U.S. Cities VC Returns

Which U.S. Cities Generate The Best VC Returns?

Which U.S. Cities Generate The Best VC Returns? by Mikey Tom, PitchBook

Although the Bay Area undeniably holds the crown for the most active startup locale, there are many other vibrant communities throughout the U.S. with founders creating game-changing companies. Cities like Austin, Boston, New York and Seattle immediately come to mind, all fostering growing startups, as well as venture firms to back them.

But how do these cities rank against each other?

A version of this question was recently answered by Fred Wilson of USV. In his post “Second and Third Tier Markets and Beyond,” Wilson separates a handful of notable startup communities into tiers based upon their respective startup activity and startup funding activity. The Bay Area took its expected place at the top of the chain at tier one, followed by NYC, Los Angeles and Boston in tier two, and Seattle, Chicago, Atlanta and Washington, D.C., making up the third tier.

After reading through conversations sparked by this post, we wondered: How do different startup communities stack up on a success/returns multiple basis? Using data from the PitchBook Platform, we calculated return multiples for some of the more prolific startup communities throughout the U.S. and have included our findings below.

Qualifiers for inclusion in the dataset:

  • Full exit (acquisition or IPO) in last 10 years
  • Companies must have raised at least $500,000 in VC funding before exiting
  • We have a confirmed record of and amounts for all funding rounds to ensure accurate total invested capital
  • We have a confirmed amount for the exit (IPO value is equal to market cap at IPO)
  • Included cities must have at least 30 companies that meet all of the above criteria

MOIC – Multiple on Invested Capital = exit value/total VC raised

Percentage of exits separated by MOIC

 U.S. Cities VC Returns

VC Returns by U.S. Cities

Number of exits separated by MOIC

 U.S. Cities VC Returns

Average MOIC

 U.S. Cities VC Returns

Note: Because we only included companies that have confirmed exit amounts, the data will be skewed positively, as successful exits are more likely to be reported than smaller ones. Companies under 1x return are not included here.

The results are a bit surprising, with cities like Washington, D.C., and Chicago ranking ahead of the Bay Area and NYC. That said, there are many ways to cut the data that may give alternative results.

VC Returns What are other metrics you think can be used to judge the successfulness of a startup community? We’d love to hear your thoughts, so drop us a comment below with any ideas or suggestions and we’ll try and include them in future articles.

Comment (1)

  • Amanda

    What about the 0.0-1.0x category??

    June 13, 2016 at 4:48 pm

LEAVE A COMMENT


Saved Articles
X
TextTExtLInkTextTExtLInk

The Life and Career of Charlie Munger

Charlie is more than just Warren Buffett’s friend and Berkshire Hathaway’s Vice Chairman – Buffett has actually credited him with redefining how he looks at investing. Now you can learn from Charlie firsthand via this incredible ebook and over a dozen other famous investor studies by signing up below:

  • Learn from the best and forever change your investing perspective
  • One incredible tidbit of knowledge after another in the page-turning masterpiece of a book
  • Discover the secrets to Charlie’s success and how to apply it to your investing
Never Miss A Story!
Subscribe to ValueWalk Newsletter. We respect your privacy.

Congrats! Are you a smart person?

We have an exclusive targeted & limited time offer for being a sophisticated and loyal reader.

ValueWalkPremium is a website and newsletter on the latest industry news much of which is not in the public domain and obtained via our sources.

We also have 10 years of resources on how to use this information to better your investment process.

Sign up for  today and get our exclusive content for 40% off. This is our second biggest discount ever!!

Use coupon code VIP20 or click on the button below

Limited time offer only ENDS 3/31/2020 or after the next 45 subscribers take advantage whichever comes first – please do not share this discount with others

 

0