VC Firm Brings Tech Dollars To Framingham
Boston may be the perceived center of the world when it comes to venture capital in the Bay State, but for one VC firm, the price was right in Central Massachusetts.
American Capital Technology Group, a division of Maryland-based American Capital Strategies Ltd., recently opened an office in Framingham, opting out of the high rents in the state's capital city.
American Capital Strategies, the largest U.S. publicly traded private equity fund, focuses mainly on buyouts, but two years ago it started the technology division to make venture investments in tech companies.
The technology group already had an office in Palo Alto, Calif., but managing director Miles Arnone said it wanted a location near Beantown too, to take advantage of the environment created by universities like MIT and Harvard, established tech companies like EMC and the new start-up companies that have sprung up around them.
Arnone said the company ended up choosing a Framingham location for its easy access to Boston and the I-495 corridor and its relatively affordable office space. Right now, five employees work out of the Framingham office, but Arnone said that number may rise as high as 10 depending how much opportunity the company finds in the area.
Arnone said the question of how good Massachusetts is as a location for venture investments depends partly on the attitude of potential investors.
"I think the environment in that regard isn't as collegial as in Palo Alto" and other West Coast technology hubs, he said.
Secret Society
Arnone said he thinks investors in the area often keep too many secrets when it comes to the start-up companies they are looking at. By sharing more information, he said, they could help entrepreneurs get the best shot possible at finding the investment they need.
"I think you need to find the best partners to work with on a deal," he said. "And a lot of those deals take a lot of money."
Arnone said Massachusetts is also just not a big enough technology center yet to make investment as smooth a process as it is in places like Palo Alto. He said that investors should encourage the growth of small companies by helping them "march from one prospective funding source to another" until they find an appropriate deal.
As for what American Capital brings to the table, Arnone said its status as a publicly traded company lessens the pressure to produce a quick return on investment. Its status as a business development company also means it invests not just money but also management support in the companies it does business with.
So far, Arnone said, his office is looking for investments mainly in the Boston and I-495 area, such as planned deal with Marlborough-based Egenera. But he said the company would be happy to do business in the Worcester area, and beyond.
"You have to find the best opportunities, wherever they are," he said.
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