At the onset of the pandemic, many expected, or hoped, that the Bay Area’s grip on venture capital activity would wane. Freed from offices, entrepreneurs and investors would flock to Miami, Austin or other locales offering lower taxes and a higher quality of life, the thinking went.
More than two years later, the picture shown in the data is murkier. Some states with small startup ecosystems grew substantially, but the largest also continued to flourish, further cementing their place at the top of the regional hierarchy.
The vast majority of states posted gains in both deal count and deal value, mirroring the overall growth of US VC investment, according to the latest PitchBook VC Quantitative Perspectives report.
West Virginia saw the largest gains in VC activity: Deal value rose 443%, and deal count gained 250%, the highest of any state. However, the increase was off of a very low base, with only four total deals in the two years prior to the pandemic.
Wyoming and Idaho, both popular escapes for Silicon Valley’s elite, tied for second in terms of overall activity growth. Vermont had the highest growth of deal value, up 452% during the period, led by a $368 million Series A for South Burlington-based electric aircraft maker Beta Technologies last year.
But not all small markets grew. Mississippi and Kentucky were the only two to experience a decline in both deal count and value.
The largest states for VC activity continued to see strong growth during the period. California’s deal value and deal count grew 71% and 13%, respectively, growth rates that put it in the bottom half of US states. New York fared slightly better: deal value rose 71% and deal count increased 20%.
Deals are just one way of measuring tech concentration. A recent report from Brookings looked at labor data across the US to assess how the pandemic had affected the concentration of tech employment.
The researchers found that the growth rate of tech jobs slowed in the nation’s largest tech hubs. Meanwhile, tech employment growth accelerated in other large cities as well as some “quality-of-life meccas and college towns.”
Both deal activity and employment point to a similar finding. US tech hubs aren’t going anywhere, but many smaller ecosystems are growing at comparatively faster rates.
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