Venture Capital: Relative Distribution Across US Cities

Richard Florida and Karen King at the Martin Prosperity Institute published a report called Spiky Venture Capital, showing how venture capital (VC) clustered around a few metropolitan areas. In fact, they found:

Venture capital investment is concentrated in three broad clusters which account for more than 80 percent of all investment: the San Francisco Bay Area, which spans San Francisco, San Jose, and several smaller metros; the Boston-New York-Washington, D.C. Corridor; and Southern California, spanning Los Angeles, San Diego, Santa Barbara, and Orange County.

For policymakers, the relative clustering of VC also matters. In other words, how much more (or less) VC is attracted to a certain metropolitan area than you would otherwise expect based on its population. For instance, if a metro area attracted 20% of the US’s VC but had only 5% of the US’s population, you could say it outperforms expectations (based on population) by four times.

Drawing from Florida and King’s study, I looked at the 20 largest metropolitan areas for VC, ranked by their share of US VC and compared this to their share of US population (based on 2015 Census estimates):

VC relative

This table is color coded, with cities who underperform VC attraction relative to their population are in red, cities that attract VC 1 to 3 times what their population size alone would predict are in yellow, and cities that attract VC >3 times what their population proportion would expect are in green.

Green cities (super performers) are the “usual suspects” of VC: San Jose (Silicon Valley) outperforming its population by 23.5 times, San Francisco (17.4 times), Boston (6.4 times) and Santa Barbara, CA (5.4 times). Moderate out-performers include some of the country’s largest metropolitan areas, including NYC, LA, and DC, as well as relative start-up hubs like San Diego, Seattle, Austin, Denver, and Raleigh, NC. Some of the under-performers are perhaps unsurprising (e.g. Houston) but for others, like Philadelphia and Chicago, this should be a major wake up call.


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