Silicon Valley Beats Boston in VC-Backed Flameouts, Too
As you might have noticed around Boston, a lot of people like to whine about how California and especially Silicon Valley are, well, just better at startups. Entrepreneurs flock to California, where venture capitalists take more risks. Why, oh why, can’t we be more like Silicon Valley?
Well, it turns out VCs and entrepreneurs in California beat Boston and Massachusetts in another measure: big venture-backed flops. Yesterday, Dan Primack over at PE Hub ran a fun piece called the “10 most expensive VC-backed busts of 2009,” where he listed the top flameouts of the year in terms of venture dollars invested when the company finally closed its doors.
Now, I like lists about doom and gloom as much as the next guy, so I dived in. But as I read through it, I couldn’t help but notice that the list is dominated by California and Massachusetts firms. So I started counting. It turns out six of the 10 are from the Golden State—and five of those are what you would call Valley firms (the sixth is from San Diego). Three are from Massachusetts. The lowly straggler is Bermuda-based geostationary satellite services operator Protostar.
What’s more, the California firms tend to clump up at the top of the list. In fact, in terms of venture dollars lost, using PE Hub’s numbers, VCs lost upwards of $650 million on the California firms listed compared to a mere $255 million gone town the toilet on the Bay State firms.
Now, of course a big part of what’s going on here is that California firms attract more venture dollars overall, so the flameouts are also naturally concentrated there as well. And I’m sure that when the IPO and M&A numbers are tallied for the next year California will be back on top. But meanwhile, Massachusetts supporters can point to something the Bay State did better than California (although the really gloomy ones here will say the Valley beat us again).
Here’s my condensed list of the PE Hub list, ranked by approximate VC dollars lost and with MA firms in bold.
1) Novafora (San Jose, CA) — $267 million *
2) OmniSonics Medical Technologies (Wilmington, MA) — $113 million
3) Hammerhead Systems, (Mountain View, CA) — $100 million
4) Protostar (Bermuda) — $90 million
5) Cosentry Networks (Milpitas, CA) — $80 million
6) Sequoia Communications (San Diego, CA) — $75 million (Note: Xconomy has this one at $86 million)
7) Autonomic Networks (Mountain View, CA) — $71 million
8) SiCortex (Maynard, MA) — $68 million
9) Cogentus Pharmaceuticals (Menlo Park, CA) — $62.5 million
10) Dynogen Pharmaceuticals (Waltham, MA) — $67 million