Where do tech industries cluster-

Mapping US tech start-up investment

By Giulia Ilacqua

Where do different tech industries (e.g. software, biotechnology, media) cluster? Richard Florida, Karen King, and the Martin Prosperity Institute try to answer this question in a recent study that explores the geography of tech start-ups and venture capital activity in the United States.

The study found that software, IT services, biotechnology, medical devices and equipment, as well as media and entertainment,  make up three-quarters ($25 billion) of all venture capital investment in the US. Not surprisingly, the Bay Area and the Boston-Washington Corridor dominate across all industries, partially attributed to the leading universities in the area.

The software industry makes up over 36% (~$12 billion) of venture capital investment. San Francisco (27.6%), San Jose (20.2%), and New York City (8.2%) make up the top three geographies for investment into software start-ups. A similar trend is seen in the venture capital investment for information technology, where San Francisco (33.5%) again dominates, followed by San Jose (14.2%) and New York City (12.4%).

The presence of leading biotech universities (e.g. University of California San Francisco, MIT, and University of San Diego) support a clustering of biotech start-ups around them. As such, San Francisco brings in 30.8% in venture capital investment, followed by Boston (18.1%), and San Diego (8.3%). Interestingly, the Boston-Washington Corridor attracts 40% of all biotech investments, compared to less than a third for the San Francisco Bay Area.

In examining the biomedical industry, Boston start-ups bring in the largest amount of venture capital investments (15.8%), followed closely by Fan Francisco (15.6%) and San Jose (9.7%). However, the Boston-Washington Corridor bring in 23% of the investment, second to the Bay Area which accounts for the largest percentage of investment (27%).

The geography of tech industries is spiky, clustered around a small number of metros in the U.S. Where investment is flowing is important for mayors, policy makers, and economic developers to understand as they look to attract investment and support the development of thriving tech clusters.

This post first appeared in TINAN 76. Subscribe to TINAN for the latest economic development news and resources.