One way to understand how easy it might be for an entrepreneur to raise money is to analyze supply and demand for VC financing across geographies. Below, we plot the # of unique tech VCs investing in a market versus the number of VC-backed tech companies funded in the market and find, not surprisingly, that Silicon Valley is the clear winner on both fronts. Lots of VC investors and lots of startups.
Interestingly, the least competitive market (most VCs per funded startups) is Utah as we highlight below.
The first chart shows the number of VC-backed tech companies that have been funded since 2013 across a variety of geos (geo must have had 50+ vc-backed tech companies receive funding since 2013 to be eligible), and pairs that figure with how many unique VC firms invested in tech in that geo over the same time period.
Silicon Valley is a clear outlier with over 1600 vc-backed tech companies receiving funding since 2013 and over 800 VCs investing in SV-based tech companies in the same time period. If we remove Silicon Valley, some of the lower volume areas such as Chicago, Austin, and Colorado present themselves more clearly, as you’ll see in the chart below.
While both charts above show the ecosystems with a high volume of VCs and VC-backed companies, if we divide the # of VCs investing in tech in a geography by the # of vc-backed tech startups which raised financing in that market, we get a sense for the fundraising competitiveness in that market.
The higher the score, the less competition, i.e. more VCs per startup.
We’ll call this our VC Competition Index.
With the VC Competition Index calculated, we see Silicon Valley is the most competitive market for VC money, with just 0.51 VCs investing in the Valley per VC-backed tech company. On the other end of the spectrum is Utah, the ecosystem that has recently seen multiple $1B+ financings. Utah sports a whopping 1.65 VCs per company ratio.
The list of US geographies ranked by VC Competition Index scores is given below.
All of the underlying data used in this research brief is on the CB Insights Venture Capital Database. To learn more, login or sign up for free below.If you aren’t already a client, sign up for a free trial to learn more about our platform.