10 reasons why Boston is a good gateway for international startups into the US
There are many reasons why international startups decide to make the jump to the US: it has a big and digitally savvy market, it makes a great international platform, there’s better access to capital than anywhere else, there’s an entrepreneurial mindset and a good business environment, etc.
However, companies trying to make the leap also face a myriad of challenges: high establishment/landing costs, lack of know-how (local culture, business etiquette, marketing, communication…), lack of network, immigration issues, market competitiveness, etc.
Choosing the correct point of access, and finding the most suitable partners are, therefore, crucial decisions to correctly penetrate the market.
Every state and city claims to be the best place for foreign companies to establish their local presence. And while many have great startup ecosystems, not all of them are the best to land in the US at first. Below is a list of reasons why Boston (and Massachusetts) is a good gateway for international startups into the US:
1. Great access to funding
The state of Massachusetts ranks third in terms of VC activity in the US, with close to $4.2B invested in 346 deals during 2014. While many companies come to the US to raise funds, landing in Silicon Valley may not always be the best option. Massachusetts offers abundant funding opportunities, and the average Series A round in Boston is actually the highest in the world, ranging from $10M to $10.5M (Source: CB Insights). Furthermore, Massachusetts also ranks first in terms of VC per capita for the whole nation.
2. Big pool of tech talent
With more than 100 colleges and universities, Boston is certainly one of the world’s top academic hubs. The presence of top-level universities like Harvard or MIT make the city a great place to find national and international talent to build teams. In fact, according to the Computing Technology Industry Association, almost 10% of all Massachusetts workers are employed in technology related fields, which makes Massachusetts’ labor force the techiest in the nation. In addition, the average salary for a software engineer in Boston is $109k — lower than the $120k of Silicon Valley, or the $117k of New York (Source: CB Insights).
3. Mature startup ecosystem
Twenty years ago almost all startups came out of Boston or Silicon Valley. Boston has always been a hot-bed for innovation, and the maturity of its ecosystem is reflected in the number of successful companies it has given birth to and IPO’d in the last years: HubSpot, TripAdvisor, Wayfair, Care.com, Demandware…This, in turn, makes the city a great place to find experienced founders, mentors, advisors, and investors — which in the end make the best partners for any startup expanding into the US.
4. Presence of big players
In line with the previous point, Boston is also home to big tech players such as Akamai, Kayak, or TripAdvisor (Expedia); and many other tech giants such as Amazon, Facebook, Twitter, Google, IBM, Microsoft, Oracle, PayPal, or Verizon have offices in and around the city. But the city not only has a good number of potential clients and partners for startups in tech related industries, but also in banking (State Street, Santander Bank, Eastern Bank), insurance (Liberty Mutual, Mapfre Commerce Insurance), and others.
5. Dense innovation ecosystem
With a population of just around 650.000, Boston is the US’ 24th largest city. The size of the city, together with the great concentration of universities, research labs, and innovation stakeholders, makes the ecosystem a tight and dense playfield convenient for any startup touching base in the US. Furthermore, according to MassTech Collaborative’s Innovation Economy Annual Index: “around 40% of the workforce is employed within an innovation economy sector, much higher than any other state”.
6. Accessibility and support
In terms of accessibility, Boston has a culture of networking and support towards startups, innovation, and entrepreneurship which makes it easy for entrepreneurs from abroad to quickly tap into it. This is reflected in places like the Cambridge Innovation Center, one of the first coworking spaces in Cambridge which currently hosts over 800 startups and runs initiatives such as the Venture Café, a weekly meetup for startups and investors; WeWork, one of the biggest coworking companies in the world, with around 16 locations worldwide; MassChallenge, the largest non-profit accelerator in the world with more than 600 startups accelerated; Techstars, a global network of local accelerators with programs in several cities; and Dat Ventures, a soft-landing acceleration program focused exclusively on international startups accessing the US via Boston, and the largest for-profit accelerator in Massachusetts by number of startups accelerated in one year (disclosure: I’m a Co-founder at Dat Ventures).
7. International exposure
All of the above mentioned characteristics make Boston a must-be place for tech media. In terms of exposure, getting coverage in US media is really helpful for international startups taking their first steps in the market. To this extent, Boston counts with several tech media happy to learn about new companies landing in the city: Bostinno, BetaBoston, Venturefizz…
8. Location
For startups coming from the East of the Atlantic, the US East Coast is a better choice in terms of logistics and communications with teams back home. Try running a business with a 9 or 12 hours time difference!
9. Tax incentives
There are many tax incentives for entrepreneurs who establish their startup in Boston, as well as many other legal incentives specifically designed for startups. Although not many international startups end up incorporating in Massachusetts, depending on the industry they operate in, it can be a wise choice.
10. Gender diversity
The startup world is not very diverse when it comes to gender. A clear example is that only 24% of founders are female in Silicon Valley, and a record low 16% in New York. On the other hand, Boston is the second city where more startups are founded by women, just short of 30% (Source: CB Insights). If you are an international female founder, in Boston you’ll feel you’re not the only one!
So remember, the US is a difficult market to navigate, and while many cities can offer great opportunities, not all of them are the best to put the first foot in. If you have a startup and consider making the jump: evaluate your pros and cons, choose wisely where you’re going to land — Silicon Valley is not always the best option — and try to access by the hand of a local strategic partner who can accelerate your adaptation.
About Dat Ventures
Founded in 2014, Dat Ventures delivers a 3-month soft-landing accelerator program for international startups in Boston. Dat Ventures connects founders abroad with local US resources to build teams, adapt businesses, and engage with potential customers and investors. Dat Ventures’ mission is to be the gateway for international startups to enter the United States via Boston, while helping generate an economic and cultural impact in their countries of origin.
