Love that Dirty Water?

By Greg Ayres

Throughout the course, we met entrepreneurs and venture capitalists from Boston as well as from Denver, New York, and the San Francisco Bay Area.  But for entrepreneurs, is Boston the best place for entrepreneurs, or can they do better in another city?  I decided to take a deep dive into the data to dispel three common entrepreneurial myths about Boston.

Myth #1: Boston is not a good place to live

By some, Boston is seen as a laggard in quality of life issues: weather, nightlife, fun.  But when Bloomberg ranked the most desirable U.S. cities in 2012[1], Boston and San Francisco were both in the Top Five.  The rankings considered educational attributes, economic factors, crime, air quality, and especially leisure amenities (restaurants, bars, libraries, museums, professional sports teams, and park acres by population). Who didn’t make the Top Five?  San Jose, New York, Denver, Los Angeles, Austin, Chicago, San Diego, and other top tech cities.

Myth #2: Boston lacks venture capital

To grow your startup, you’ll need access to investors.  Although Silicon Valley still has the most venture capital, Boston’s tech startups are far from starving.  A look at 2011 data from USA Today[2] shows that 430 Bay Area tech companies received $11.8 billion in investments.  The Boston area was a distant second, with 285 companies receiving $2.77 billion in investment.

Nonetheless, Boston is part of the Northeast Corridor, which is a much larger market for venture capital.  Investors in this corridor are, at most, a half-day’s drive or shuttle flight from Boston, which is a reasonable commute for most investors.  In 2011, the top three cities in the Northeast corridor (Boston, New York, and Washington, DC) alone attracted a total of $6.5 billion in investment.  The Northeast Corridor’s venture community has become a respectable rival of Silicon Valley’s.

Myth #3: Boston lacks good career opportunities for spouses and partners

There is no shortage of career opportunities in Boston. According to 2010 data from the U.S. Cluster Mapping Project[3], Boston was home to 28 of the nation’s Top Ten industry clusters by employment.  By comparison, New York was home to 32 Top Ten clusters; San Francisco, 14; San Jose, eight; and Denver/Boulder, zero.  Furthermore, these cities were home to Top Ten clusters in many of the same industries.  From aerospace engineering to education, and from medical devices to financial services, job opportunities in Boston are comparable to those in New York, San Francisco, and San Jose.

However, Boston’s wage rates still trailed those of the other cities in 2010.  In most of the national Top Ten industry clusters found in New York, San Francisco, San Jose, and Boston, average wages in Boston were lowest.  The wage penalty was especially severe in financial services, information technology, distribution services, and medical devices, where average wages in Boston were up to 42 percent lower than New York wages and up to 28 percent lower than San Jose wages.  While this is bad news for spouses and partners, it’s great news for entrepreneurs looking to scale a business without running out of cash.

So if you’re an entrepreneur looking to launch a company, you’ll have a tough time finding a better spot than Boston.  But if your spouse or partner wants to make a lot of money, you may need to look elsewhere for love.

[1] Bloomberg BusinessWeek, “America’s Best Cities”, September 26, 2012.

[2] Jefferson Graham, “Top Cities for Technology Startups,” USA Today, August 24, 2012.

[3] Data assembled from U.S. Cluster Mapping website,  Last accessed March 14, 2013.


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