Spark Snuffs Out Non-Competes

Weekend kudos to Spark Capital, which has done away with non-compete clauses for its portfolio company employees. As Spark partner Bijan Sabet wrote on his blog, this is the “right thing to do.”  

Some Valley folks might not realize that non-competes even exist anymore (they’re illegal in California), but such language is pervasive and perverse here in Massachusetts (where Spark happens to be based). It’s also enforced. Several years ago, for example, venture-backed SANgate Systems lost CEO Doron Kempel because of a non-compete lawsuit brought by his former bosses at EMC.

Sabet argues that non-competes are a “substantial” reason for why Massachusetts lags California in terms of new startups, and it’s a hard assertion to dispute (although it may also be tough to support empirically. Also not sure that the basic premise is accurate on a per capita basis, but at least it feels right.

The only question left is if such a policy is good business not for overal innovation, but for Spark Capital itself. There are obvious some drawbacks — startups are particularly reliant on a small number of brains — but they should be easily balanced out by the additional talent that Spark’s portfolio companies should be able to attract.

So let me echo Sabet’s concluding question: Will other VC firms make a similar pledge?

Update: Lots of blog action on this: Rick Segal, Fred Wilson, Ask The VC, T.D. Klein and Francois Schjettecatte,