This is the fourth in a series of posts examining the new geography of venture capital and high-tech start-ups.
Is Silicon Valley losing its long established reign over U.S. and global high-technology? Bruce Katz, director of the Brookings institution's Metropolitan Policy Program and co-author of the new book The Metropolitan Revolution, thinks so. Here's Derek Thompson reporting on Katz's recent talk at the Aspen Ideas Festival:
"What's happening now is workers want to be in Oakland and San Francisco," [Katz] told Walter Isaacson. Young workers want to live in a city -- somewhere they can ride bikes, shop locally, walk to their favorite restaurants and bars, and live in a dense urban or urban-lite environment with nearby amenities. But Silicon Valley isn't like a city. It's like a suburb. "Silicon Valley is going to have to urbanize," Katz said. "[There is a] migration out of Silicon Valley to places where people really want to live."
San Francisco has indeed overtaken Silicon Valley as the nation's leading center of venture capital financed start-ups, attracting some $7 billion dollars in venture capital investment in 2012, or one in four of all of venture investments, compared to $4 billion or 15 percent, for San Jose. New York and Boston have also emerged as major centers of start-up activity, much of it in urban neighborhoods. (In a future post, I'll use more detailed zip code data to get at this "urban turn" in venture capital and start-up activity).
Brad Feld, managing director of the Foundry Group and author of the book Startup Communities, recently asked me to look at venture capital and start-up activity on a per capita basis. So with the help of my Martin Prosperity Institute research team we re-ran the numbers on a per capita basis. Zara Matheson mapped the data below.
As it turns out, we can't count Silicon Valley out yet: It remains the nation's number one location for venture capital on a per capita basis. That said, some other important patterns are evident, including the role of smaller college towns, especially Feld's very own Boulder, which do quite well in term of venture capital per capita.
The map below charts venture capital deals per 100,000 people by metro.
San Jose (the Silicon Valley) tops the list with 22.6 venture capital deals per capita. But San Francisco is close behind with 17.2 deals per 100,000 people. The list changes substantially from there with smaller metros, especially those with major colleges and universities, moving up considerably. Boulder, Colorado (home to the University of Colorado) is third with 13.6 deals per 100,000 people, Boston is fourth with 9 and Ann Arbor, home to the University of Michigan, in fifth (6.4). Lawrence, Kansas (University of Kansas, (5.4 deals), Austin, University of Texas (5.1) Charlottesville, Virginia, University of Virginia), Missoula, Montana (4.6), Champaign-Urbana, Illinois, University of Illinois 3.4) and San Diego, University of California at San Diego (3.3) round out the top 10.
The next map, above, charts venture capital investment dollars per 100,000 people by metro, while the table below lists the top 20 metros for venture capital investment per 100,000 people.
Top 20 Metros for Venture Capital Activity per 100,000 People
Rank
Metro
Investment
Deals
1
San Jose-Sunnyvale-Santa Clara, CA
$216.9
22.6
2
San Francisco-Oakland-Fremont, CA
$159.1
17.2
3
Boulder, CO
$86.9
13.6
4
Boston-Cambridge-Quincy, MA-NH
$68.1
9.0
5
Santa Barbara-Santa Maria-Goleta, CA
$59.1
3.3
6
Lawrence, KS
$40.8
5.4
7
San Diego-Carlsbad-San Marcos, CA
$36.6
3.3
8
Austin-Round Rock, TX
$36.5
5.1
9
Provo-Orem, UT
$30.7
2.7
10
Seattle-Tacoma-Bellevue, WA
$25.8
3.3
11
Ann Arbor, MI
$24.1
6.4
12
Santa Rosa-Petaluma, CA
$20.8
1.7
13
Raleigh-Cary, NC
$16.3
2.5
14
Fort Collins-Loveland, CO
$15.9
1.7
15
Salt Lake City, UT
$13.2
2.4
16
Los Angeles-Long Beach-Santa Ana, CA
$13.1
1.8
17
San Luis Obispo-Paso Robles, CA
$13.0
0.4
18
New York-Northern New Jersey-Long Island, NY-NJ-PA
$12.0
2.0
19
Trenton-Ewing, NJ
$12.0
1.9
20
Madison, WI
$11.5
1.9
The pattern is similar for venture capital investments per capita, as the map and table show.
San Jose (Silicon Valley) is again first with $216.9 million in venture capital investments per 100,000 people. And again, San Francisco follows in second with $159.1 million. A combination of college towns and larger, more established metro areas make up the nation's other leading centers for venture capital investment per capita. Boulder is third ($86.9 million) and Boston fourth ($68.1 million). Santa Barbara ($59.1 million), and Lawrence, Kansas ($40.8 million), San Diego $36,6 million. Austin ($36.5 million), Provo, Utah ($30.7 million), and Seattle ($25.8 million) complete the top 10. Ann Arbor ($24.1 million), Santa Rosa ($20.8 million), Raleigh-Cary ($16.3 million), Ford Collins ($15.9 million, Salt Lake City ($13.2 million), LA ($13.1 million, San Luis Obispo ($13.0 million), New York ($12.0 million), Trenton ($12.0 million), and Madison, Wisconsin ($11.5 million) round out the top 20.
A change does seem to be occurring in the geography of high-tech start-ups and venture capital. Silicon Valley holds onto the number one spot on a per capita basis, but the San Francisco metro is an impressive challenger. Large metros like Boston and New York also appear to be gaining ground in terms of absolute levels of investment, while college towns that are home to major research universities do very well on a per capita basis.
My bottom line: Silicon Valley's lock on high-tech activity is no longer what it once was. San Francisco, along with urban centers in New York and Boston-Cambridge, have upped the ante, and smaller college towns have also shown they can play as well.
I'll continue to track the evolving geography of start-ups and venture capital in future posts. Next week, I'll look at the economic, demographic and social characteristics of metros that are associated with venture capital and start-up activity. In future posts, I'll delve more deeply into all of this, using detailed data by area code and zip code level to tease out the changing geography of venture capital and start-up activity and its distribution across cities and suburban areas.
All maps by MPI's Zara Matheson.