Published On: Wed, Aug 9th, 2017

California and its 23.8 billion dollars in startup funding

While tech startups have been all the rage over the last few years, have you ever wondered where all of that venture capital funding is coming from?  You would be right to assume that Silicon Valley is a hotbed of startup funding in the U.S., but what does the geography of startup funding across America really look like?

photo by photoSteve101 via Flickr

According to a new study just published by startup funding database Fundz, “California has more startup funding than the next 3 states combined.”  What?  That sounds hard to believe.  But the study conducted by Fundz analyzed 17,459 startup fundings across the U.S.  since 2015.  And they found that California alone accounts for 23.8 billion dollars of startup funding.

Compare California’s 23.8 billion dollars in startup funding to the next 3 states:  Massachusetts at 9.56 billion dollars, New York at 6.61 billion dollars, and Illinois at 5.34 billion dollars.  The data shows that California is outperforming the next 3 states combined.  That’s impressive.

California is well-known for being home to Silicon Valley.  And you might not know it but Palo Alto, despite having a total population of a mere 67,000 people, is the 7th largest city in terms of startup funding.  It surpasses enormous cities like Washington D.C., Denver, and Boulder.  Additionally, California also has massive amounts of startup funding in cities like San Diego, San Jose, and Irvine that all contribute to California’s large amount of startup funding.

However, it’s easy to attribute large amounts of startup funding to the states with the largest populations.  Hence, states like California, New York, and Texas rank high on the list.

photo/ Public domain pictures via Pixabay

For this reason, the researchers of the study decided to take another approach in an attempt to correct for this kind of bias. “In order to normalize for the inherent bias towards states with larger populations and big cities, we broke down the numbers and calculated startup funding per person in each state by dividing total money raised by the state’s population.”

They found that states like Oklahoma and Colorado actually have a very high ratio of startup funding to population size when considering the “startup funding dollar amount raised per person”.

As a result, they found that Oklahoma, Massachusetts and Colorado account for the top three states for startup funding dollar amount raised per person.  By this metric, Oklahoma has raised an average of about $2,000 per person in the state, which it seems mostly comes from the oil and gas sector.  Even a small, unsuspecting state like Connecticut makes it to number 6 on this alternative list, with about $1,000 raised per person in the state.

The top 3 cities for tech startup funding across the U.S. are what you might expect:  New York, San Francisco, and Boston.

Looking to raise money for your startup?  By now you should have a pretty good idea of where in America you have the highest chances of securing funding for your startup.

Author: Dmitrii Zaitsev

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