Innovating Through the Downturn: The View from the Nantucket Conference
At the Nantucket Conference, an invitation-only gathering of New England-area CEOs, entrepreneurs, venture partners, and select others, first-time attendees get a single blue dot on their nametags. Alumni get another dot for every year they’ve attended, and veterans of five or more conferences get a gold starfish pin.
About a third of the participants at the tenth annual conference, held April 30 to May 2 on Nantucket Island, MA, had one blue dot, including myself (I was one of a handful of journalists invited by the conference organizer, Shayne Gilbert of Future Forward Events). But strikingly—despite the obsession among attendees with the economy’s drastic downturn and its effects on entrepreneurship—several of the starfish people said afterward that it was the best, most energetic edition of the conference they’d been to. It seems that the crisis has inflamed the classic innovator’s itch to get on with business—and to invent new ones.
In past years, the proceedings of the Nantucket Conference were off the record to journalists unless a source explicitly agreed to be quoted. This year, the organizers reversed the policy, so everything was on the record, unless a speaker indicated otherwise—which only happened once the entire weekend, to my knowledge. That meant attendees were free to indulge their social media passions, blogging and tweeting freely (you can see the whole conference Twitter stream here).
It also means I’m able to bring you a few of the main themes from the conference. Though the program included panels on topics as diverse as getting venture funding, robotics, gaming, energy, and the roots of the economic crisis, a few ideas seemed to frame the mood of the conference (and perhaps of the entrepreneurial set in general these days), a mindset I’d call pragmatic optimism. Some of the main elements:
Fundraising is getting harder—especially for new companies, but even for established ones. Michael Greeley, a general partner at Flybridge Capital Partners, pointed to estimates that only 600 new startups will win venture funding nationwide this year, down from 1,171 in 2008. VC firms have become exceedingly cautious, keeping $5 in reserve for every $1 they invest, rather than the more traditional 2-to-1 ratio, Greeley said. Jana Eggers, CEO of Leipzig, Germany-based Spreadshirt, a T-shirt customization company whose North American headquarters are in Boston, said that even though her company is cash-flow-positive, it had a very difficult time raising its most recent round of growth capital. The terms offered by potential funders were “shocking” and were “clearly based on the economy, not on our fundamentals,” Eggers said.
In areas such as robotics where New England has clear strengths, venture capital is largely absent, pointed out MIT roboticist Rod Brooks, a co-founder of iRobot who now leads stealth-mode startup Heartland Robotics. In the energy and cleantech space, according to General Catalyst‘s Hemant Tenaja, money from hedge funds and strategic investors has largely dried up, and the spigots will stay off until Congress and the Obama Administration work out energy and climate bills. And heaven help the startups that need cash quick: Each of Boston-Power‘s three funding rounds took a year to negotiate, according to CEO Christina Lampe-Onnerud. “The best time to raise capital is when you don’t need it,” said Andy Palmer, co-founder of Vertica Systems, former CIO at Infinity Pharmaceuticals, a veteran of Bowstreet (acquired by IBM).
On the other hand, companies need less money—and should probably be lowering their sights anyway. John Landry, a software industry veteran who is managing director at Wayland, MA-based Lead Dog Ventures, used his pulpit as moderator of a panel on “Getting and Staying Funded” to argue that infotech startups “don’t really need a lot of money” these days thanks to technologies like … Next Page »