Angelist analyzed IRR for around 2,500 deals in 2013
Tech innovation is becoming More widely distributed throughout the United States.
Of the five startups launched in 2020, which raised the most funding, four were located outside the Bay Area. Key patriarchs such as Keith Rabois of Founder Fund, David Blumberg of Blumberg Capital and Joe Lonsdale of 8VC have moved out of the Bay Area into the newly emerging tech hub that AngelList defines as Austin, Texas; Seattle; Denver; Portland, Oregon; Brooklyn, New York; Nashville, Tennessee; Pittsburgh; And Miami.
The number of syndicated deals on Angelist in emerging markets has increased 144% over the last five years.
According to Angelist data, the number of startups in these emerging markets is growing rapidly, and is increasingly getting a bigger slice of the VC pie.
AngelList has compared the performance of startups by the Internal Rate of Startups (IRR) in Silicon Valley for emerging tech hubs, which measure the rate of growth of these investments. Angelist defines “Silicon Valley” as San Francisco, Palo Alto, Mountain View, Oakland, San Mateo, Berkeley, Redwood City, Menlo Park, San Jose, Santa Clara, Sunnyvale, Burling, and San Carlos.
According to Angelist data, startups in emerging tech hubs have an overall IRR of 19.4% per year on syndicated deals on AngelList. Syndicated deals on Angelist in Silicon Valley have a total IRR of 17.5% per year.
The total value of paid-in (TVPI), which is many net returns of fees, is also slightly higher for angelist deals in emerging tech hubs (1.67x) than in Silicon Valley (1.60x). This means that for every $ 1 invested in a startup based on an emerging tech hub, the investor’s portfolio is now valued at $ 1.67, compared to $ 1.60 for a Silicon Valley startup.
The data is based on AngelList, a sample of approximately 2,500 syndicated deals in 2013, with current returns as of January 1, 2021.
The investors we spoke with offer a number of reasons for the rise of these emerging tech hubs, including cheaper taxes outside the Bay Area, lower cost of living, and wider distribution of talent brought on by the COVID-19 epidemic is.