Venture Capital

Venture capital invested as a share of gross metropolitan product.

Why Is This Important? In relative terms, venture capital (funds invested in new and unproven businesses) amounts to a small share of the overall capital markets, but its value goes beyond a simple dollar figure. Venture capital spurs growth at the critical early stages of growing companies' development. Moreover, venture capitalists don't just throw their money at start-up companies hoping to get lucky and pick a winner. They become involved as board members and management advisers, suggesting strategic partnerships and helping to refine business plans. And venture-based companies are a key source of job growth - employment in venture-backed companies increased 34 percent annually between 1991 and 1995, while employment in Fortune 500 companies declined 3.6 percent. In the nation as a whole, venture capital has increased from an average of $6 billion in the early 1980s to $30 billion in 1999 (in constant 1992 dollars), and from 0.10 percent of GDP to 0.37 percent. In 1999, it was disbursed to some 4,000 companies, eight times as many as in 1980.

The Rankings: Venture capital is a story of Silicon Valley and everyone else. The San Francisco metro area receives over twice as much venture capital as a share of its economy as does Seattle, the next-highest metro. This is clearly because the area remains the technological innovation capital of the globe, with a strong presence in a host of high-tech sectors, including biotech, Internet, telecom, computers, and devices. In contrast, other top-ranking metros, including Seattle, Austin, Raleigh-Durham, San Diego, and Washington, D.C., are much more specialized on one or two high-tech industries.28 The presence of strong university engineering and science programs, in places like Silicon Valley, Austin, and Raleigh, is also associated with venture capital investments.

100th-76th Percentile

75th-51st Percentile

50th-26th Percentile

25th-1st Percentile

METRO AREAS BY RANK
Rank	Metro Area	Score
1	San Francisco	5.50%
2	Seattle	2.71%
3	Austin	1.83%
4	Boston	1.53%
5	Raleigh-Durham	1.35%
6	Denver	1.20%
7	San Diego	1.01%
8	Grand Rapids	0.49%
9	Washington	0.44%
10	Portland	0.43%
11	Atlanta	0.42%
12	Minneapolis	0.42%
13	Los Angeles	0.36%
14	Orlando	0.34%
15	St. Louis	0.34%
16	New York	0.33%
17	Las Vegas	0.30%
18	Miami	0.29%
19	Rochester	0.29%
20	Nashville	0.24%
21	Chicago	0.23%
22	Philadelphia	0.23%
23	Phoenix	0.22%
24	Dallas	0.20%
25	Sacramento	0.18%
26	Pittsburgh	0.17%
27	Louisville	0.16%
28	Hartford	0.16%
29	Salt Lake City	0.14%
30	West Palm Beach	0.14%
31	Houston	0.13%
32	San Antonio	0.10%
33	Charlotte	0.10%
34	Tampa	0.09%
35	Oklahoma City	0.09%
36	Cincinnati	0.09%
37	Buffalo	0.08%
38	Milwaukee	0.08%
39	New Orleans	0.07%
40	Detroit	0.04%
41	Jacksonville	0.04%
42	Cleveland	0.04%
43	Kansas City	0.04%
44	Columbus	0.04%
45	Dayton	0.04%
46	Norfolk	0.02%
47	Richmond	0.02%
48	Indianapolis	0.01%
49	Memphis	0.00%
50	Greensboro	0.00%
	U.S. Average	0.38%
	Top 50 Metro Average	0.59%

ALPHABETICALLY
Metro Area	Rank	Score
Atlanta	11	0.42%
Austin	3	1.83%
Boston	4	1.53%
Buffalo	37	0.08%
Charlotte	33	0.10%
Chicago	21	0.23%
Cincinnati	36	0.09%
Cleveland	42	0.04%
Columbus	44	0.04%
Dallas	24	0.20%
Dayton	45	0.04%
Denver	6	1.20%
Detroit	40	0.04%
Grand Rapids	8	0.49%
Greensboro	50	0.00%
Hartford	28	0.16%
Houston	31	0.13%
Indianapolis	48	0.01%
Jacksonville	41	0.04%
Kansas City	43	0.04%
Las Vegas	17	0.30%
Los Angeles	13	0.36%
Louisville	27	0.16%
Memphis	49	0.00%
Miami	18	0.29%
Milwaukee	38	0.08%
Minneapolis	12	0.42%
Nashville	20	0.24%
New Orleans	39	0.07%
New York	16	0.33%
Norfolk	46	0.02%
Oklahoma City	35	0.09%
Orlando	14	0.34%
Philadelphia	22	0.23%
Phoenix	23	0.22%
Pittsburgh	26	0.17%
Portland	10	0.43%
Raleigh-Durham	5	1.35%
Richmond	47	0.02%
Rochester	19	0.29%
Sacramento	25	0.18%
Salt Lake City	29	0.14%
San Antonio	32	0.10%
San Diego	7	1.01%
San Francisco	1	5.50%
Seattle	2	2.71%
St. Louis	15	0.34%
Tampa	34	0.09%
Washington	9	0.44%
West Palm Beach	30	0.14%

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The Progressive Policy Institute (PPI)
Technology, Innovation, and New Economy Project
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