An Insider’s Guide to Founding a Startup in Boston

The city’s community, resources, infrastructure and quality of life make it a clear choice for entrepreneurs looking to escape Silicon Valley.

Written by Ignacio Castro
Published on Nov. 29, 2021
An Insider’s Guide to Founding a Startup in Boston
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With startup hubs popping up across the United States, competition is fierce to find a location that combines a fertile business landscape with a genuinely good quality of life. 

Emerging hotspots often come with extortive living costs, have limited access to nature or are so saturated with entrepreneurs that it’s hard to really break through the crowd. As any founder will tell you, where you plant your startup roots plays a big part in how you grow. 

Enter Boston.

Located in the northeast U.S. next to The Charles River, Boston has a special blend of scenery and startup spirit. In fact, the city has been ranked fifth on the list of top startup ecosystems due to its collection of world-famous educational facilities, generous grants and tax rebates, full calendar of innovation events and skilled talent pool. Beyond the bustling business sphere, locals enjoy a lifestyle surrounded by picturesque architecture, sports games, natural wonders and diverse communities. 

There's no short supply of capital in Boston either. This year, Boston’s fundraising activity reached new heights, with record sums poured into tech startups there. It’s not a standalone trend: Back in 2018, the city received more overall startup investments than New York. The strong funding backbone makes sense considering that Greylock — one of the oldest VC firms — was founded in Boston. Fast forward to 2021, and the Financial District is now filled with a cluster of new and established VCs including Underscore VC, Flare Capital, Founder Collective and Boston Seed.

There's a reason why Boston is nicknamed The City of Champions. It’s a natural breeding ground for success stories. For those looking to leave their legacy in the world, here’s the full rundown on how to start a new business in Boston.

 

What Industries and Entrepreneurs Are Excelling in Boston? 

A number of industries have found their footing in Boston. Finance, healthcare and education are the three largest players, being responsible for 74 percent of employment. Fintech has made a particularly big splash too, due to Boston's historic relationship to banking and insurance. Likewise, Boston’s manufacturing heritage has paved the way for the fast-growing manufacturing tech sphere, where businesses have been embracing robotics, AI and the Internet of Things. 

Biotech is also on the rise, with more than 1,000 biotech companies — from startups to billion-dollar enterprises — calling the city home across the Kendall Square neighborhood and Longwood area. Robotics and AI are prominent, too, partly due to MassRobotics, the innovation hub and startup cluster in Boston dedicated to supporting the needs of startups in the sector. The tourism sector is significant in Boston, as more than 21 million people visit the city each year, collectively spending $24.9 billion.

Amongst these thriving industries, a few entrepreneurs have made a firm name for themselves, and are inspiring others to follow suit. A handful include:

Top Entrepreneurs and Founders in Boston

  • Jeremy Achin, cofounder of DataRobot
  • Andrew Bialeck, CEO of Kalviyo
  • David Friend, CEO of Wasabi Technologies
  • Sheila Lirio Marcelo, CEO and co-founder of Care.com
  • Jennifer Lum, co-founder of Adelphic Mobile
  • Sheela Sethuraman, founder of CueThink

On top of these names, Dharmesh Shah met his HubSpot co-founder Brian Halligan when they were grad students at M.I.T in Boston. Matt Lauzon, the founder of Gemvara, was named as one of the top 25 entrepreneurs under 25. And Sravish Sridhar, the founder of Kinvey, is well known for his blogs that celebrate, instead of criticizing, his competitors.

 

Why Are Certain Industries Drawn to Boston? 

Boston has introduced a series of tax reductions to attract large tech employers to the area and to support employment in high growth industries. There are also plans for business owners to be exempt from the $10,000 federal cap on state and local tax deductions.

Boston is also becoming more diverse. There are a number of independent organizations — like the Boston Ujima Project — that provide greater access to capital for founders from underrepresented groups. There are also research centers like the Boston Indicators that are identifying ways the city can increase access to equity investment, grants and alternative financing structures. Elsewhere, Smarter In The City is a high-tech accelerator offering a zero-equity stipend, professional mentorship, co-workspace and technical assistance to people of color.

