Which cities are the new hotbeds of innovation?

Explore the U.S. cities with the most new founders since the start of 2022.

Which cities are the new hotbeds of innovation?
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Startup founders have historically been drawn to hubs like Silicon Valley, home to tech giants, unicorns, and the next batch of hopefuls, and venture capitalists that populate Sand Hill Road. 

However, since the pandemic, the dominance of Silicon Valley has declined, as remote work policies and a spate of layoffs have fueled the departures of workers and cleared the way for rising investment in emerging tech hubs across the United States, notably Austin and Miami. 

Funding for companies in Miami has nearly quadrupled in the past three years, totaling $5.39 billion in 2022, while deal volume jumped 81 percent. Similarly, Austin's venture capital investments rose 77 percent to $4.95 billion with the number of deals jumping 23 percent. These regions still pale in comparison to Silicon Valley, which in 2022 drew $74.9 billion in investments across 3,206 deals.

Despite the change in the industry, founders desiring the quintessential start-up experience are still flocking to Silicon Valley. However, more startups are popping up in other places like Seattle, New York, and Miami.

The movement of startup founders from historical hubs to new cities is shifting the industry's structure. While Silicon Valley and New York still remain top destinations, other cities have seen a massive surge in new founders, investments, and deals, indicating greater geographic diversification.

Explore the cities that are quickly becoming hotspots for startup activity below.

The “not-so-surprising” new hubs

Miami

Miami has emerged as a major player in the startup ecosystem with a favorable business climate, diverse talent pool, and high quality of life. The city's growing number of accelerators, incubators, and co-working spaces are helping to foster a vibrant startup community – following the adage “go where the action is.”

Austin

Startups in emerging technologies, such as blockchain and cryptocurrency, have been flocking to the city. In addition to its vibrant music scene and laid-back lifestyle, the city's strengths in technology have made it an attractive destination for entrepreneurs and investors.

Seattle

While the city has long been home to tech giants like Amazon and Microsoft, it has recently become a hotbed of startup activity. Seattle is particularly known for its strengths in cloud infrastructure and developer tools, which attract both investors and entrepreneurs alike.

Denver

The city's strengths in the outdoor industry and renewable energy have also contributed to its recent success. Entrepreneurs and investors are attracted to Denver's opportunities and resources, which make it an ideal place to start and grow a business.

These cities are all outperforming in terms of the number of startup founders relative to their population, which is a strong indicator of the health and vibrancy of their startup ecosystems. As more and more entrepreneurs look beyond Silicon Valley for opportunities, these cities are likely to continue to grow and thrive as major players in the startup world.

The Contenders

Minneapolis

Minneapolis is known for its thriving startup scene and culture of innovation. Notable startups from Minneapolis include Code42, a cloud-based data security company, and Gravie, a company offering innovative health benefit solutions. The city is home to venture capital firms like Arthur Ventures and Brightstone Venture Capital.

Portland

Portland has a strong focus on sustainability and green technology, with a thriving startup scene in the clean energy and food and beverage industries. Notable startups from Portland include Orca Security, a pioneer of agentless cloud security, and Torq, a no-code security automation platform. The city is home to venture capital firms like Rogue Venture Partners and Elevate Capital.

Phoenix

Phoenix has emerged as a major startup hub in recent years, with a growing focus on technology and healthcare. Notable startups from Phoenix include Mosaic, a tech-enabled general contractor, and Fullbay, a cloud-based shop management software. The city is home to venture capital firms like Canal Partners and Tallwave Capital.

Salt Lake City

Salt Lake City has a growing startup scene, with a focus on technology and outdoor recreation. Notable startups from Salt Lake City include R-Zero, a biosafety technology company, and Filevine, case management software for attorneys. The city is home to venture capital firms like Pelion Venture Partners and Kickstart Seed Fund.

Nashville

Nashville is known for its vibrant music scene, but it has also emerged as a hub for healthcare and technology startups. Notable startups from Nashville include Built, a leading provider of construction finance technology, and Alto, an easy-to-use alternative investing platform. The city is home to venture capital firms like Frist Cressey Ventures and Nashville Capital Network.

Charlotte

Charlotte is home to a growing startup scene, with a focus on fintech and healthcare. Notable startups from Charlotte include Prescient, a digital design-build system, and Oyster, a future of work hiring platform. The city is home to venture capital firms like Frontier Capital and Queen City Angels.

