We talk a lot about new fundings at Built In NYC, and for good reason. Generally, venture capitalists are a pretty savvy bunch, and they don’t like to lose money. When a company gets funded, especially a new company or a big round, it’s seen as a vote of confidence that the company is on the road to something big.
Last week, we looked at the cities that gave investors the best return on their investments. Overall, New York startups performed incredibly well — outperforming their rivals in the Bay Area, though proving nowhere near as numerous. There were only 98 exits on record for New York startups, compared to 618 for Bay Area startups. That means that even with a slightly lower rate of return out west, there were still a lot more companies earning a healthy return.
In the same study, Chicago startups were found to offer the overall best return for the VC’s buck, while New York and Los Angeles startups offered the third and fourth best returns, respectively.
While that’s all great, it doesn’t tell us much about where things are headed. So, we dug into some of our own data and compared notes with our colleagues in Chicago and Los Angeles to see how the funding environments varied among the biggest cities in the U.S.
What we found was an overwhelming dominance of New York funding events. New York-based tech companies have seen a whopping 170 funding events between January and May of this year. That is compared to just 109 funding events in Chicago and 97 in Los Angeles over the same period.
But the overall total amounts raised were interesting. Surprisingly, New York’s $3.38 billion came in a little behind Los Angeles’ $3.69 billion. Chicago lagged further behind at just over $1 billion in funding.
Still, the devil is in the details. Los Angeles-based Snapchat pulled in an amazing $1.8 billion round in May, accounting for almost half the city’s total funding. New York’s largest funding event, meanwhile, was WeWork’s $430 million round in March, while Chicago’s largest event was Groupon’s $250 million of private investment in May.
As far as large fundings go — fundings above $100 million – New York came out slightly ahead with six, while Los Angeles had four and Chicago, two.
To get an unscientific idea of how things are looking for the future of the cities, we also compared the cities' funding events that were under $100 million. It is, after all, the smaller companies being funded right now that will be tomorrow's unicorns. On the whole, it was pretty heartening.
Smaller New York companies have raised an impressive $1.9 billion dollars, while Los Angeles companies raised $13 billion and Chicago companies raked in $628 million.
Only time will tell, but chances are that one of these companies will be the next big thing.
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