Ask Georges: Which US tech hubs are attracting the most new startups?

By Dan Abelon and Lauren Xandra on August 3, 2022

Innovation is getting more diverse, dispersed, and distributed. How is that changing the fabric of America’s tech hubs?

Dan Abelon and Lauren Xandra turned to Georges to learn more.

The pandemic unleashed a striking surge in entrepreneurship, and gave rise to new tech hubs

According to data from the US Census Bureau, the number of Americans filing paperwork to start new businesses surged to record highs starting in the summer of 2020 and remain above pre-pandemic levels today.

This marks an exciting and important move away from decades of declining dynamism, with a depressed startup rate for new businesses stretching back decades to the early 1980s.

Startups opening up shop in the 2020s have greater geographic flexibility than ever, and research suggests that small companies are 2x more likely to hire remote workers.

This sudden entrepreneurial boom, compounded by greater geographic dispersal of startups being founded, is giving way to new tech hubs across the country. Understanding where innovation is moving can give founders, investors and talent an edge.

Backed by data and historical context generated through Georges Doribot (our AI team member and proprietary research tool that helps our team find new, innovative startups to back), our team of engineers and investors assess a selection of tech hubs to help bring to light key trends. Using PitchBook data, we look at how the percentage of VC-backed startups founded in six tech hubs has evolved since 2010. We also anchor these findings in the context of the rate of startups per capita.

Tech hubs to watch

TSV Analysis, PitchBook Data, 2022

To contextualize these findings, we created a ‘startup index’ to show the number of startups founded per capita in each tech hub as a multiple of the national average. To do this, we divided the annual number of startups founded per capita in each of the hubs by the national average, where the national average represents total US startups per capita in each year.

TSV Analysis, PitchBook Data, 2022

Fastest risers: Miami and New York

So far, Miami is maintaining momentum in its ability to attract entrepreneurs. Our analysis finds that since 2020, Miami is experiencing the fastest growth rate of new VC-backed startups founded, ahead of New York City, Los Angeles, Austin, San Francisco and Boston. Miami is in third place (behind San Francisco and Austin) for having the most startups per capita.

New York is also having a heyday, with a significant increase in the number of tech companies setting up shop. Its setbacks during the pandemic were far from evenly distributed, with the city’s tech sector thriving. A recent report by Tech:NYC finds that tech accounts for 17% of NYC’s job growth since 2010 and is increasing at a faster rate than nearly every other sector.

Steepest declines: San Francisco and Boston

While San Francisco has the most startups per capita–roughly 7x the national average–the percentage of new companies founded in Silicon Valley has dropped significantly from 2019 highs. We also see a steady decline in Boston’s ability to attract new founders since 2017: perhaps the early innings of misalignment between the density of well-educated workers and the density of young business activity.

Tech hubs to watch: Austin and Los Angeles

Startups are being founded in Austin at a slightly faster pace than in Los Angeles, with Austin further cementing its status as a new tech hub in 2021 after recording record-high population growth and becoming the new location for Tesla’s headquarters. Incredibly, Austin is second to San Francisco in having the most startups per capita, with nearly 6x the national average.

We think these initial insights into the changing face of America’s most dynamic tech hubs present a hopeful view of a more equitable future distribution of technology investment, employment and innovation.

But we hope that you will respond and disagree; join us in asking “what if’s” and “why not’s”, and in approaching complex things in an open-eyed way. Please feel free to contact Dan Abelon or Lauren Xandra with your take on this perspective, or with any ideas for future questions you want Georges and our team to tackle.

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