Big Apple Vs. Bay Area: New York Investors Take Bigger Bite Of U.S. Venture Pie From Silicon Valley

The San Francisco Bay Area, epicenter of the U.S. technology industry, is home to the FANG in FAANG—Facebook, Apple, Netflix and Google—with Apple the most highly valued company in the world, alone worth over $2.4 trillion.

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So far this year, the Bay Area accounts for about 37 percent of venture dollars invested in the U.S. The Greater New York Area, by contrast, represents less than half that amount, receiving 17 percent of U.S. venture dollars invested.

But a Crunchbase News analysis shows that as more growth investors compete with VCs in startup investing, firms from the Big Apple are gaining traction.

In fact, while Bay Area investors led roughly double the deal volume, as measured by dollar amount, of New York investors between 2016 and 2019, that proportion began to change last year—and by 2021 the dollar amounts led by New York-based investors in U.S. startups is close to equal that of Bay Area investors, according to Crunchbase data.

Where the dollars go

Of course, the Bay Area and Silicon Valley aren’t just where the investors are. Together, the two leading tech ecosystems also capture more than half—54 percent—of all venture funding into U.S. startups.

But the New York region is also gaining when looking at not just who is making the investment, but the startups receiving that money. Some of the more highly valued tech companies to go public in recent years boast New York headquarters, including UiPath, Peloton and Compass.

New York, the U.S.’ financial and news media capital, of course also hosts the major stock exchanges, the NYSE and Nasdaq, where many startups from around the world choose to go public.

PE leads in New York

There are distinct trends in each market when you look at lead investors specifically.

In the Bay Area, there are many more investors who have led rounds that tally up to $1 billion or above globally so far in 2021, and the majority of these are venture investors, Crunchbase data shows.

As we’ve reported, there’s been a significant increase overall in growth equity investing this year in private companies, with many of these investors headquartered in New York.

Perhaps unsurprisingly, then, the majority of startup investors in New York are private or growth equity investors. In fact, just one venture investor, Thrive Capital, has led or co-led rounds globally above $1 billion to date in 2021, per Crunchbase data.

Tiger and Insight lead on all measures

New York-based firms Tiger Global Management and Insight Partners far exceed Bay Area investors by amounts led or co-led, with $19.7 billion and $11.1 billion, respectively, this year.

The typical private equity playbook has been to invest large sums in a smaller set of companies. What is different in 2021 is not only the large amounts invested—which is up significantly year over year—but also the number of companies garnering investments from these two firms.

Tiger Global has led or co-led 149 deals so far this year, while Insight has done that for 137 deals, Crunchbase data shows. Both far exceed, by at least 40 investments, the third most active investor by count: Menlo Park, California-based Andreessen Horowitz, which has led 91 investments in 2021 to date.

Despite the fact that New York investors are gaining on Bay Area investors by amounts, there is still a large difference in the number of deals led by each investor cohort.

The Bay Area cohort has led rounds twice as often from a deal count perspective in 2021. New York, meanwhile, leans more heavily toward late-stage fundings led as a proportion of deals fueling valuations for earlier-stage investors.

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Methodology

The data contained in this report comes directly from Crunchbase, and is based on reported data. Investment data is based on disclosed rounds in Crunchbase as of Oct 13, 2021.

Data includes seed, venture, corporate venture and private equity investments into venture-backed startups.

Please note that all funding values are given in U.S. dollars unless otherwise noted. Crunchbase converts foreign currencies to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events are reported. Even if those events were added to Crunchbase long after the event was announced, foreign currency transactions are converted at the historic spot price.

Illustration: Dom Guzman

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