Boom or Bust? 11 Big Bets on the Future of Boston Tech

7/9/12Follow @gthuang

Just past the midway point of 2012, let’s take stock of the Boston-area technology scene. Not just because we care about what’s happening in the local community (which we do), but because what’s happening in the local community could have a big impact on some of the most important sectors in technology and business—across the nation and the world.

I’ve decided to take a critical look at the biggest venture-backed firms in the area. I’m calling them “boom or bust” companies, because each could become hugely successful—indeed, some already are—or could end up flaming out (or fading away). The fate of major industries rests in the balance but, hey, no pressure.

These are privately held tech companies that have raised $50 million or more in venture funding since 2000. (That figure is arbitrary, but I wanted a nice round number and had to draw the line somewhere.) Each company has been trying to create a new market or transform a sector of technology. Each company is thinking big. Many of them are the face of their sector. And collectively they represent the major hotspots in Boston-area tech innovation: software, hardware, and Internet, across the fields of data storage and management, e-commerce, travel, mobile advertising, security, and networking.

Here’s who isn’t on the list: biotech, life sciences, cleantech, or energy-focused firms (of which there are many big local bets). And of course there are plenty of interesting bootstrapped companies, as well as startups that haven’t yet raised $50 million (that I know of, though some are close), such as Gazelle, Plexxi, SCVNGR, and Visible Measures. I’m not saying that lots of VC funding is the ticket to being noteworthy or successful—but I am saying that it means people are betting a lot on your success or failure. Boom or bust.

I counted 11 companies that fit my criteria. For many of them, my quick analysis was a trip down memory lane—through strategy shifts, name changes, new CEOs, and other “pivots” over the years. In considering how each could “win” or “lose” in its sector, some common themes emerged. For consumer-tech companies, in particular, the cost of acquiring customers is an issue. For infrastructure and enterprise-tech companies, are they pioneering a new industry or are they an also-ran? How’s their timing? How competitive is their industry? (Interestingly, no VC firm has a monopoly on these investments; the leaders were General Catalyst, Highland Capital Partners, and Sigma Partners, each with three companies on the list.)

In most cases, I didn’t talk to the companies themselves or their investors for this article. Instead, I talked to outside sources on background—people with knowledge of the companies, but without a financial stake in them. I’m not here to pump these companies up. I’m not here to tear them down. I’m here to provide a realistic look at their prospects and their strengths and weaknesses.

Without further ado, here’s a slide show of 11 top venture-backed companies (and their CEOs) that I believe will define a generation of Boston tech:

 

NEXT COMPANY >>
Actifio
HQ: Waltham, MA
Founded: 2009
CEO: Ash Ashutosh
Amount raised: $57M
Investors: North Bridge Venture Partners, Greylock Partners, Advanced Technology Ventures, Andreessen Horowitz.
What it represents: The future of data management, but more than that, a big chunk of enterprise IT systems.
Why it wins: Ahead of the curve and lots of positive buzz.
Why it loses: What the heck is data management virtualization? Will the EMCs of the world catch up before Actifio can get to big revenues?
Photo courtesy of Actifio

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 or call him at 617-252-7323. Follow @gthuang

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  • http://about.me/miketrap Mike Troiano

    Great piece, Greg. Thanks for the props, and the warning. Worth noting… Actifio is radically simple copy data management. We stop the data storage explosion lots of businesses are struggling with right now by addressing its root cause: the siloed data protection and availability apps creating, moving, and storing copy after copy of everything in production. Think backup, snapshot, disaster recovery, test & dev, etc. We replace all that complexity and expense with a storage appliance that creates a single, golden copy of everything in production, and tracks changes to it over time. The result is a single, simple, elegant system that lets you recover any thing from any time instantly for up to 90% less than you’re paying today. It’s really not that hard to understand, we just need to do a better and more consistent job explaining it. I promise we will.

  • gthuang

    Thanks, Mike. I suspect your customers get the concept right away. It’s just one of those things that’s hard to write about in the mainstream press. You guys are building a very interesting company—definitely one to watch closely.