New city toppling SF for startup investing dominance?

• 🏌️‍♂️ Hit the Links: The top links from the world of startup investing

• 🌎 VC Capital of the World: Has SF fallen as the top VC hub?

• 💅 Clockwork Poll Results: Reader reaction to my latest investment

HIT THE LINKS

We’ve got some quick hits for you lined up on the fairway:

🔻 Anti-trust rules might be tightening, which could limit M&A deals (link)

🧑‍🤝‍🧑 Starting in 2025, VC firms in California will need to report diversity statistics of the founders they invest in, including their sexual orientation (link)

💰 Issuance CEO breaks down the average crowdfunding investment check size by payment method. Let’s just say those wire payments are BIG (link)

💸 CIBC Innovation Banking leads an investment round in equity crowdfunding platform DealMaker to fuel growth (link)

🤝 A VC firm just acquired Sowefund, a French equity crowdfunding platform that boasts 110,000 retail investors. We sometimes see VC + crowdfunding at odds with one another, so this is an interesting pairing. (link)

VC CAPITAL OF THE WORLD

Pitchbook dropped a report ranking VC ecosystems around the world

To rank each city, Pitchbook tabulated two main scores across a 6-year period, Growth & Development.

• Growth scores consisted of trending figures for number of deals, average deal value, exits, and number of active funds.

• Development included some of the above metrics and additionally included stats on mega-exits, unicorns, first fundings, late-stage to early-stage ratios, and more.

Development Leaders

To no surprise, San Francisco emerged as the most developed VC ecosystem with a weighted score of 89.4. New York was a distant second, bringing in a score of 75.8.

Rounding out the top 5, we have Beijing, Shanghai, and Los Angeles.

Europe is shockingly under-represented on the list, with London being the only European city to crack the top 10. The gravity center of the VC ecosystems lies in the US and Asia where 85% of the 20 most developed VC ecosystems reside.

Growth Leaders

Turning our eyes to Growth, Dubai ranked top of the list with a score of 72.8. Detroit barely fell to second place with a score of 72.5.

While Dubai is an obvious contender, Detroit has flown under the radar and surprised me. After the auto industry fell into a recession, Detroit was written off the map as having any tech/financial relevance.

The unemployment rate in Detroit skyrocketed to 25% at one point in 2010. That same year, Dan Gilbert moved the headquarters of Quicken Loans (now Rocket Companies) to downtown Detroit and founded Detroit Venture Partners.

His VC firm invested in over 90 startups and served as a major catalyst for changing the tides in Detroit. Detroit is on the upswing and has recently produced several valuable startups like StockX, Benzinga, and Duo.

Rounding out the top 5 growth metros are Berlin, Raleigh, and Houston.

The gravity center for growth appears to be the US and Europe, which represent 65% of the top 20 metros.

Combined Score

The above chart plots both Growth & Development - here we can see that SF sits in a world of its own. But NYC should not be underestimated - its growth score over the past 6 years is 2.37x higher than that of SF. Combining the scores, SF and NYC are incredibly close, and NYC has momentum on its side.

Interestingly, equity crowdfunding is flourishing in the US, despite there being a robust VC ecosystem in many US cities.

It makes sense that startups flock to areas of high VC investment - so equity crowdfunding players may just be mowing where the grass grows.

CLOCKWORK POLL RESULTS

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CLOCKWORK POLL RESULTS

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I invested in Clockwork at a $37.5M valuation, did readers agree?

Last week I wrote about Clockwork, a startup that’s designed a nail-painting robot. Readers were split, with 53.6% saying they would not invest in Clockwork.

🟨🟨🟨🟨🟨⬜️ Yes (46.4%)

🟩🟩🟩🟩🟩🟩 No (53.6%)

Since ‘No’ won out, here is some of the Opposition Feedback:

“$15 for a half-assed job? Take a poll of women who have their nails done and see what they say. ”

“Interesting concept. It’s capital intensive and will take lots of marketing spend to get customers to buy their machines at the current price. Trying to think who would potentially acquire them for an exit and it may be a challenge at this valuation for a nice multiple on exit. If they do make it to $100M+ revenue a year and position themselves for IPO I’ll consider paying a premium at that point with liquidity. Scaling May be more of a challenge for a new concept to gain wide adoption. Could burn cash faster than anticipated would could cause operational challenges. $10-15M post money valuation more realistic at this stage ”