Andrew Friendly, Principal

East vs. West Coast: The Myths & The Realities

When I attended MIT’s recent Energy Conference, one of the clichés about the differences between the East and West Coasts struck me as being accurate. I wore jeans and a blazer to the Saturday conference and three times the casualness of my outfit was remarked on. In California, where I lived for seven years before moving to the Boston area last April, jeans would have far out numbered the slacks that my fellow attendees wore.

But it is not just the sartorial style that differs on the coasts, I have come to recognize that some of the well-worn clichés are close to the truth while others are off the mark. I joined Advanced Technology Ventures in our Waltham office last April to help build out our cleantech portfolio after spending three years in Los Angeles investing in and building start up energy technology companies at Idealab. For the four years prior, I was in San Francisco working with very early-stage IT and cleantech companies and investors. Although I grew up on the East Coast and went to college in New England, in my years out West I had taken well to the California lifestyle and the fast-paced high-tech community.

I knew the rap against East Coast Venture investors when I decided to join one: they are more risk averse, slower to move, and less entrepreneurial. In fact, an article on this topic in Financial Executive magazine last year said, “venture capital firms in the West remain more willing to take a gamble on unproven companies or technologies…In contrast, VC firms in the East are more likely to pony up only for more established operations, including executive teams they have funded before.”

But I have not found that to be the case at all. In fact, in the booming cleantech sector my colleagues at ATV and at other local venture firms have been quickly placing big bets on huge ideas, some with first-time teams. While it is still more likely to see a term sheet before conducting any diligence from a West Coast VC, I have seen my East Coast colleagues move very fast to lock up a deal with the right team and compelling technology.

And, somewhat unfortunately, the cliché that West Coast VCs won’t invest outside of the Silicon Valley is no longer true -- if it ever was. In fact, we have seen a number of very early-stage cleantech companies receive funding in New England from West Coast firms that don’t have local offices. Boston-based firms can’t afford to be slow when, just like so much else, venture has become a global business.

Lastly, a friend warned me before I moved to the area that I would find it difficult to break into the Boston venture and entrepreneurial community. He said that Boston fits the stereotype of the closed, hard to penetrate, Brahmin community. So, coming from California where networking and easy going socializing must be taught in kindergarten, he thought that I would be discouraged by the relative scarcity of the same in New England. To a degree, he was correct.

I was a little surprised that there were not more informal networking opportunities. So, I helped to start one with Rob Day from @ Ventures who had similarly recently moved to the area after a number of years in San Francisco doing cleantech investing. We started the Boston chapter of the Renewable Energy Business Network ( purely to help bring the local cleantech community together for monthly happy hours at local bars with an occasional talk tied to the event. In less than a year’s time we have over 500 people on the listserve and are helping to launch other chapters in about a dozen cities over the course of this year.

Thankfully, my friend was wrong about the challenges of breaking into the Boston community but I do think there is still a long way for the region to catch up with the West Coast. The number of new companies funded, the amount of money invested, and the concentration of entrepreneurs on the West Coast continues to dwarf what we are doing in New England but I am very happy to be a part of trying to catch up.