Boston’s Q2 shows that the startup rebound isn’t ahead of us, it’s upon us

Area startups raised $3.7B in Q3, according to CB Insights

The coronavirus caused some disagreement amongst Boston’s venture capital community. Looking back at our mid-2020 survey of its VCs, some saw the city’s strength in biotech and healthcare as a competitive advantage, while others saw Boston’s diverse startup ecosystem as key to its survival.

And some were worried that activity was about to clamp down. Jeff Bussgang, Flybridge Capital, put it most frankly: “Q2 financing for Boston is going to fall off a cliff. The biotech industry may see some bright spots […] but the financing market has frozen up as solid as the Charles River in February.”

With fresh data in hand, it appears that the more bullish were more right than the bears and that, in a good turn of affairs for Boston startups, Bussgang was wrong.

The city, much like the country, did not see the sharply negative quarter that many anticipated. Boston posted record venture capital investment in the period, its highest total since at least Q3 2018 according to CB Insights data.

The same dataset also says that Boston-area companies raised $3.7 billion across 126 deals. Indeed, the good news from Boston’s Q1 bested better-than-anticipated-results from both the global venture capital community, and the domestic VC world in Q2.

Bussgang sent an updated metaphor to the TechCrunch team in response to this data: “It was a tundra in March and April but, as happens in Boston, April showers and May flowers kicked in and the financing markets started to gush again in the late spring/early summer, just in time to save Q2.”

While the data isn’t historically definitive due to reporting lags, it can be used as a directional sign that Boston’s rebound isn’t ahead of us, it’s upon us.

The solid numbers are a sign that COVID-19 and economic turmoil have put many startups in greater demand than before, which means that they need to amass money to meet growth needs.

Broadly speaking, Boston’s success is not unique. The pandemic has had little impact on the pace of deal-making across the country, proving that investors have taken to cutting checks through Zoom.

The reason might be that unlike in prior downturns when startups were ancillary to the broader economy, in 2020 upstart companies are helping other firms rapidly convert to a more digital, connected and modern way of doing business. It’s not a surprise, then, that VCs are putting more capital to work in startups that — far from slipping in the face of a recession — are catching COVID-19 tailwinds.

With that context in hand, let’s dig into Boston’s results.

Record results

According to a CB Insights data pull for TechCrunch, Boston’s Q2 2020 VC results brought with them at least a local-maximum when it came to venture capital funds raised, even if the total number of rounds in the quarter was merely a four-quarter high; some 2018 and 2019 periods saw higher round counts.

Here’s the data:

On a year-over-year basis, Q2 2020 saw a 61% increase in total dollars invested in Boston, while total rounds in the city slipped by a little under 5%.

That Q2 2020 bested Q1 2020 in the city feels like a sign of strength; as COVID-19 picked up pace in the United States, some Boston-area companies were forced to cut staff. It felt like the start of an awful season. To see a stronger Q2 than Q1, then, feels more surprising than similar gains in another year.


Despite Boston-area investors’ Q1 weariness, in June TechCrunch compiled a pair of investor surveys that hinted there was optimism in Boston’s air. According to some investors, COVID-led pain that startups were enduring was less than expected.

Rudina Seseri, Glasswing Ventures, for example said that duress has been “significantly under what we were expecting at the beginning of COVID-19” while Lily Lyman of Underscore VC said that her expectations were matched — especially the startups she expected to surge.

It’s worth noting here that Boston’s strong quarter doesn’t mean every startup is rushing to put together a round quite yet. Jamie Goldstein of Pillar VC said “it’s certainly not an ideal time to be fundraising. Working with an investor is a long-term partnership and the chances of closing an investment are much better when you can meet people in person. If this is an option, we’re encouraging our companies to wait — they are also more likely to have stronger results to point to a few months from now.”

The conservatism trickles down to other firms, too.

Lyman said that “we’ve also told our portfolio companies to anticipate a longer time to raise money and lower valuations. Each company has been advised to develop multiple replans — a survival plan, a normal plan and an upswing plan so they’re not caught flat-footed.”

Even with Q2’s bump, Boston-area investors were also reticent to say that their portfolio companies would need to raise this year. More investors than we expected noted that their Boston portfolio companies aren’t raising this year.”

Line up this commentary to the data bump and you’ll see contradiction; but to take it more generally, it feels fair to say that Boston’s stable venture capital scene isn’t stopping companies from staying in survival mode, whether that means spending conservatively or not raising at all.

Who, then, were the companies that did raise in Q2 2020?

Per CB Insights data, the five largest rounds in Boston during Q2 2020 were worth just over $1.02 billion, or around 28% of the quarter’s total dollar tally; venture rounds obey a power law, making the largest investments outsized in terms of their comparative dollar heft.

The biggest rounds per the provided data included $300 million for Indigo, $230 million for Duck Creek Technologies, $215 million for Atea Pharmaceuticals, $150 million for C4 Therapeutics and $134 million for AmWell.

There were other rounds in tech companies in Q2 that are worth noting, including Gingko Bioworks’ $70 million Series E extension, PatientPing’s $60 million Series C and Thrasio’s $75 million Series B.

In an interview with Crunchbase News, Thrasio CEO Joshua Silberstein said that the company is the fastest-profitable company in the United States to achieve unicorn status.

Profit, unicorns and billions of dollars in venture funding? The year just keeps surprising us, too