Economy

America's Leading Startup Neighborhoods

More than 50 percent are urban, and two in downtown San Francisco attract more than a billion dollars each in venture capital.
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Venture capital is the driving force of high-tech innovation, spurring revolutionary companies from Intel, Apple, and Genentech to Twitter, Facebook, and Uber. But venture capital investment in startup companies is increasingly concentrated in a small number of urban neighborhoods in America’s major cities. That’s the main takeaway of a new report I co-authored with my Martin Prosperity Institute colleague Karen King. The report, titled Rise of the Urban Startup Neighborhood, uses granular data from Thomson Reuters to look at micro-clusters of venture capital investment across America’s neighborhoods and five leading high-tech industries: software, biotechnology, media and entertainment, medical devices and equipment, and information technology services.

The first map shows the pattern for software, an industry that attracts $12 billion, or 36 percent, of total venture capital investment. Again, venture capital investment is primarily located in the Bay Area and across the New York-Boston-Washington Corridor, but smaller circles also appear in Southern California, Seattle, Portland, Atlanta, and Austin.