Baker Institute report: San Francisco is uncontested as America’s startup capital

Rice University News & Media

The nation’s top startup cities for 2016 are, in ranked order, San Francisco; New York City (Manhattan); Boston; Cambridge, Mass.; Palo Alto, Calif.; Austin, Texas; and Seattle, according to a report from Rice University’s Baker Institute for Public Policy.
Credit: 123RF.com/Rice University
“The Top U.S. Startup Cities for 2016” ranks the top 100 cities by venture capital funding. The report was co-authored by Ed Egan, fellow of the Baker Institute and director of the institute’s McNair Center for Entrepreneurship and Innovation; Anne Dayton, research manager at the McNair Center; and Diana Carranza, graduate researcher at the McNair Center.
The authors found 2016 was a slightly down year for venture capital investment. The total amount of seed, early and later-stage (also known as growth investment) venture capital invested in startup companies dropped to $33 billion from $41 billion in the previous year. The number of U.S. startups receiving for the first time growth investment from a venture capital firm also declined — to 1,041 from the 1,347 “new deals” recorded in 2015. The total stock of active venture-backed startups based in the U.S. leveled out at 9,656, having risen just past 9,700 in the previous year.
As in past years, startup activity was concentrated in a select set of American cities. For 2016, the top 50 cities took more than 73 percent of dollars invested, accounted for 70 percent of new deals and housed 69 percent of venture capital-backed startups. The next 50 cities had much lower startup activity. Cities ranked 51 to 100 collectively took just 9 percent of dollars invested, accounted for about 11 percent of new deals and housed around 11 percent of venture-backed startups.
The authors placed the top 50 U.S. cities into three tiers: The first tier is the top seven cities — the only seven U.S. cities to receive more than 20 deals in 2016. “Each city in this tier is an example of a major and highly successful startup ecosystem,” the …

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