WHERE DO THINGS GO FROM HERE? FIG. 9 Series B deal activity led by Bay Area investors in startups outside of the Bay Area 112 101 100 93 88 84 78 59 63 51 49 $0.8 $0.8 $1.2 $1.8 $1.8 $1.3 $2.5 $3.1 $3.3 $4.2 $5.7 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021* Deal value ($B) Deal count Source: PitchBook | Geography: US, excluding Bay Area startups | *As of September 1, 2021 Note: Bay Area is defined as San Francisco and San Jose MSA. No other ecosystems were excluded from the figures above. s we can see, capital is increasingly flowing to companies In the pages that follow, we dive into the data and stories of twelve based outside of the Bay Area. More and more VC firms are growing startup communities—just a fraction of the great innovation Asetting up shop in places across the country. And perhaps most ecosystems in which Revolution has spent considerable time over interestingly, regional investors dedicated to finding local companies the last decade. We excluded from this conversation cities such as with breakout potential are popping up in cities across the country. Seattle, Austin, Chicago, and LA, which have experienced strong Taken together, these forces are driving more interest and investment momentum—and received more attention—in recent years. Instead, in companies headquartered in places like Washington, D.C., Phoenix, we asked some of our friends in other innovation communities to and Nashville. All of this is happening as the overall market is tell us why their cities are increasingly showing up on the map. The expanding: 2021 is on pace to be another record-breaking year for reasons vary, but some common denominators emerge: Tech talent VC investment. has spread everywhere following COVID-19; livability is crucial; culture matters; local corporations are helping; sector expertise is increasingly The chart above tells the story of how far we’ve come, and where we important; and universities are initiating a new era of entrepreneurship might be headed. Compared to a decade ago, when Revolution first education. started building it’s Rise of the Rest infrastructure, Bay Area VCs are now deploying nearly six times the dollars outside their region. The The pieces of this puzzle are complex. Getting innovation off the lion’s share of VC AUM sits in the Bay area, but it’s clearly no longer ground isn’t about following a Silicon Valley recipe. That’s why true that a founder must be in walking distance to get a check. Revolution has spent years building our nationwide network, meeting founders where they are. We don’t see this as just investing in The more that capital gets off the sidelines, the better for companies. We are investing in entrepreneurial communities. entrepreneurs everywhere—and the better for America’s future economic competitiveness: more investment, more startups, more Talent is equally distributed, but opportunity is not. We hope that the jobs. Startups are responsible for nearly all net new job creation in acceleration of capital away from the Bay Area isn’t just a pandemic the US, making greater startup investment outside of the Bay Area blip on the radar, but a turning point for entrepreneurs everywhere, a driving force in creating a more equitable distribution of economic and a final blow to the idea that the Bay Area has a monopoly on growth and opportunity. US innovation. 6 / Beyond Silicon Valley: Coastal dollars and local investors accelerate early-stage startup funding across the US