was great to see such a nice turnout for this event. Between this and the strong crowd at the Web Innovators Group meeting on January 30, there is plenty of buzz about Internet businesses in Boston. This market is healthier than most people think!