VC Deal Sizes in Silicon Valley Dwarf NY

New York tech has seen a proliferation of large financing rounds this year, from Flatiron Health’s notable $130M Series B deal to Betterment, Paperless Post, LearnVest and Squarespace which all announced $25M+ rounds on the same day (April 15th). Given the influx of large New York venture deals, we wondered how the city’s financing deal sizes compare to Silicon Valley.

Using CB Insights data, it’s clear that although NY has come a long way, Silicon Valley companies raise more across all stages.

Overall Trends

As the chart below shows, Silicon Valley technology startups have raised over 55% more money per round on average over the past four quarters. Q1 2014 was the highest with Silicon Valley average funding and median round sizes coming in at $20.7M and $6.8M respectively, across 227 deals.  While in NY, the average stood at $8.7M and median at $3.9M across 74 deals. While average figures are good to look at, large rounds, like Cloudera’s $900M Series F in March, have clearly impacted – and skewed – the most recent average funding figures.  As a result, the median figures are probably the better indicator for each market.

And over the last eight quarters, New York has never topped Silicon Valley in terms of median deal size. Of note, Q1 2014 saw Silicon Valley notch a median round size 74% higher than New York.

Stage-by-Stage Analysis

Early-Stage (Seed/Series A) median round sizes were 25% higher for Silicon Valley vs. NYC at $2.5M and $2M respectively over the past four quarters. Median Round sizes for Mid-Stage (Series B & C) companies were 37% higher at $12.32M and $9M respectively, while Late-Stage (Series D+) companies saw the largest median disparity with financings being 65% higher in SV vs. NYC at $22M and $13.3M respectively over the past four quarters.

At the late-stage, NYC lacks mega-rounds like Silicon Valley.  While only a handful of companies have raised over $100M rounds in NY, the Valley has more than 10 including the likes of Cloudera, TangoMe, and Palantir among others.

Comparing Similar Startups

We next used CB Insights to identify comparable companies to see how the SV versus NYC comparison looked for a set of competitors. Specifically, we examined the financing stats of:

1. Naturebox vs. Birchbox
2. Wealthfront vs. Betterment
3. Spoonrocket vs. Plated
4. One King’s Lane vs. ideeli
5. Quora vs. Stack Exchange
6. IndieGogo vs. Kickstarter

The first table looks at these competing duos and compares their total funding.  In almost all cases, Silicon Valley companies have raised significantly more than their NY peers in aggregate funding (Birchbox being the lone exception).

When we look at these same companies and compare similar financing rounds, we also see that at a similar stage, Silicon Valley companies raise more than their NY peers.  (Again, Birchbox is the NY company that trumps its Valley peer)

While the discrepancy in round size between New York and Silicon Valley is noteworthy, it’s worth remembering that NY was a virtual non-entity in venture as recently as five years ago.  New York has already seen a proliferation of big rounds in Q2 2014 and posted a 50% jump in Tech IPO Pipeline companies in 2014 so the gap may become less severe over time.  But for now, the king of cash remains Silicon Valley.  This probably won’t do much to change the perception by some that Silicon Valley is the only relevant market for venture capital.