The underlying data is from 2012, pretty sure it is wrong for 2015. Asia (China, India, SE Asia) have seen huge investments in the last few years (post 2012).
part of this is definition -- what is "venture funding" -- b/c if you simply count any type of private finance I think you'd find it is more of a continuous distribution (if still coastally-weighted). it's fair to say VC is mostly SV or NY, but I think that says more about how small the world of "venture capital" is compared to the larger world of private finance. this is not necessarily about where innovation happens, and certainly not about where economic output happens.
That article is so arrogant sounding. Of course most of the funding is coming out of SV. Because most VC won't fund anything that isn't in SV or maybe NY. If your from SV they'll fund dog butt social flipper app but sorry I get that your company has revenue and makes a profit it just doesn't meet our funding criteria. I suppose the rest of the IT departments and universities around the world are run by a bunch of nose picking hill-billies. With out the sophisticat-un of them there city folk.
Start with the premise that the single most important factor that determines startup success is hiring quality talent, specifically engineers and scientists. High quality engineers and scientists are currently a small percentage of the entire world's population. They are attracted to areas where they can find jobs, and usually stick around universities.
Going with that premise, would you rather start your company in Oklahoma City or Boston? And if you are an investor, would you rather invest in a tech startup in Oklahoma City or Boston?
Finally, as an engineer, I highly value the quality of the area I live. There is literally nothing that could make me move to sprawling city like Oklahoma City, Kansas City, Atlanta, Houston, Phoenix, Detroit, etc. Nothing short of an environmental or man made disaster that made all highly desirable, walkable, densely packed cities unlivable.
Having worked for Silicon Valley companies and an Ivy League university, I think it's fair to say I'm a good engineer.
I hate big cities. They are so expensive and noisy and I abhor having to drive for more than 30 minutes at a time. The opportunity cost of all of the exciting marvels going on around you makes you feel like shit if all you want to do after work is drink and watch Netflix.
As great as big cities are, unless you are actively making the best of them, chances are you are living in the same ways most other people are: you use the same devices as everyone else to watch the same shows as everyone else. You get food delivered to your shelter-cubicle which anyone in a decently sized city can get as well. You go from boxes to boxes in boxes.
I like my small city. I like to get off the grid and go outside to hear nature. Turning off lets me channel my energy when I turn on.
Why can't the startup be based in a smaller city and have people working remotely or if needed just the engineering team where the talent is? It all depends on the product/market.
This might be another reason, most companies probably have a tiny Coast office and say it's headquarters but have operations in another place -- to keep costs low.
> the single most important factor that determines startup success is hiring quality talent, specifically engineers and scientists. High quality engineers and scientists are currently a small percentage of the entire world's population. They are attracted to areas where they can find jobs, and usually stick around universities.
Another thing is the speed at which a company can hire high quality engineers. Facebook now has 25 employees for every employee it had eight years ago. For a company taking off like a rocket, there is only one place where you can hire that many good engineers in that amount of time - San Francisco.
The provincialism on display in this thread would be comical if it weren't so sad. CMU, CWRU, MIT, Duke, Waterloo, UWashington, UTexas, UMichigan, Georgia Tech, ...
Microsoft's WA state employment is 3x Facebook's total employment. Amazon is similar.
Have you ever actually lived in OKC? It is an awful quality of life for many reasons. I highly recommend not living there. If investing is only about rent and salaries, you may as well hire in Sub-Saharan Africa. Lots of tech talent lives there, I'm sure.
Investing isn't about only rent and salaries its about capital to grow. I would also say that investing in a bunch of super risk takers can work but could also leave you with a bunch of unicorns you can't dump off to the public.
VCs don't fund outside of clusters because early stage private investing is very different from public market investing. There's a reason why Buffett can live in Omaha and be the best investor of all time. Contrast this with embryo stage companies where they really are investing in the team. They don't feel comfortable when the team is far away. Not to say this is right but it's due to human nature being what it is.
Anyone in finance that is not ignorant or malicious can see how problematic this is.
American, SV and NYC "entrepreneurship" are mislead by the idea of American exceptionalism.
These are a consequence of EXTREME centralization of global investable capital in select networks. Had it been deployed evenly, you'd see unimaginably terrific ventures across the world.
