Do Anchor Companies Have an Effect on the Start-up Eco-system?

This article originally appeared as a guest post on Greenhorn Connect on Tue, 06/15/2010

Starting and growing companies that become or have the potential to become huge, is a goal of several initiatives and members of the entrepreneurial community in the Boston area. The reasoning behind this is the premise that huge companies provide a proving ground and talent resource that feeds the local start-up economy.

So let’s do a little research to observe this effect and see the companies that can be traced back to a local behemoth in our area.

Since EMC is the 800 pound gorilla in our woods, that should be a great place to start.

To view a dynamic and more legible EMC company graph use this link.

emc connected companies

As you can see, a company the size of EMC has a large graph of connected companies. This represents many acquisitions as well as large public companies from which they now recruit executives.

But what we are interested in are the companies that have spawned from EMC and where EMC executives have moved to the start-up companies.

Let’s start with some acquisitions we selected from the larger group. This list includes Equallogic which is the largest most recent liquidity event in the New England Area, at a purchase price of $1.5 Billion cash. Several sales and marketing executives were from EMC.

Archivas was formed by founders from EMC, Abuzz, AppIQ and Network Integrity and built a solution for fixed content archiving which was bought by Hitachi Data Systems within three years of inception.  Some of the founders have gone on to found Nasuni, a cloud based storage company.  iBrix was purchased by HP in 2008. Another cloud based storage company founded in 2009, TwinStrata has benefited from the addition of an  iBrix executive.

Each of the acquired companies had executives from EMC whose leadership contributed to the successful outcomes.  It is no surprise that these companies are in the storage market, the ‘bread and butter” and seminal business for EMC.

Mature start-ups are well represented with storage again a major sector but also moving into cloud computing and Rich Internet Applications.

The founder of  Nexaweb, building RIA software, was an architect from EMC, who has now gone on to found another company Yottaa, in the cloud services space.

Cloudswitch a Matrix company has technical leadership from an Architect/VP that used to be a Distinguished Engineer at EMC.

Sepaton is an interesting case. EMC executives still are part of the leadership team, but the original CEO from EMC was forced to exit due to a “non-compete” lawsuit. It turns out that EMC is not shy about suing companies here in Ma, as they also went after Nexaweb, but that suit was settled.

Several Series A VC investments with EMC connections represent the trends towards virtualization,  data management and grid computing.

The CEO of PeerApp, a grid compuing company,  started at EMC as a key developer of the  revolutionary storage platform that yielded as much as $6 Billion in annual revenues.The CEO of Certeon led the product development and marketing of streaming solutions at EMC after the company he founded, Bitcasting was acquired. The founder and President of Lattice Engines was director of business operations at EMC.

Lastly these seed round companies have roots within EMC.  Sadly both messageSling and Carespace are now defunct. Such is the nature of bootstrapped companies. The storage market is  very mature here in the Boston area.  It makes sense that companies founded by executives with significant domain experience can go straight to Series A VC investment without the need for a seed round.

Conclusion:

Storage is a mature and thriving sector in the Boston area. Along with EMC the  anchor company, there are many new companies and returning successful founders that perpetuate innovation and a thriving industry cluster which is now pushing the trends in cloud computing and virtualization.

Based upon this simple analysis, we can conclude that anchor companies have a significant effect on their geographic markets. While this example is not exhaustive and there may be many other downstream companies impacted by EMC, it is clear that the Boston area could benefit from several other large companies in other Industry Segments.

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