Cambridge Officially the New Center of MA Venture Deals—the Data

Xconomy Boston — 

Over the past few years, it’s no secret to Boston-area entrepreneurs that venture capitalists have been moving back into Cambridge and Boston from places like Waltham’s Winter Hill, Lexington, and Wellesley. Off the top of my head, I can name Atlas, Highland, Bessemer, Greylock … and that’s just a quick list.

Firms like Polaris (through Dogpatch Labs) and CommonAngels have also opened presences in Kendall Square. (Here is an account of Boston VC migrations I compiled in 2011 that captured the bulk of the moves.)

Now, and not surprisingly, the payoffs of these moves are evident in a new study of deal activity that shows Cambridge has taken the clear lead as the center of venture activity in the Bay State. The study, by New York data services firm CB Insights, covers both corporate and private venture firms, as well as angel groups.

As CB Insights states, “Massachusetts is the #2 destination for venture capital in the U.S. but within the state, there appears to be a shift happening as cities like Cambridge and Boston steal venture capital share from other destinations like Waltham and Woburn … The clear winner in Massachusetts has been Cambridge with the lead in both VC deals and dollars.”

The report looks at quarterly venture and angel deals in Cambridge, Boston, Waltham, and Woburn over the past five years, starting in the fourth quarter of 2007 and ending in Q3 of this year. You can see from the charts below that Cambridge roughly doubles over this time. Here are some quick takeaways from the study:

  • Over the past four quarters, from Q4 2011 through Q3 2012, Cambridge-based investments totaled $991 million in 122 deals. That marked a 5 percent growth in dollars and 27 percent rise in deal volume over the four previous quarters.
  • In that same time period, Boston accounted for $541 million in funding spread across 63 deals. That was actually down 13 percent in deal numbers versus the prior four quarters, but funding was up 8 percent in that time.
  • Waltham held pretty steady, and is even growing, despite the VC migration. Over the past year, thanks to a big spike last quarter, it actually edges out Boston in dollars invested, although the 41 total deals trails Boston significantly. It may be that as the economy perked up, the smaller number of firms there are doing more and bigger deals, keeping the numbers up.

Below are the charts for Cambridge, Boston, and Waltham (all data from CB Insights). The blue bars are dollar totals invested each quarter, the orange lines show the deal numbers. You can find additional analysis and more charts (including data for Woburn) in the full report.

Cambridge Venture and Angel Deals

Boston Venture and Angel Deals

Waltham Venture and Angel Deals