U.S. Venture Capital Investment Attracted To Cities

MIAMI, March 31, 2014 /PRNewswire/ -- A comprehensive research report "Startup City: The Urban Shift in Venture Capital and High Technology," by Richard Florida and the Martin Prosperity Institute (MPI) at the University of Toronto's Rotman School of Management found that the locus of high-tech investment is now attracted to urban centers in the U.S.

Examining startup formation and venture capital data across the U.S., Florida and his MPI research team found that city centers accounted for more than half of all venture capital investment in a majority of major U.S. regions. Researchers also found that concentrations of venture capital and startup activity are associated with several markers of diversity, including immigrants and gays and lesbians.

"Startup activity in the U.S. is increasingly shifting back to America's cities," explained Florida. "With their creative class appeal, amenities and walkability, cities are now the center of America's entrepreneurial ecosystem for entrepreneurs and investors."

Key takeaways from the report include:

• Bay Area Still on Top: As a whole the San Francisco Bay Area — which includes greater San Francisco and the Silicon Valley — accounted for more than 4 in 10 of all venture capital dollars (a total of $11 billion) invested across the entire United States.
• San Francisco Leads the Way: San Francisco proper tops the Silicon Valley as a center for venture investment (15% nationally) -- $7 billion versus $4 billion.
• New York City is a Rising Start-Up Hub: New York is the nation's third largest center for venture capital financed startups, attracting $3 billion in venture investment in 2011. Nearly 80 percent of this, $2.4 billion, was invested in the city itself.
• College Towns Attracting Venture Capital Too: College town tech hubs like Austin and Raleigh-Cary in the North Carolina Research Triangle have long been magnets for venture capital, but when measured on a per capita basis, Boulder, Ann Arbor, and Lawrence, Kansas attract surprisingly large amounts of venture capital as well.
• Venture Capital Follows High Tech Industry: Venture capital investment is significantly associated with levels of innovation (measured patents per capita) and even more so with the concentration of high tech industry.
• Talent Matters Venture investment tracks the geography of talent, being correlated with the percentage of adults who are college grads and the percentage of the labor force holding knowledge-work jobs.
• Diversity Effect: Venture capital investment and start-up activity are also associated with the diversity and openness of metros. Venture capital investment is associated with several markers of diversity, including immigrants and gays and lesbians.
• The Urban Shift: The center or main city accounts for more than half of all venture investment in seven of the 13 regions that were analyzed at the zip code level. The center city accounts for more than 80 percent of venture investment in three, New York, Austin and San Diego. It accounts for two-thirds in Seattle. It makes up roughly half in greater Washington D.C. and Baltimore and accounts for nearly half (46. 5 percent) in Chicago. Conversely, the center city accounts for 20 percent or less of venture capital investment in five regions – greater Boston, greater LA, Dallas, Philadelphia, and San Jose.

The full report can be downloaded at: www.martinprosperity.org.

About Richard Florida:
The Director of the Martin Prosperity Institute at the University of Toronto's Rotman School of Management, Global Research Professor at New York University, and the founder of the Creative Class Group, which works closely with governments and companies worldwide, Richard Florida is perhaps the world's leading urbanist, "as close to a household name as it is possible for an urban theorist to be in America," according to The Economist. Esquire has included him on its annual list of "The Best and the Brightest," and Fast Company dubbed him an "intellectual rock star." MIT Technology Review recently named him one of the world's most influential thinkers. GDI also named him one of the world's global thought leaders of 2013.

SOURCE Creative Class Group