Useful Stats: Share of U.S. Venture Capital Activity and Per Capita Investment by State, 2010-2015

More than three-quarters of U.S. venture capital dollars went to companies in California, New York and Massachusetts in 2015, according to data from the PricewaterhouseCoopers (PwC)/National Venture Capital Association (NVCA) Moneytree Report. California companies received over 57 percent of all U.S. investment, about 0.5 percent down from the state’s peak in 2014. Both New York and Massachusetts received about 10 percent of U.S. dollars. Washington, the state with the fourth highest share, trailed far behind at 2.1 percent. California and Massachusetts also both led in venture capital dollars per capita, taking in about $860 and $841 per resident, respectively. Massachusetts continues to lead the nation in deals per capita, with about 6.5 per 100,000 residents.

SSTI has prepared data on venture capital investment by state per capita and by share of the national total based on the PwC/NVCA data. That data, along with state-by-state totals for 2010-2015 are available in Excel format. Access last week’s analysis of venture capital activity in top U.S. metros at: http://ssti.org/blog/useful-stats-venture-capital-investment-capita-metro-2015.

Over the last five years, California’s dominance over the nation’s venture capital economy has grown, from about 51 percent in 2010 to 57 percent last year. The state’s share of U.S. activity had remained fairly steady through 2014, when it jumped from 51 percent to 58 percent. That year represented a remarkable resurgence for the industry after the Great Recession, in which total investment jumped by 68 percent. In a year in which investment grew by more than $20 billion, California’s investment level grew by $14 billion.  As such, California’s increasing share does not seem to have come at the cost of venture capital activity in other states, but rather to have been a feature of the recovery.

As of 2015, it appears the Great Recession did little to reduce California’s primacy in the U.S. venture capital economy, while the recovery has enhanced its position. In 2007, the state was home to about 49.3 percent of all investment, a share that had slowly ticked upward since the dot com crash. In 2009, the nadir of the post-crash period, California’s share held steady at 50.1 percent. This does not mean, however, that California venture capital was not affected by the recession. Per capita investment dropped from $406.59 per resident in 2007 to $250.11 in 2009. The per capita level stabilized at the pre-recession level, around $400 for several years, before leaping to $756.64 in 2014 and $860.06 in 2015.

The rapid growth in the California venture capital market has come through large deals, rather than an increase in the number of deals. Deal activity has increased at a much slower rate, from about 3.47 per 100,000 residents in 2009 to 4.8 in 2015. Massachusetts continues to lead in deals per capita with 6.46 per 100,000 residents in 2015, and trail closely behind in dollars per capital with $840.93.

If California has dominated the recovery, does this mean that other states have been left out? While progress has varied across the country, most states appear to be receiving more venture capital dollars now than before the recession. Omitting California companies, U.S. companies received about $45.40 per capita in 2007. That figure fell to $31.10 in 2009, but more than doubled to $89.08 in 2015. Including California investments, the U.S. per capita level was $182.97.

The highest percentage increases in dollars per capita during the 2010-2015 period came in smaller states, such as Alabama, Maine and Nebraska. Among the top 20 states, New York and Utah posted the highest growth in per capita dollars. Utah also more than doubled it number of deals per 100,000 residents during that period.