Wednesday, May 09, 2007

Love That Dirty Water

The may come as news to some folks but we Bostonians can be a bit parochial and self-centered. We like to think of our fair city as the origin of some pretty spectacular stuff. (Have you heard of the United States of America?< /Stephen Colbert voice>) And we wonder how people can ever get tired of hearing us yammer on about the Red Sox (We won a World Series you know. First time in 86 years.)

In All Our Glory (Writer not pictured)

So as the IN VIVO Blog's resident Massachusen VC-watcher, I’m of two minds when I hear that West Coast venture firms are opening Boston offices. First comes the understandable sense of validation—someone recognizes our place in the industry. Then comes the feeling that we’re somehow become an outpost for … egad … West Coast firms!

At a dinner a few years back, the managing partner of a VC firm, in explaining plans to open a Boston office, suggested Boston was an up-and-coming region that might be the next San Diego! The next San Diego? I always thought San Diego was the next Boston!

What’s driving this rant is the recent news that Skyline Ventures—a highly regarded Palo Alto firm—hired Stephen J. Hoffman, formerly of TVM, to head its East Cost office in Boston refreshed those conflicted feelings. Skyline joins Abingworth, Kleiner Perkins, Morgenthaler and 5AM as out-of-towners who opened Boston-area offices over the past few years.

Skyline founder John Freund says the hiring had more to do with Hoffman than with the East Coast or Boston. “We knew he’d fit in with our firm perfectly and he can’t move from Boston,” Freund says. “The more we thought about it the more we thought it would be an advantage to have an office in Boston. We’ve done a lot of investments in Boston over the last two years so having a presence on the ground would be an advantage.” Among the many attractions of Boston is an influx of pharmaceutical companies opening shop in the area (Merck and Novartis among the largest).

It’s great to have Skyline here in Boston. Same goes for Abingworth, Morgenthaler, 5AM and, of course, Kleiner Perkins (which technically didn’t open an office but did hire former Acambis CSO Tom Monath as a Boston-based partner). The more venture capital firms in Boston, the better off the biotech and medical device industries will be.

We’re lucky to have a strong core of venture firms like SV Life Sciences and Polaris Ventures. Still, it’s striking that the only new venture blood in town seems to come from branch offices. With the exception of Clarus Ventures, which broke off from MPM Capital, I can’t recall the start of any significant venture firms in the Boston area in the past few years. (Tell us if I’m missing someone.)

Still, wouldn't it be nice if Boston could be the home-base of a significant new venture firms, rather than an outpost?

Go Sox!

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