Raleigh

Raleigh has a thriving startup scene, with a focus on technology and life sciences. Notable startups from Raleigh include Reveal Mobile, a tool for location-based marketing, and Pendo, a product management software company. The city is home to venture capital firms like Hatteras Venture Partners and Bull City Venture Partners.

Orlando

Orlando has emerged as a major startup hub, with a focus on technology and hospitality. Notable startups from Orlando include Stax, an industry-leading payments technology provider, and Fortress, a provider of cyber supply chain risk management solutions. The city is home to venture capital firms like venVelo and FAN Fund.

Las Vegas

Las Vegas has a growing startup scene, with a focus on hospitality and entertainment technology. Notable startups from Las Vegas include Influential, an AI social data and conversion technology, and EXO Freight, a company applying technology to the open deck transportation industry. The city is home to venture capital firms like VegasTechFund and Stage Venture Partners.

Cambridge

Cambridge is home to one of the most prestigious universities in the world, Harvard University, and is a hub for biotechnology and pharmaceutical startups. Notable startups from Cambridge include Quick Base, an app-building platform that allows teams to automate processes regardless of previous coding knowledge, and Intrepid Pursuits, a digital product development company. The city is home to venture capital firms like Atlas Venture and Flagship Pioneering.

Detroit

Detroit has undergone a revitalization in recent years, with a growing startup scene in the automotive and mobility industries. Notable startups from Detroit include StockX, an online marketplace for luxury goods, and May Mobility, a company that provides autonomous shuttle services. The city is home to venture capital firms like Fontinalis Partners and Renaissance Venture Capital.

Boulder

Boulder is a thriving startup hub, with a focus on technology and sustainability. Notable startups in the area include Techstars, a startup accelerator that has helped launch companies like SendGrid and ClassPass; and Ramen, a product success platform for software teams. Major venture capital firms in Boulder include Foundry Group and Techstars Ventures.

Scottsdale

Scottsdale is also emerging as a startup destination, particularly in the fields of health and wellness, software, and e-commerce. Notable startups in the area include Parchment, an online credentialing platform; and WebPT, a software company that provides electronic medical record systems for physical therapists. Major venture capital firms in Scottsdale include Canal Partners and Grayhawk Capital.

Fort Lauderdale

Fort Lauderdale is quickly becoming a hub for technology startups, with a focus on industries such as healthcare, finance, and transportation. Successful startups in the area include CarePredict, a company that uses artificial intelligence to predict changes in seniors’ health; and JetSmarter, a private jet booking app. Major venture capital firms in Fort Lauderdale include Las Olas Venture Capital and Medina Capital.

Follow human capital movement

Over the last three years, the startup ecosystem in the United States has undergone a dramatic transformation. Once concentrated primarily in Silicon Valley, entrepreneurship has since spread to established cities like New York and Boston, as well as emerging hubs like Austin and Denver. Understanding the evolution of these ecosystems, as well as the movement of human capital between them, is critical for investors and entrepreneurs alike.

This shift has also led to a greater emphasis on the importance of human capital. While access to financial capital is still important, it is increasingly recognized that the most successful startups are those built by great founding teams and top talent. This talent can come from a variety of backgrounds, from technical and engineering to marketing and sales.

Understanding the movement of this human capital is critical for investors looking to place bets on the next generation of startups. For example, if there is a wave of engineers leaving Silicon Valley for emerging hubs like Austin or Denver, it may be a sign that these cities are poised for growth. Alternatively, if a city like New York is experiencing an influx of marketing and sales talent, it may indicate that the startups and companies in the city are hitting the gas on GTM motions.

Investors can also benefit from understanding the unique strengths and challenges of each ecosystem. For example, while Silicon Valley may still be the dominant player in terms of access to capital and top technical talent, it is also known for being incredibly competitive and expensive. Conversely, emerging hubs like Austin and Denver may offer a lower cost of living and more supportive communities, but may have fewer resources and a less established network of investors and mentors.

Ultimately, the key to success in the evolving startup ecosystem is understanding the value of human capital and being able to tap into networks across different cities and regions. Which cities will continue to be hotbeds for new founders and where should investors pay the most attention to to identify the most promising startups?

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