Last year, I moved across the country from Boston, Massachusetts to San Diego, California. Anyone that has lived on both coasts knows there are some major differences in culture. (Aside from Californians not being able to drive in the rain.) Massachusetts is known for education and healthcare due to the large number of major research institutions. California is synonymous with big tech. In northern Virginia — where I spent most of my childhood — just about everyone has some tie to the government or military. 

Savvy founders consider the dominant industries in specific states or metropolitan areas before starting their companies. Northern California, for example, has a large network for big tech and venture capital and may be the best place for a new software company to succeed. Different geographies also have different consumers. A startup looking to sell electric scooters won’t have a large use-case in the rural Midwest — but would in New York City. 

Revisiting a chart from last year, this week I wanted to dig into whether or not the online private markets align with greater geographic industry trends. I looked at equity deals for 2022 in each state to see which industries thrived across the U.S. (Note: we chose to show top industries only for states where an industry had at least three or more raises. States that did not meet this criteria are blank on the map.) Unsurprisingly, California had a whopping 47 companies in the Business Services, Software, & Applications category, making up 12% of the state’s 371 raises.

Massachusetts’ online raises were also in line with what you might expect from a state known for healthcare. Nine of the state’s 43 raises fell into Healthcare & Pharmaceuticals, making it the top industry for the state in 2022. The same was the case for North Carolina, another state known for its top-tier research institutions. Transportation, Automotive, and Aerospace was the top industry for Virginia, which makes sense given the large military presence.

It seems that founders entering the online private markets are at least somewhat strategic about geographic ties. Or new startups spin out of local industries or institutions popular in their respective state.

As an investor, geographic location is important for a number of reasons. Maybe you want to reinvest your dollars into your local community. Or maybe you want to bet on a deal that is optimally positioned for easy access to talent, a specific venture ecosystem, a large university, or a research institution. Perhaps a certain product or service meets a need specific where target customers live.

Location is one of the many important factors in making an informed investment decision. Though often overlooked in the diligence process, geography can help paint a clearer picture of a company’s growth trajectory.

Note: All data on online startup investing used for the Chart of the Week comes from the KingsCrowd database and represents a snapshot of the U.S. crowdfunding market.