Why the South Could Soon Beat the West in Startups - KingsCrowd

December 1, 2021

Why the South Could Soon Beat the West in Startups

Online startup investing is decentralizing venture capital. Companies from anywhere in the US can reach investors anywhere in the US through crowdfunding portals. While just looking at the number of companies by state shows California as the home to the most startups, that’s not the entire story. Looking at how the number of companies has changed over time in a given region reveals longer term trends happening across the US.

Stacked Line Chart Showing Growth of Raises Across Regions

The number of startups raising money online has clearly increased over the past four years. The total has already increased by more than 115% from 2018 to 2021.  While the West wins out in sheer number of companies, the South had the strongest growth of any region from 2018 to now. It saw an increase of more than 185% in the number of companies raising money online from 2018 to October 2021. In the Midwest and Northeast, the number of startups increased by 98% and 96% respectively. It’s very interesting to note that the West has actually seen the lowest overall growth of any region. The number of companies in that region only increased by 91%.

Although California dominates in sheer number of companies, this chart shows that the landscape is shifting over time. Averaged across all four years, the quantity of startups based in the South that are pursuing crowdfunding has grown by more than 45% each year. The West has an average growth rate of around half that figure. These growth rates indicate a significant change in startup creation and startup investing. Online equity crowdfunding does seem to be widening the field for startups, making it easier for a company outside of Silicon Valley to raise capital. And that’s excellent news for investors, as they are no longer limited by localized networks or events as their main option for finding promising startups. We hope to see these growth trends continue into 2022 and beyond! 

Note: all data used for the Chart of the Week comes from the KingsCrowd database and represents a snapshot of the crowdfunding market.


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