What TechStars’ Progress in Boston Really Means for Innovation

5/4/12Follow @gthuang

As I walked out of the latest TechStars Demo Day spectacle in Boston yesterday, I was struck by one question: what does it all mean?

Yes, 13 young startups made highly refined pitches to a theater full of angel investors, venture capitalists, and fellow entrepreneurs, to mark the end of the accelerator program. Yes, some of them were intriguing, but it’s hard to tell much about their real prospects from pitches like those. Judging from the breathless tweets and most of the media coverage around the event—not to mention the congratulatory remarks emanating from the stage—it would seem that a Boston tech renaissance is upon us.

I would say the true significance of the event is both more and less than that. This was the fourth startup class for TechStars Boston, and the program has firmly established itself here. (There will be another session this fall.) It is consistently drawing outside talent to Boston, which is always good for the community. It attracts top-tier entrepreneurs and investors to get involved in the mentoring and vetting process. And it shines a spotlight on an important segment of the tech startup population. TechStars clearly has succeeded in bringing together an outstanding crowd of innovators. (When you run into David Beisel, Mok Oh, Jason Jacobs, and others within seconds of arriving at the event, you know it’s for real.)

And if the goal of its companies on Demo Day is to raise money, they’re doing pretty well there too. Gone, at least for now, are the days when even accelerator startups really struggled to get going. But the longer-term impact of TechStars and its companies—and where they fit into the broader ecosystem—is still an open question.

(By the way, the martial-arts demonstration in the middle of Demo Day was a bit random, but I hope it inspires someone to organize a Startup Fight Club. If so, I’ll be there.)

Some of the bigger ideas were from Laveem, which is trying to serve up nutritional info about every food you might eat; UberSense, which is using mobile and video technology to connect athletes and coaches anywhere; and Pact, which gets people to put their own money on the line to motivate themselves (to exercise, for starters). These are all ideas with a big upside, if they can gain wide adoption.

But a criticism I often hear about accelerators, even from their mentors, is that they think too small. Their financial model rewards relatively quick flips to make money for their investors. That would seem to be at odds with the chorus of people who say, “We need to build more big companies in Boston”—which is debatable as well, of course.

I think the resolution comes down to startups needing to focus on solving specific problems, and if they do that well, they will have a choice of becoming bigger and more influential or selling out. Accelerators like TechStars need not stand in the way of that, of course, and they should (and already do) recognize when a company or idea has a real opportunity to become huge.

Another more general criticism is that we are in the midst of an “incubator bubble” and an early stage startup bubble. Too many similar companies are getting similar amounts of funding and not amounting to much. There is something to be said about the pack mentality that keeps people from trying radically different approaches, or putting their money and effort into other big sectors that need it (like energy, healthcare, and education) rather than chasing after the next Facebook or startup du jour. So we’d all do well to remember that accelerators like TechStars are just a piece of the whole puzzle, that they work for certain types of startups but not all.

At the end of the day, the fate of Boston’s tech ecosystem rests with all of its companies—those that stay local, that is. The renowned investor Bill Warner reminded us at Demo Day that in 1977, when he came to Boston to attend MIT, the city “was on top of its game. People didn’t know there was high tech anywhere else.” Now he is bullish again on Boston’s future, saying that “today is the day the [overdrive] button got pushed. The revolution is starting here.”

Warner also touched on the region’s historical significance when he pointed out that “the first social network” was created in the Northeast; it was based on a few lines of code, and now has some 300 million users. “It’s called the Constitution. What we created is a social network, and it’s changing the world.”

Perhaps an even broader perspective was shared by TechStars co-founder Brad Feld when he said, “Boston was a great startup town before I got here, and it’ll be a great startup town after I’m dead.”

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com. Follow @gthuang

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