Agenerational shift is sweeping through the startup ecosystem in Boston and across the country as investors and entrepreneurs who were active for decades retire, opening the way for a new, more diverse generation.
At Boston venture capital firm Underscore VC, for example, partner Lily Lyman will lead the firm as founder Michael Skok steps back. Lyman, 38, who has worked at Underscore for six years, is the youngest person and first woman to head the company.
She is one of several women moving into top posts and influential positions at VC firms, startups, and other tech-focused organizations, a trend captured by the Globe’s Tech Power Players list.
Nine new women were named to the list for 2024 — the third annual installment of Tech Power Players — after 12 were added last year. Still, Boston’s startup community has a woeful reputation for diversity. As just one example, only $160 million of VC backing, or 1 percent, went to local women-founded startups last year, down from $267 million in 2022, according to PitchBook.
“The numbers are really bad,” Lyman says. “We need more women writing checks, in seats that have decision-making power.”
Lyman and others, including Leah Ellis, chief executive of cleantech company Sublime Systems, and Sarah Hodges, a general partner at Pillar VC, hope to change that. They, among others, have stepped into leadership roles even as Boston has lost some pioneers of its innovation sector.
Bijan Sabet, who cofounded Spark Capital in Boston almost 20 years ago, departed in 2022 as US ambassador to the Czech Republic. Mackey Craven and Ricky Pelletier, who founded OpenView Venture Partners in 2006, left last year. Ryan Moore, cofounder of Accomplice, left a few months ago, leaving just one of the original partners in place.
Lyman came to Underscore in 2018 after working almost five years at Facebook, where she helped lead an effort to expand internet connectivity around the world. At Underscore, she continued to expand networks, connecting with women founders, encouraging women to become VCs, and investing in women-led startups such as e-commerce company Wonderment in Boston.
She also is a leader of the Boston chapter of All Raise, a nonprofit working to increase female involvement in venture investing.
Lyman says she is confident that the Boston area’s academic institutions and growing roster of public tech companies will provide the diversity of people and ideas to keep the startup ecosystem vibrant.
“We’re bullish on the quality of talent and the innovation that’s coming out of the labs and great institutions here,” she says.
Such talent includes Ellis, 34, the CEO of Sublime Systems. While working on postdoctoral research in materials sciences at MIT with professor Yet-Ming Chiang, Ellis hit on a method to reduce carbon emissions from cement manufacturing. Cement making accounts for 8 percent of global emissions.
In 2020, Ellis and Chiang founded Sublime Systems to commercialize the process, which replaces fossil-fuel powered kilns with an electrical process powered by renewable energy.
Last year, Sublime’s pilot plant in Somerville came online. Next up: a commercial-scale plant in a former paper mill in Holyoke. Sublime recently won an $87 million grant from the US Department of Energy to help finance construction of the plant, which is expected to open in 2026.
Sublime has raised about $50 million from investors and $140 million in government grants, but it wasn’t easy. Ellis says venture capital investors seemed particularly negative about her company’s prospects, which she ascribed in part to her being a woman.
VC investors tend to focus more on risks and downsides of startups founded by women while concentrating on the potential for success of companies founded by men, research shows. About 13 percent of startup founders nationally were women in 2023, down from 15 percent in 2022, according to market researcher Carta.
Ellis says she takes it in stride when investors focus on what could go wrong. She replies that she will add any concerns to her list of risks to avoid — which is not necessarily a bad thing.
“Being aware of the thousand ways that things will fail is just as important as understanding the one way that something can work perfectly,” Ellis says. “Because accidents are less likely to happen when you expect them.”
Hodges, a partner at Pillar VC since 2016, is gaining recognition for her role in backing women-led startups such as Waeve, a Somerville online wig retailer founded by three Black women.
But Hodges, who was head of marketing for fitness app Runkeeper (among other roles at local companies), is concerned that the changing of the guard by itself will not build a more diverse startup and investment industry. She notes that pioneering women VCs are among the generation leaving the sector.
An answer is likely to be found on local college campuses, Hodges says. There, diverse groups of startup-minded students and faculty are looking to launch new companies and bring new faces and ideas to Boston’s innovation economy. And successful founders often become investors in ensuing generations of startups.
“I’ve been blown away by all the energy on campus,” Hodges says. “There’s been a real evolution. It feels like there is such strong momentum right now.”
May 17, 2024