In a new global report, The Atlantic CityLab founder and researcher who coined the term “creative class” tracks Durham fourth globally behind San Jose, San Francisco and Boston for the amount of venture capital coming in considering its size.
Durham Makes High-Profile Global VC Activity List, But What Does It Really Mean?
Durham, as it turns out, attracts $475 in venture capital per resident, falling just behind the $2,146 raised per capita in San Jose, $1,415 in San Francisco and $665 in Boston. Below it on the list are cities typically bringing in significantly more venture capital by sheer number of dollars—San Diego, Austin, Seattle, Washington D.C., Los Angeles and New York.
What this stat should signify to entrepreneurs and venture capitalists outside the region is that Durham startups and high-growth companies are significant drivers of this local economy. Venture capital activity typically means jobs being created, real estate leased or purchased, intellectual property secured and new products introduced to the world. It means that a density of people are working at these innovation-oriented companies in town, regardless of its size. There’s a critical mass that may not be as easy to find in much larger locales.
And Durham isn’t the only small North Carolina city where that’s (somewhat) the case—Greensboro grabs the 15th spot for its $97 in venture capital raised per resident.
It’s important to note that researchers Richard Florida and Karen King, in partnership with Martin Prosperity Institute, use 2012 Thomson Reuters data for their study. Considering that venture capital into North Carolina skyrocketed in 2015, it would be interesting to see where the city ranks using more recent data. Spikes in funding have also happened in other U.S. cities that rank below it per capita in 2012. Presumably, the innovation economy is making up a larger percentage of business activity than in the past in many U.S. and global cities. That’s certainly shown in today’s report.
But in total, the U.S. still accounted for 68.6 percent of the $42 billion that went to companies in 150 worldwide cities and metro areas in 2012, followed by Asia and Europe with about 14 percent of the activity each. Many of the Triangle area’s peers made a list of 20 cities worldwide for total activity—those include San Diego, Washington D.C., Seattle, Chicago, Austin and Philadelphia.
It’s exciting to see Durham on high profile lists like this—those who live in town know that it has some of the characteristics Florida credits with helping venture capital flow, “density, great universities and the open-mindedness and tolerance required to attract talent from across the world.”
But it’s important to keep perspective. The top 20 metro areas in the world still account for almost two-thirds of all venture capital raised in the year. 90 percent of funding happens in the top 50 regions, of which Durham isn’t one.
Florida sums it up like this: “While some smaller places, mainly in the U.S., do well on a per capita basis, venture capital increasingly flows to large global cities, with all their density and dynamism.”
At least for now, Durham is swinging above its weight in a global economy increasingly densifying.