To supplement PitchBook analysis on venture investment activity, this report introduces a framework for deeper evaluation of venture ecosystems in the United States. Building extensively on existing industry research, we present three key indicators of ecosystem development: density, resources and talent. While this report is just a starting point for comparing factors of development, we hope to address the lack of data and research in private markets by providing readers a new lens with which to understand venture ecosystems.
Few states have developed late-stage ecosystems. Many smaller ecosystems have a healthy density of early-stage startups but lack a concentration of late-stage companies. While states with low late-stage density also have fewer exits, healthy early- and very early-stage vitals could indicate potential for growth.
Proximity to capital is expensive. States with the most access to local capital ($2.5 million+ per venture-backed startup) also have higher costs of labor and housing relative to the national average. States with slightly less capital per startup (around $1 million per venture-backed startup) have costs closer to the mean, while regions with low values of local venture capital also have the lowest costs.
Entrepreneurial experience is relatively equal across states, but talent clusters. Regarding local talent, the proportion of startup founders who previously founded another company hovers around 3%-5% in most states, indicating relative equality in entrepreneurial experience. Local talent retention is more variable, however. The proportion of startups with founders who studied at a four-year institution in-state appears to be strongest in regions with top-tier colleges and universities.