Putting the “Venture” into VC

81% of the population saw only 37% of total seed funding in H1 2018. Can we change it? Should we?

It’s no secret that Silicon Valley is the established venture behemoth of the US, followed by its distant cousin in NYC (Silicon Alley). But whether it be slippery echo chambers, decreasing marginal benefit of startups catering to elites (cool story, Snapchat), or just a desire for some edgier climate, it’s also no secret that the “venture” in VC may be taking on a more literal meaning. So what does capital access look like to a budding entrepreneur in the U.S. in 2018? And more importantly, what does it look like outside of the coastal powerhouses (CA/NY)?

Money Tree or Cambridge, Massachusetts?

With 28% of the local population enrolled at two of the world’s most prestigious intellectual powerhouses (Harvard/MIT), this actually should not come as too much of a surprise. Furthermore, 62% of seed funding in the area went to the capital-intensive healthcare industry further amplifying the outlier status of Cambridge, Massachusetts. But beyond Cambridge, it’s again easy to see why you don’t even need to throw the stick to hit a VC in Silicon Valley. Constituting the next 5/6 spots are regions all originating from the Bay Area to include SF proper, Berkeley, San Mateo, Sunnyvale, and Santa Clara. After the Bay Area are the quiet(-ish?) rumblings of Austin, Texas and some pleasant surprises in Columbus and Kansas City. Of note that in spite of being the second-largest ecosystem, NYC’s seed funding per capita is significantly diluted by its dense population and amplified by what could culturally be considered by some founders to be old money & tight fists.

Seed funding per capita for cities that closed at least 10 deals. Data Source: CB Insights

So Where Does that Leave the Rest of “U.S.”?

First, some fun references. Below is a list of what some other U.S. regions call their respective hubs of innovation. Maybe we should just start a new prefix altogether? Personally looking forward to Crypto- “insert term here”…

  1. Silicon Beach — Los Angeles
  2. Silicon Prairie — Midwest USA
  3. Silicon Harbor — Charleston, South Carolina
  4. Silicon Forest — Portland, OR
  5. Silicon Slopes — Utah
  6. Silicon Bayou — New Orleans, LA
  7. Silicon Hills — Austin, TX

Now, back to the data. For the rest of the country (outside of CA & NY), the graph below lists every city’s total seed funding that closed at least $1M in the first half of 2018 and broken down by sector (see legend to right).

Data Source: CB Insights. Seed Funding in H1 2018 by City & Sector. Found your city or hometown? Comment below on any local insights you’re willing to share…

While the above graph constitutes $1.05B in seed funding, it still only represents 37% of the total $2.83B in funding that occurred when you include CA & NY. Considering 81% of the population lives outside of these regions, there is a bit of a disconnect. While it does not necessarily hold a candle to personal wealth inequality, it begs the question of whether this is a symptom or a cause? And while there are certainly substantial benefits to having concentrated centers of industry (ex. LA/entertainment, NYC/finance, Las Vegas/vice, etc.), perhaps the venture landscape of tomorrow can continue to quite literally look a bit broader…

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