Best Cities for Startups — Boston

By Adriaan Brits | Friday, 13 August 2021 | Feature, Startup

Boston’s advantages for startups begin with its location near two world-class academic institutions: The Massachusetts Institutes of Technology and Harvard University. But proximity to some of the best minds in the country isn’t the only reason entrepreneurs might want to start a business here. Startup Genome, which ranks Boston fifth in the world among startup-friendly cities, also places it among the top 10 in global ecosystem funding with an ecosystem value of $96 billion in 2020, compared to the global average of $10.5 billion. “Boston is home to a buzzing startup ecosystem across many sectors – cleantech, biotech, and robotics,” Emily Reichert, CEO at Greentown Labs, told Startup Genome. “We strongly believe that our regional community thrives because of all the stakeholders that are committed to supporting local, early-stage companies.” 

The startup community in Boston features more than 50 accelerators and incubators, including MassChallenge. This global nonprofit has more than 10 years of experience accelerating startups, industry, and innovation ecosystems by fostering entrepreneurship through collaboration and development. And Massachusetts itself helps encourage startups by offering its own research and development tax credit that complements the federal R&D credit. 

Advanced manufacturing, robotics, and the life sciences are particularly strong sectors in Boston. More than 4,700 people in the city work for robotics companies, and 3D printing and advanced manufacturing startups like Desktop Metal, Markforged, and Humatics have done well here. According to Startup Genome, Boston also has more than 1,100 life sciences companies, seven teaching hospitals, and five of the top six National Institutes of Health-funded independent hospitals in the US. In addition, the Massachusetts Life Sciences Center provides research grants, loans, tax incentives, and other assistance through its $1 billion Life Sciences Initiative. Plenty of life sciences companies have prospered in the Boston area as a result. This includes Moderna, which launched the largest biotech IPO in the world in 2018, valued at $7.5 billion.

Here are some additional reasons to consider starting a company in Boston.

Tons of Capital

Lots of investors are itching to pour money into promising startups in the Boston area. For example, 60 of them received funding of more than $1.5 billion in March 2020 and $3.5 billion in April 2020. According to BostInno, these included biotech companies Sarepta Therapeutics ($400 million), Xilio Therapeutics ($100.5 million), and Kymera Therapeutics  ($102 million). Underscore VC says Boston’s history has a lot to do with investors’ enthusiasm, as Greylock, the first modern venture capital firm structured as an LLC with multiple partners, was founded there. And although Silicon Valley and the Bay Area have been extremely popular with investors for some time, those areas’ perceived advantages over other cities may be waning. In any event, especially for promising startups in the biotech, robotics, or advanced manufacturing space, there’s plenty of funding to be had in the Boston area.

Access to a Fluid Labor Market With Top Talent

Boston’s proximity to Harvard and MIT, not to mention many smaller learning institutions, means there will always be a good supply of talented young workers. Plus, as Underscore VC points out, Massachusetts has a law (enacted in 2018) that limits the enforceability of non-compete agreements that used to be a drag on the Boston-area labor market. The new law generally bans non-compete agreements for both employees and independent contractors that don’t meet strict requirements. These include, among other things, requirements pertaining to the notice of any required non-compete agreement, a job candidate’s right to consult an attorney before signing it, and limitations on an agreement’s scope. As a result of the law, graduates are more likely to stick around because they won’t be saddled with difficult non-compete agreements that limit their future job options. 

Another reason Boston is an incubator of top talent is its diversity. In fact, according to Boston Indicators, it is one of the most racially diverse in the US. Census data from 2017 show that the city is approximately 44% White, 23% Black, 20% Latino, and 10% Asian. All of these different groups of people bring a variety of backgrounds, perspectives, and experiences to Boston’s labor market. Plus, because Boston is relatively compact, these people are more likely to run into each other and exchange ideas, producing a synergy that more geographically dispersed cities would struggle to match.

Multiple Iconic Platform Companies

Underscore VC also points out that Boston hosts a variety of “platform companies” (i.e., companies that train their employees in such a way that they are later able to leave and start their own businesses with their newly acquired skills). For example, former employees of Cambridge, Massachusetts-based Hubspot started Crayon, Drift, and SaaSWorks. Other platform companies that have an office in Boston include Amazon, Demandware (Salesforce), Drift, Toast, Tripadvisor, and Wayfair. Not only do these companies help spawn other businesses, but they also attract both investors and talent that can greatly benefit startups.

Relatively Affordable Property and Excellent Infrastructure

While Boston real estate is obviously more expensive than that of a small town, considering the talent pool, capital investment, and other resources it has for startups, rent won’t set a company back as much as you might think. Moreover, the city is compact given its population of some 700,000, which means getting around is fairly easy. An efficient public transportation system helps with this, which means employees can get to work relatively easily. Those employees will also be able to enjoy a wide variety of restaurants, parks, museums, and other amenities.

Plenty of Funding for Research and Development

Boston’s companies and institutions invest heavily in research and development, and these efforts can help spawn startups. For example, Harvard Innovation Labs is an “innovation ecosystem” that supports Harvard, the entrepreneurial efforts of students, and select alumni by providing networking, mentoring, and collaboration opportunities, as well as resource and programming support. Along the same lines, MIT’s The Engine helps to commercialize students’  ideas by “empowering disruptive technologies with the long-term capital, knowledge, network connections, and the specialized equipment and labs they need to thrive.”

About the Author

Adriaan Brits

An analyst of global affairs, Adriaan has an MSC from Oxford, with diverse interests in the digital economy, entertainment, and business. He is a specialist trainer in advanced analytics and media.