Trends in Venture Capital, Angel Investments, and Crowdfunding across the Fifty Largest U.S. Metropolitan Areas

Annual Survey of Entrepreneurs Data Briefing Series

Using new data from the 2014 Annual Survey of Entrepreneurs (ASE), this data briefing looks across the largest fifty metropolitan statistical areas (MSAs) to see how entrepreneurs have fared in their quests to secure money from venture capitalists, angel investors, and online crowds. 

Venture Capital Received when Starting a Business:
While 10.3 percent of entrepreneurs report using personal credit cards when starting their business, nationally, only 0.6 percent initially received venture capital.

• The metros with the highest percentage of firms receiving venture capital funding when starting include: San Jose, CA (2.4%), San Francisco, CA (1.5%), Salt Lake City, UT (1.3%), Austin, TX (1.2%), Baltimore (1.1%), Birmingham, AL (1.1%), and Nashville, TN (1.1%).

• The metros at the bottom include: Chicago, IL (0.4%), Detroit, MI (0.4%), Jacksonville, FL (0.4%), New Orleans, LA (0.4%), Orlando, FL (0.4%), Washington, D.C. (0.4), Virginia Beach, VA (0.3%), and Cleveland, OH (0.2%).

Venture Capital Investment Trends across MSAs:
In 2014, roughly $68 billion was invested in venture capital deals in the United States and, 7,878 employer businesses reported receiving VC funds. Thirty percent of those recipients were located in just four metro areas: New York, Los Angeles, San Francisco, and Boston. The national average was 0.2%.

• Metro areas that rank highly in terms of those venture funding success rates include: San Francisco, CA (0.8%), San Jose, CA (0.8%), Boston, MA (0.5%), Hartford, CT (0.5%), Memphis, TN (0.4%), Minnepolis, MN (0.4%), Philadelphia, PA, (0.4%), Richmond, VA (0.4%), Washington, D.C. (0.4%).

• At 0.1 percent, the lowest ranked metros include: Baltimore. MD, Denver.CO, Jacksonville, FL, Las Vegas, NV, Orlando, FL, Riverside, CA, Tampa, FL.

Angel Investment Trends across MSAs:
Nationally, 8,900 firms (0.2%) received angel investments in 2014. Among firms that received the full amount they sought from angel investors, again, 30 percent were in just four MSAs.

• Metropolitan areas with the highest success rates of firms receiving the full amount of angel investments they sought include: San Jose, CA (1.0%), San Francisco, CA (0.7%), Boston, MA (0.5%), Los Angeles, CA (0.4%), Austin, TX (0.4%), and Charlotte, NC (0.4%). Metros at the bottom include Detroit, Cleveland, and Chicago.

• The metros at the bottom include: Chicago, IL, Cleveland, OH, Detroit, MI. Fifteen other metros have a rate of 0.2%.

Crowdfunding Investment Trends across MSAs:
With a national average rate of 0.1 percent, crowdfunding success rates, were lower than that for VC and angel funds. Again, four MSAs—New York, Los Angeles, San Francisco, and Washington, D.C.—accounted for 28 percent of firms that received all the money they sought from crowdfunding sources.

• At 0.3%, the top MSAs for crowdfunding success in 2014 are: San Francisco, CA, San Jose, CA, Washington, D.C., Charlotte, NC, Las Vegas, CA, Memphis, TN, Minneapolis, MN, Oklahoma City, OK, and Raleigh, NC.

• At 0.1 percent, the metros at the bottom include: San Diego, CA, Riverside, CA, Pittsburgh, PA, Orlando, FL, Kansas City, MO-KS, and Chicago, IL.