FTFL - From VC to Shining Sea 🎵

This article appeared in our July 2025 issue of From the Front Lines, Bowen’s roundup of news and trends that educate, inspire and entertain us. Click here to subscribe. 

A benefit of being a 23-year-old firm is that our experiences span the dawn of the Internet Age all the way to the current Age of AI. That makes us old enough to remember America Online, yes AOL. While its Time Warner deal is on the shortlist of biggest train wrecks in the history of corporate America, one of its founders, Steve Case, continues to leave legacies.

In 2014 Case authored The Rise of the Rest: How Entrepreneurs in Surprising Places Are Building the New American Dream. The backdrop of the book is that at the time, 63% of all US venture capital investments went to entrepreneurs in 3 states – California, New York and Massachusetts. More specifically, Silicon Valley, New York City and Boston. Case’s premise was that entrepreneurial talent can be found anywhere and over time, venture backed companies would give rise to a technology-led renewal of US cities that formerly served as industrial hubs.

Now a full decade hence – and many bus tours and one global pandemic later – we first looked to answer the question: was Case right in his prediction or has venture backing remained stubbornly in the 3 familiar cities / states?

Let’s see what’s happened over the last 10 years:

The rich are getting richer! The big 3 have gone from 63% of US VC dollars to 76%. But as expected, AI is screwing with our data. When you strip out $500M+ VC deals, CA/NY/MA’s US VC dollar share has been darn near flat. Hard to build a case for Mr. Case’s thesis.

This got us thinking – what have been the dynamics in other US geographies, particularly the ones that have been known as growing tech hubs? We focused on the dataset that excludes $500M+ megadeals, and looked at growth over the last 5 years – as the strong performers would show a stark contrast vs. the US as a whole, where 2024 value was 4% lower than 2019.

Holy growth tech Batman, look at what we found!

• Silicon Valley was actually up 82% when you include all deals (with US total up 9%) – that impressive growth was completely due to massive megadeals, as the Bay Area (and US total) declined without them
• Houston, we are go for launch! Digging into the numbers further, we see that a huge influx of VC money into various energy subsectors drove the 79% growth, accounting for 49% of Houston’s total VC investment last year
• The next best performer was Denver, driven by strong growth in aerospace & defense, energy and semiconductors, each at approximately 8% of the total
• San Diego – no surprises here – was powered by the pharma, biotech and healthcare sectors, which attracted 74% of the area’s VC dollars
• Philadelphia’s 24% growth didn’t appear to be overwhelmingly caused by any particular sectors, but we noticed the City of Brotherly Love has been strong in cryptocurrency/blockchain

A few surprises:

• The success of Amazon and Microsoft has not done much for the Seattle startup ecosystem
• Covid relocation hotspots like Austin and Salt Lake City have not seen increased investment
• When IBM acquired Red Hat 5 years ago, we expected to see VC dollars start to pour into the Raleigh-Durham area, but that has not been the case
• The CHIPS Act has not been the venture boon to Phoenix that we anticipated

Looking for more data trends in these or other metro areas? Ask us!

A note to readers: 30 editions in, we have been humbled and honored by your feedback. From its outset, FTFL was meant to speak first and foremost to founders, entrepreneurs and those that invest in the macro growth tech economy. We know and appreciate that the vast majority of our audience has access to an increasingly larger set of data feeds and articles on these topics. Our commitment to you remains:

• If we’re covering something you’ve already read about, we hope to write about it in a new and fresh way
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