Top Venture Capital Ecosystems & Hotspots According to Pitchbook

Top Venture Capital Ecosystems & Hotspots According to Pitchbook

By Nazmia Nassereddine, 13 November 2023

This decade has witnessed a meteoric rise in private capital markets, paralleled by flourishing VC ecosystems and new VC hotspots across the globe. Hungry investors are casting their nets wider as startups push company valuations beyond the billion-dollar mark with regular frequency. Finding the right capital source is becoming a strategic chess game, and with macroeconomic factors at play in competitive ecosystems all over the world, the decision of  'where to invest?' is more critical than ever. 

Top 20 Venture Capital Ecosystems around the World 

Last month, PitchBook launched their VC Ecosystem Rankings which compares and scores VC ecosystems based on their development and growth rates. Their Development Score evaluates the size and maturity of ecosystems,  and elite cities are topping the charts as undisputed VC meccas, boasting impressive capital-raising records, startup deals, and a rich history of successful VC-backed exits. 

Infobyte: Pitchbook's Top 20 VC Ecosystems in the World 2023

San Francisco stands unmatched as the world's leading VC ecosystem. From Q3 2017 to Q2 2023, US $364.5 billion poured into San Francisco-based startups; for context, startups in New York secured less than half of this amount. This comes as no surprise as the West Coast has been the cradle of VC in the US for decades, and San Francisco with its Silicon Valley roots remains consistently leader of the pack. 

Zooming out with a wider lens reveals that the US accounts for 9 of the 20 most developed VC ecosystems. Asia accounts for 8 VC hotspots, while Europe only accounts for 2 VC hotspots. Tel Aviv is the only Middle Eastern city to make the Top 20 list.  

Beyond San Francisco and New York, American cities like Los Angeles and Boston boast impressive rankings, while over in Asia, Beijing, Shanghai, Hangzhou, and Guangzhou get China the limelight it deserves. Seoul, Tokyo and Singapore also shine a spotlight on these other Asian VC markets.   

Fastest Growing VC Hotspots

Meanwhile, the Growth Score spotlights the cities and ecosystems around the world that are growing at the fastest rates. These cities might not hit the headlines with staggering numbers, but their rapid growth trajectories ensure they don't go unnoticed and open up new doors in the VC realm. 

Known for its towering skyscrapers and luxurious lifestyle, Dubai now emerges as a major player in the VC growth rankings, clinching the top spot where VC growth is concerned. Dubai's accelerated transformation into a global VC leader is nothing short of spectacular, and 58% of all Arab world venture funding happens in Dubai.

Infobyte: Top 20 Fastest Growing VC Ecosystems Globally (Q2 2017 - Q3 2023)

However, the surprises don't stop there. Detroit, historically celebrated for its automobile industry, has recently roared to life in the tech scene. Earning second place in VC growth is a clear signal that the Motor City is rebranding itself as a budding tech hub. Berlin, the European tech darling, took third place on the podium, while Raleigh and Houston rounded out the top five. 

With established VC hubs facing fierce competition and soaring costs, the landscape is shifting as startups and investors set their sights on new frontiers.  

A closer look at the numbers reveals an interesting geographical split and a contrasting picture when comparing most developed and fastest growing cities. While Asia made up 40% of the top 20 most developed VC ecosystems, only 15% of the top 20 cities ranked by growth are located in Asia. Instead, Europe and the US are home to 65% of the fastest growing VC ecosystems around the world.   

Comparing development and growth, it's a case of David versus Goliath in the VC world as big cities like San Francisco, Beijing, and Boston are victims of their own success. The data paints a clear picture: the bigger the development score, the slower they grow. A global dip in activity over the past 18 months hints at possible contractions for these large VC ecosystems, while smaller VC ecosystems are zooming ahead. 

Infobyte: Top 10 Locations Ranked by Overall Score

Overall, US & Chinese cities dominate the top 10 list though UK, Germany, and Korea appear as well. Notably, established cities like New York, Shanghai, London, and Berlin strike the perfect balance between development and growth to maintain their positions across all three lists. 

The evolving dynamics in the VC world are not crystal clear. While Asia remains a powerhouse in development, emerging cities like Dubai and Detroit are propelling forward in the global race for VC dominance.

In a world where capital is king and its throne ever-shifting, VC ecosystem rankings like Pitchbook’s might just be the roadmap guiding stakeholders to their next major deal.

Stay tuned and stay hungry. 

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