Startups raised more venture capital funding than ever last year and more cities around the world started to look like tech hubs – although Silicon Valley remains firmly in the lead.
In 2021, investors more than doubled the amount of cash they handed out to start-ups, hitting $621 billion (R9.65 trillion) globally and shattering the previous year’s record, according to new data from research firm CB Insights. The US accounted for about half of the world’s funding total, with start-ups in the country raising about $311bn, according to the report.
The Silicon Valley region and New York retained their top spots for both the most money raised and the most deals completed. Those tallies were helped along by a few big funding rounds for established companies. But the CB Insights data also show an uptick in early-stage deal activity for cities that are not traditional tech hubs.
Early-stage funding is an indicator of a healthy, growing start-up scene.
The portion of early deals shrank slightly in both Silicon Valley and New York last year, landing at 57 percent of the total in both regions – their lowest points since at least 2015, when CB Insights began tracking the metric.
The percentage of early-stage deals in Austin, Texas, slipped for the second
consecutive year, also landing at 57 percent. Meanwhile, Philadelphia’s early stage start-ups represented 63 percent of total deals, up from 51 percent.
In Los Angeles and Dallas, which reached new funding highs last year, the numbers climbed to 62 percent and 55 percent, respectively.
“That’s not surprising” that founders are launching start-ups in more varied locations, said Bilal Zuberi, a partner at Lux Capital, which backs early-through growth-stage companies. The boom in remote work has made companies’ home towns less important, he said, and the ease of video calls has made the process of deciding whether to back a start-up faster.
“If you’re linked to New York, Austin or Silicon Valley, then it doesn’t matter if you’re based in Montana,” Zuberi said. “What matters most is what ecosystem a founder can tap into for executives and employees.”
Miami was another city that boomed in 2021, helped along by several high-profile figures who fled Silicon Valley for warmer climes.
Miami start-ups raised $4.6bn in 2021. That’s more than double the previous year’s total and a ninefold increase from 2015. The share of earlystage start-ups capturing deals in the city has also increased in recent years, hitting a high of 50 percent for the first time in 2021.
It wasn’t just US cities that saw big gains. For the first time since CB Insights started tracking the data, there were more funding rounds in Asia than any other region, with 12 485 deals – though the US was still the leader in terms of the dollar value.
Start-ups in Silicon Valley alone raised $105bn last year, making it easily the world’s top metro for funding start-ups.