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Angel investment needs to become much more active in seeding startups in the Boston area. That was one of the strong conclusions to come out of an occasionally heated panel discussion at the MIT Stata Center last night.
CEO and founder of Oneforty Inc. Laura Fitton was one of the CEOs presenting who had received help in launching a company from angel investors or incubators. Fitton indicted the Boston angel community, stating she had to go to the West Coast just to raise her seed funding.
“I literally moved to California for three months to raise my angel money,” Fitton told the sold-out crowd. “Only $15,000 of that $150,000 came from Boston and everything else was California. So Boston’s got to wake up and start putting its money where its mouth is. And I had introductions from, like Dan Hessen, Bill Warner and Dan Bricklin, and they couldn’t get me a single interview out here.”
Before the CEOs spoke, Simeon Simeonov, founder and CEO of Fastignite Inc. and a former partner at Polaris Venture Partners, led a discussion with Dave McClure of Founders Fund representing angels, Hemant Taneja from General Catalyst Partners representing VCs and David Cohen of Tech Stars representing incubators. The event, “Accelerating Startup Growth: Seed Funding, Incubation and Mentorship Models,” saw some intense discussion of the current state of seed funding, and a fair amount of colorful language.
McClure was responsible for much of both the intensity and the blue wordage. At one point, debating with Taneja on the state of VCs in funding startups these days, he called out the investor rate of return for the VC industry as a whole.
“Have you seen the IRRs for the last ten years?” McClure asked. “They look like s---.”
Taneja agreed that VCs are trying to figure out the right model for investing, as well as the best technology space to be in.
“Information technology has now reinvented itself in terms of innovation. Information technology has migrated to a place where it doesn’t need a bunch of capital,” he said. “Take clean tech. Frankly venture capitalists are trying to figure out which model might apply.”
The MIT Enterprise Forum of Cambridge put on the event, which was sponsored by Foley & Lardner LLP, whose veteran Gabor Garai opened the event, connecting the history of seed funding with the venue by noting he was the lawyer for Ray Stata — who donated the money to MIT for the Stata Center — early in his career.
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