Looking at How Venture Capital Stacks Up by U.S. Region

Venture capital follows a unique pattern, if you can call it a pattern at all. There are consistently certain geographic areas that garner more venture capital investment than what population, business regulatory environment, or other factors would suggest, but then there are other areas that are growing very quickly in capturing the eye of venture capital investors. What does the venture capital picture look like by U.S. region? Here’s a look according to a fascinating research note out of private equity and venture capital data provider Pitchbook.

The Overall Picture

The first view of the venture capital (VC) world is the median dollar deal size in 2010, 2020, and 2021 by series. Interestingly, Seed stage companies had a median deal size of $0.5 million in 2010. This quadrupled to $2.0 million in 2020 and is up another $500,000 to $2.5 million in 2021.

For Series A companies, the median deal size has grown from $2.5 million in 2010 to a whopping $12.3 million in 2021.

For Series B companies, the median deal size has gone from $7.0 million in 2010 to $28.0 million in 2021.

For Series C companies, the median deal size has exploded even more, from $10.0 million in 2010 to $60.0 million in 2021.

For Series D and above, the median deal size has increased from $12.0 million in 2010 to an almost unbelievable $101.5 million through the first half of 2021.

Simply amazing.

One of the Reasons …

One of the reasons for the massive expansion in value is deal count by ecosystem. In 2011, a little more than half of deals were sourced to either the California Bay Area, New York, Los Angeles, or Boston. In 2020, the proportion stayed about the same, meaning that other geographic areas were not falling behind in a potentially “clustered” investing world. In 2021, the proportion has shifted a little bit more towards the “big four”.

A Broader View

One of the more fascinating views offered by Pitchbook is their median pre-money valuations by selected ecosystems. Overall, some areas experienced some massive median pre-money valuation boosts. The following look at the median early-stage pre-money valuation by ecosystem. In 2021, we saw some incredible increases in Los Angeles, Washington, D.C., Philadelphia, and a few other areas. Perhaps unsurprisingly, the U.S. median early-stage pre-money valuation (dotted black line) jumped a little more strongly in 2021 than in prior years, but nowhere near the clearly visible jumps in other areas of the U.S. VC ecosystem.

Summing Up

Overall, venture capital continues to perform quite well in areas long considered cluster areas for venture capital investment. With that acknowledged, emerging investment trends suggest that traditional clusters may be giving way to other areas’ capture of the venture capital investment dollar.