Furthermore, entrepreneurs can take advantage of initiatives that support launching cutting-edge AI and robotics startups and leverage the technical expertise of MIT’s new Schwarzman College of Computing, Amazon’s Boston-based robotics teams and the MIT-IBM Watson AI Lab. 

Innovation is flourishing in Boston. The city placed second on the list of the World’s Most Innovative Cities, and a new survey from the Boston Chamber of Commerce shows that executives from the largest employers in the city are accelerating the adoption of new technologies.

In the pandemic, Boston startups and organizations offered smart solutions. Moderna researched and deployed its vaccine against Covid-19. Ginkgo Bioworks, the Cambridge Innovation Center, and Brio Systems established Covid-19 testing sites. And Biobot Analytic used its AI technology to track the virus in local communities.

Apple, Google, IBM, Facebook, Amazon and Uber all have offices in Boston and spend huge amounts on R&D efforts in the city. The Cambridge Innovation Center is at the center of much of the action, supplying entrepreneurs with its Venture Café (a nonprofit programming partner that connects innovators) and Captains of Innovation (an in-house boutique consultancy for corporate innovation initiatives.)

 

What Entrepreneurial Support Is Available to Founders?

Entrepreneurs have a wealth of programs, mentors and startup communities to help them at any point during their journey in Boston. When it comes to financing, the local government offers two general programs: the federal 504 loan program, which offers long-term, fixed rate loans of up to $5 million. The MassDevelopment program also has funding options for projects that generate economic benefits for local communities. 

Other specialized funding routes include the State Trade and Export Promotion (STEP) grant to facilitate internationalization, the Safety Grant Program for workplace safety training and the Workforce Training Fund to finance workplace education. 

The City of Boston equally has a business strategy team to aid companies in moving to (and expanding within) the city. The small-business development team supports permit applications, licensing and the technical side of business — plus grants certifications for underrepresented, local and women-owned businesses. Entrepreneurs who have a family (or are planning to start one) can apply for the Childcare Entrepreneur Fund to attend business training sessions and receive grants for their ventures. 

The Greater Boston Chamber of Commerce has an extensive list of events for small-business owners, where people can collaborate, network and stay updated about local initiatives and regulations. The U.S. Small Business Administration additionally has an office in Boston and an active community offering free counseling and advice on starting a company.

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Where Can I Meet Other Founders and Connect With Mentors?

With all the buzz around Boston, there’s a sea of interesting entrepreneurs and investors to wade through. The Boston Entrepreneurs’ Network brings early stage entrepreneurs together to share knowledge and experience and collaborate on upcoming projects. The network specializes in nurturing tech and life science entrepreneurs but is also open to founders from other sectors. 

The Founder Institute’s Boston branch puts entrepreneurs in touch with local, global and Silicon Valley experts via its critical support network of founders and mentors. The accelerator has weekly feedback sessions and office hours for founders in its program, who can access detailed, actionable feedback for impactful business. For entrepreneurs in AI, the Founder Institute supports more startups in the field than any other organization.

Techstars’ Boston branch  hosts a number of events, including meet and greets where entrepreneurs can network with past accelerator teams and partners and attend sessions about fundraising, growth and technology.

Greenhorn Connect is a community dedicated to forming connections within Boston’s startup scene. The online portal introduces Boston startups to lesser-known resources, events and opportunities in the region, as well as a range of educational content. The Capital Network is a nonprofit that gives practical and personalized mentoring from investors and fellow entrepreneurs to demystify the funding process for early stage entrepreneurs. 

Startup Boston Week takes place annually across five days in September, with 70 events and more than 200 speakers. Each event track is specifically designed towards different entrepreneurial roles and company stages, so is ideal to find like-minded people, as well as tap into the toolkit Boston has for businesses.

Not to mention, Boston has an impressive selection of coworking spaces, where entrepreneurs can work side-by-side with the next biggest companies and founders. Some of the most popular are: 

 

Where Can I Find Talent?

Boston is famous for its educational institutions, including Harvard, MIT and a variety of public, charter, pilot, private and international schools. The result is a young, tech-savvy, entrepreneurial-minded pool of talent. Boston actually features in the top 10 markets in North America for technology talent, while MIT has consistently been ranked number one for engineering schools — producing some of the most skilled tech talent available in the United States. 

