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 startups, hitting $621 billion globally and shattering the previous year’s record, according to new data from research firm CB Insights.
The U.S. accounted for about half of the world’s funding total, with startups in the country raising about $311 billion, 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 startup scene. The portion of early deals shrank slightly in both Silicon Valley and New York last year, landing at 57% 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%.
Meanwhile, Philadelphia’s early-stage startups represented 63% of total deals, up from 51%. In Los Angeles and Dallas, which reached new funding highs last year, the numbers climbed to 62% and 55% respectively.
“That’s not surprising” that founders are launching startups in more varied locations, said Bilal Zuberi, partner at Lux Capital, which backs early- through growth-stage companies. The boom in remote work has made companies’ hometowns less important, he said, and the ease of video calls has made the process of deciding whether to back a startup 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 startups raised $4.6 billion in 2021. That’s more than double the previous year’s total and a ninefold increase from 2015. The share of early-stage startups capturing deals in the city has also increased in recent years, hitting a high of 50% for the first time in 2021.
It wasn’t just U.S. 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 U.S. was still the leader in terms of the dollar value. Startups in Silicon Valley alone raised $105 billion last year, making it easily the world’s top metro for funding.