Startups Blog

The State of US Venture Capital and Its Spread

Venture capital interest - interestingly enough - is always likely to vary from state to state. This may be as a result of tech hubs, for example, in areas such as California. However, there have been some interesting shifts in startups and funding recently that are well worth paying attention to.

vc

Who Gets the Most VC Interest - And why?

It’s perhaps no surprise that, in 2020, California remained THE startups capital of the US. In 2020, the value of VC investments in CA reached an astonishing $84.2 billion.

On its own, this is a staggering figure. However, compare it to the second-highest investment capital. New York rolls in as runner-up, but with $18 billion in investment from VCs. That, remarkably, is less than 25% of CA’s figure for the same period. Massachusetts follows up with $17.3 billion and is the last of the states to earn more than $5 billion across 2020.

CA is, of course, home to Silicon Valley. It’s here where the most prominent US tech startups find their feet - it is not even arguable. That stigma doesn’t seem to be dissipating any time soon.

However, it’s interesting to see that there is a broader spread occurring across the states.

$161.5 Billion for US Startups

Over $161 billion found its way to ventures via VCs in 2020. That’s an impressive figure given global curtailment. Even when you consider California, New York and Massachusetts, that leaves just over $45 billion to account for from elsewhere.

Per state, that’s an average of just under $1 billion each - each remaining territory its own unicorn. One of the most interesting surges in recent years comes via Michigan.

Michigan seems to be at the epicenter of the bioscience boom. In the past two years, it has seen an enormous rise in investment interest.

According to various sources, no other state has grown quite so dramatically. This may be as a result of more diverse industry out in the Great Lakes. Or, it may even be as a result of cheaper labor and parts.

Why Does VC Interest Differ from State to State?

Not every state has the golden reputation California continues to trade on. What’s more, not all states benefit from the best access or trade routes.

What drives interest differentiation is likely to do with labor availability, graduate appeal and costs. NY is a hotbed of various cultures and companies. Michigan is expected to help VC money travel that bit further than might be expected in, say, the Bay Area.

That’s a key reason why different states will common different rates of VC interest. It is unlikely CA will be unseated any time soon. However, it’s intriguing to see how wide the spread is elsewhere.

VCs wishing to look beyond the Bay may do well hunting down startups from other states through Fundz. Location, in the modern age, is no longer the sticking point it used to be.

SOURCES

https://news.crunchbase.com/news/fastest-growing-states-venture-capital-investment/

https://insights.colliganlaw.com/post/102gyod/an-opportunity-for-rustbelt-capital-as-vc-dollars-spread-throughout-us

https://uk.practicallaw.thomsonreuters.com/7-501-0057?transitionType=Default&contextData=(sc.Default)&firstPage=true&contextData=(sc.Default)&firstPage=true

https://www.statista.com/statistics/424167/venture-capital-investments-usa-by-state/

 

Topic: Startups