Where does the funding go?

I’m always hearing about how VCs are rare and funding from them is even rarer — guest speakers, textbooks, articles, etc. speak about this. This article goes as far as to urge 99.95% of founders to stop wasting their time with VC. Okay, so VCs are picky with how they invest their money. I get that. But how do you even find one? Where are they? Not surprisingly, San Francisco is where most VC investments happen (25% of the total US VC investment happens here!). In fact, SF not only tops the charts in the US, but it reigns supreme across the globe. (Check out these articles filled with fun graphs and stats about the VC climate stateside and globally). You don’t have to get far outside of SF to find the second ranking VC spot. San Jose / Sunnyvale / Santa Clara boast 15% of the total VC investment. New York and Boston come in next with 10% each, and after that the charts drop quickly to 5% in LA and then all the way down below 1% in Baltimore (ranked 20th). Seattle is 8th on the list with 3%, Chicago is 10th at 2%, and Austin is 13th at just over 1%.

Okay, so I know what you’re thinking… the bigger cities have an edge based solely on size, right? Well, like any other business-centric question, the answer is “it depends.” If you scroll down past the first couple of charts on this article linked above, you’ll find data that controls investments for metro size. The top 3 are no shocker: San Jose, SF, Boston. But, when you look at the numbers this way, Boulder (note: not on the previous list) comes in 5th, Austin is 8th, Seattle is 9th, and NYC is 19th. So, again, it depends. BUT, if you’re looking to go outside the US, you’re probably better off sticking with the populous cities. London is the top ranked international spot for funding (7th); Beijing is 9th, Toronto is 12th, and Shanghai, Mumbai, Paris, Bangalore, and Moscow round out the international representation of the top 20.

If you’re not an SF based company, don’t worry! The SF VCs still invest outside of the Bay Area! PitchBook put a list together for us of the top 20 US cities that attract the most VC funding outside of the Bay Area by its own VCs. Most of the list is pretty unsurprising, with NYC, Boston and LA holding down the top 3 spots, but Washington DC surprises at the 8th spot and Portland rounds out the top 10. Minneapolis, Salt Lake City, and Phoenix even make the top 20!

So, yes, I would say that it is going to be easier to get your startup funded in some locations than others, but if you aren’t all about insane living costs there are options out there for you. Make it a point to keep yourself informed of the activity in your area, and research the VC firms you are trying to snag funding from. You can never be too prepared.

To get you started, here’s a list of the 8 most active VCs in Series A rounds.


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