By: Gigaom
Why start up in Boston?
It may not be Silicon Valley but the Boston-Cambridge metro area has a lot going for it -- infrastructure expertise, a deep talent pool, and VC funding. Facebook famously went elsewhere, but here's why other local companies started here (and will stay put.)

The Boston metro area is no Silicon Valley. But it fields its fair share of startups and it raked in the lion’s share of the nearly $780 million in venture capital invested in the New England region in the fourth quarter of 2011.

While the area is more famous for the tech luminaries and startups it lost to other regions — Harvard alums Facebook’s Mark Zuckerberg and Microsoft’s Bill Gates being the most famous examples  – it still can claim a roster of impressive tech startups.

As a Silicon Valley-based partner for Boston-based North Bridge Venture Partners‘  Paul Santinelli has studied the differences between the two technology hotbeds up close and come up with a few conclusions. ”Boston is strong in infrastructure, comms [communications], and enterprise software — the kinds of technologies needed to build businesses,” he said in a recent interview.

Silicon Valley — which led the league in VC money with more than $3 billion invested in Q4 2011, according to the PricewaterhouseCoopers/NVCA MoneyTree Report, is much more focused on the consumer markets, Santinelli said.

But in the post-minicomputer, post-PC world, why build a business in Boston? “That’s a question we had to answer in a very real way when we got started,” said David McFarlane, Co-Founder and CEO of Akiban Technologies, a Boston-based NewSQL database startup. Some of the company’s backers wanted it to relocate to Silicon Valley, he said, but Akiban resisted.

“There’s a tremendous amount of talent in the Boston area where there are quite a few database and data integration companies. There are a number of founding architects that came from Object Design, from Archivas, Blue Agave, and Oberon and InterSystems,” he said. Object Design was a pioneer in object-oriented databases; Blue Agave, a demand management specialist, was acquired by I2 Technologies (which was then acquired by JDA Software); Archivas was a storage startup acquired by HDS; InterSystems is the company behind the Cache database (an outgrowth of the  MUMPS database) used by many hospitals and healthcare organizations.

Ori Herrnstadt, McFarlane’s co-founder and Akiban CTO agreed. “The caliber of architects you found here in the database world was unmatched. The Vertica, the Netezza, the Object Design guys were all here,” he said.  (Vertica, Netezza and Object Design ended up at  Hewlett-Packard, IBM and Progress Software respectively.)

Other hot database or storage oriented startups in the Boston area include ParElastic, Ginger.io, Sonian, Hadapt, Cloudant and VoltDB, the latest brainchild of serial database entrepreneur Michael Stonebraker, who backed Informix, INGRES, Streambase and, Vertica.

It doesn’t hurt that MIT, Harvard, Tufts, Boston University, Boston College, Brandeis, Bentley, Babson, UMass/Boston and other colleges are shoehorned into a compact area around the city. Those schools provide a steady stream of young talent to power startups. Another key part of Boston’s deep bench comes from its background as the home of the minicomputer — the mid-range machines that bridged the mainframe and PC eras. Those minicomputer companies — Digital Equipment Corp., Prime Computer, Data General, Wang Labs, ComputerVision — have gone the way of the dodo bird, but left behind an impressive array of technology experience that remains relevant.

Boston’s proximity to east coast financial companies is another plus. Those companies are not only a possible source of investment but a potential customer base, Santinelli said.

Still, as evidenced by the number of local companies snapped up by outside tech giants, the Boston-Cambridge nexus can feel more like a farm team to distant big leaguers. IBM alone has bought 20 local area companies since it purchased Lotus Development Corp. in 1995. IBM’s most recent purchase was Burlington, Mass.-based Emptoris last December.  Oracle (bought Cambridge-based Endeca in October) and others have cherry picked promising startups in the area. There simply aren’t many tech giants based here any more. On the plus side, the well of expertise still runs deep in the area that witnessed the rise (and fall) of the minicomputer era.

Photo courtesy of Flickr user John Stracke

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