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February 21, 2023 | Tom Ballard

Much was anticipated, but little has changed in the VC world

The latest PitchBook Analyst Note shows venture capital is still concentrated in the Bay Area of California and New York City.

Here’s a not-so-surprising data point.

Between two markets – the Bay Area of California and New York City – more than $330 billion in capital was raised by venture capital (VC) firms from 2019 to 2022. VCs in the rest of the U.S. raised less than half that total, begging the question: Is venture destined to become siloed into these two markets and everywhere else?

That’s the question posed in this “PitchBook Analyst Note: Capital Concentration and Its Effect on the VC Ecosystem.” Written by Kyle Stanford, the article notes, “At the start of the pandemic, many expected capital to move out of the major start-up hubs of New York City and the San Francisco Bay Area. Three years later, our latest analyst note suggests that not much has changed — and there are disadvantages for companies in smaller markets. While the median distance between lead investor and target company has increased for nearly all stages due to the pandemic and remote work, these effects could fade, causing distances to shrink and bringing back barriers for smaller markets and companies to succeed.”


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