The Martin Trust Center for Entrepreneurship focuses on teaching MIT students the proven frameworks and processes to start a business. The program equally has a professional advisors’ network to mentor participants and gives awards to recognize students that have committed time, energy and capital toward future generations of entrepreneurs. MIT alumnus Bill Aulet has even written a book called Disciplined Entrepreneurship, which is a 24-step guide to building innovation-based ventures. 

Many of the colleges like Northeastern University, Babson College and Boston University, host career fairs and expos concentrating on different job sectors. There are also a number of Boston-born and based HR technologies to source and assess talent in the area. Workable recruitment software is popular, and the company has held events in Boston to discuss what it takes to impress and hire top tech talent in the northeast. 

Elsewhere, Predictive Index is a talent-optimization platform that gives local companies a suite of tools to find, curate and manage recruitment efforts. ClearCompany, another Boston native, is a talent management software provider that plays a big role in the city’s HR tech space. Alternatively, VentureFizz has a sizable reach when searching for tech talent in the area.

 

Where Can I Get Early Stage Funding? 

Boston’s funding landscape has plenty of different funding routes, from traditional VC to alternative means of accessing capital. The local government has a range of grants for new businesses in specific sectors: for example, environmental grants and financing from the Massachusetts Clean Energy Center for those in green verticals. 

The SBA (a government-run agency) has a list of approved business loan lenders, as well as virtual courses to help entrepreneurs find funding best suited to them. Additionally, the New England Venture Capital Association has an investor database for local investors, and Grants.gov compiles any federal grants that are available.

For angel investment, Boston Harbor Angels invests in high-growth, early stage companies in IT, life sciences, specialty materials, aviation and more. With more than 70 active members, angels have invested in more than 70 startups since 2004. TiE Boston is another angel group and has invested in more than 24 companies, contributing $4 million in 2017 alone. Beacon Angels and MIT Alumni Angels of Boston are also active in the area.

Startup competitions in Boston offer funding to winners, and are a great way to get startups a literal platform at the same time. MIT $100K brings together VCs, serial entrepreneurs and prototyping funds, and gives away $300,000 in non-dilutive funding to early stage startups. SparkTank is a competition hosted by Brandeis International Business School, where staff, students and alumni pitch for $50,000 in prize money. 

MassChallenge is a nonprofit organization and global network of innovators targeting large-scale problems in society. The accelerator and its partners provide annual awards for selected startups in its cohorts, and last year, they gave $1.4 million in prizes to startups ( including four from Boston). MassChallenge has an office space in the city and offers specialized programs in fintech and healthtech verticals.

Underrepresented, women, LGBTQ and veteran founders can also receive financial support and advice from a variety of entities across the state, such as charities, corporations, nonprofits and the federal government.

 

What’s the Cost and Quality of Life in Boston?

In 2019, Deutsche Bank ranked Boston ranked eighth overall in the world for best quality of life — ahead of San Francisco. The survey also found that Boston is relatively affordable to visit, meaning locals can enjoy a steady stream of visitors from out of town. More recently, Boston was rated the state capital with the best quality of life in the United States.

According to data from NerdWallet, the median salary in Boston is $51,737, while the median cost for rent for a two-bedroom apartment is $3,375, and 3-bedroom homes sell for $714,900. The city scores high in walkability, and the average commute time to work is 28.6 minutes. Public transit is also very accessible and includes a subway, bus, commuter rail, water taxis and a ferry network.

To register a business in Boston, founders have to pay a filing fee of $65 and an additional $35 fee if the person doesn’t live in Massachusetts but conducts business there. To launch a Massachusetts LLC costs $500, which is paid to the Massachusetts Secretary of the Commonwealth. There’s also a $500 annual report fee; however, many early stage companies will pay $275 to get started and then $125 per year for the report fee.

Boston ticks all the boxes for starting a business. The community, resources, infrastructure and quality of life make it a clear choice for entrepreneurs looking to escape the sky-high prices and insularity of Silicon Valley. The city is already incubating the next generation of founders and disruptive companies — and the door is wide open for others to come in.

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