Visualizing the Venture Capital Market

Posted on Mar 5, 2016

Contributed by Adam Owen. Adam is currently in the NYC Data Science Academy 12 week full time Data Science Bootcamp program taking place between January 11th to April 1st, 2016. This post is based on his first class project - R visualization (due on the 2th week of the program).

The venture capital market and it's players--from Sequoia Capital to Facebook to Elon Musk--contribute significantly to technological innovation, economic growth, and American pop culture. Previous generations witnessed technology harnessed by NASA, NSA, and DOD largely because the US government's ability to write big checks. Today, capital raising has never been easier and barriers to entry have never been lower, and talented engineers are abundant.  This analysis takes flies a Cessna high and low over the three major components--Startups, Venture Capitalist and Engineers.

STARTUPS

The startup landscape for the past several years has been healthy even during the financial crisis.  Not surprisingly, there was a huge dip in fundings and new startups during but the industry was largely resilient compared and has exploded in recent years with a fresh wave of prominent startups.  The graph below created using ggplot in R displays the recent explosion of software startups based on estimated valuations. startup by industry

The most striking trend is the explosion of the Software industry in the last several years.  Apps and data analytics startups have exploded while clean energy startups have plummeted. That trend has continued to today.  A recent study by the National Venture Capital Association estimated that 40% of venture capital went to software startups and 50% of exits were software startups. That comparison is volume vs. count but it still shows the value and permanence of software startups.

VENTURE CAPITALISTS
Untitled"We're Venture Capitalists from Vermont"

The most VC activity I've seen out of Vermont are two actors playing like they're venture capitalists from Vermont.  It should come as no surprise that California rules the VC market both in terms of funding size and transactions.  The map below displays the amount of capital committed by state.

VC Capital Commitments 2006-2014 ($millions)

Screen Shot 2016-04-14 at 2.14.26 PM

Unfortunately, WordPress doesn't like googleVis.  Click here to access the interactive map.

Unlike the capital, VC funds are slightly more spreadout for NY, MA, TX, IL and CT.  Many VC firms like to be near the startups and others tend to stay near the financial professionals and capital.  NY has roughly the same amount of capital committed as does CA firms, for example.

VC Funds

Again, click here to view the interactive tree graph and drill down to the VCs in each state. (Right-Click to move back up the tree map)

The types of rounds that VCs commit dollars too has fluctuated quite a bit over the years. The 2009 crash squeezed everyone and the market has rebounded very well.  In 2012 we see a very interesting spike in debt financings.  Most likely, VCs and banks have abundant cheap capital to commit and startups are rushing to IPO knowing that the increased stress and scrutiny is not worth the capital especially with abundant private money available.  Startups today are waiting longer to IPO unless they absolutely have to and instead are filling out the capital structure with debt trances.

Top VC Funding Types ($millions)

Startup capital by size

ENGINEERS

The lifeblood of most startups is a strong engineering corp.  While money is highly important, without a strong engineering team that money will go to waste.  A brief overview average engineering salaries according to the US Department of Labor showed DC taking the top spot and New York all the way down to 13th, despite NYC having a high cost of living.  NYC may be an excellent location to access engineers at a lower rate than California.


engineers

Click here to view the interactive map

CONCLUSION

Our high level flyby of the VC industry told a couple of interesting points.  Software startups are still booming while the clean energy push prior to the Financial Crisis has fizzled out.  VCs are largely dispersed among startup centers and financial centers in the US while the capital is completely dominated by California companies.  Engineers, the lifeblood of many tech startup, are expensive no matter where you go but you may be able to find a bargain in NY.

If you're an exciting entrepreneur and curious about where to start your shop then NY is a top choice to consider given it's access to cheaper engineers and abundant capital.  If you're a VC, then NY and CA are still top investments.  If you're a talented engineer, I suggest moving out of NY:)

DATA & ANALYTICS

The data was sourced from Quandl, Crunchbase via Enigma, and US Department of Labor.  All the analysis was done in R and the script can be found on github here.  There are a few other basic charts I included from that script that are not included in this blog post.  All the graphics were done in ggplot and goolgeVis with supporting packages to handle data manipulation.

Please check out my other posts below!

About Author

Adam Owens

Adam is a data strategy consultant that spent a number of years in big tech companies, startups, and investment banking. He particularly enjoys working with product managers and entrepreneurs to guide competitive product dynamics and value economics for...
View all posts by Adam Owens >

Related Articles

Leave a Comment

No comments found.

View Posts by Categories


Our Recent Popular Posts


View Posts by Tags

#python #trainwithnycdsa 2019 2020 Revenue 3-points agriculture air quality airbnb airline alcohol Alex Baransky algorithm alumni Alumni Interview Alumni Reviews Alumni Spotlight alumni story Alumnus ames dataset ames housing dataset apartment rent API Application artist aws bank loans beautiful soup Best Bootcamp Best Data Science 2019 Best Data Science Bootcamp Best Data Science Bootcamp 2020 Best Ranked Big Data Book Launch Book-Signing bootcamp Bootcamp Alumni Bootcamp Prep boston safety Bundles cake recipe California Cancer Research capstone car price Career Career Day citibike classic cars classpass clustering Coding Course Demo Course Report covid 19 credit credit card crime frequency crops D3.js data data analysis Data Analyst data analytics data for tripadvisor reviews data science Data Science Academy Data Science Bootcamp Data science jobs Data Science Reviews Data Scientist Data Scientist Jobs data visualization database Deep Learning Demo Day Discount disney dplyr drug data e-commerce economy employee employee burnout employer networking environment feature engineering Finance Financial Data Science fitness studio Flask flight delay gbm Get Hired ggplot2 googleVis H20 Hadoop hallmark holiday movie happiness healthcare frauds higgs boson Hiring hiring partner events Hiring Partners hotels housing housing data housing predictions housing price hy-vee Income Industry Experts Injuries Instructor Blog Instructor Interview insurance italki Job Job Placement Jobs Jon Krohn JP Morgan Chase Kaggle Kickstarter las vegas airport lasso regression Lead Data Scienctist Lead Data Scientist leaflet league linear regression Logistic Regression machine learning Maps market matplotlib Medical Research Meet the team meetup methal health miami beach movie music Napoli NBA netflix Networking neural network Neural networks New Courses NHL nlp NYC NYC Data Science nyc data science academy NYC Open Data nyc property NYCDSA NYCDSA Alumni Online Online Bootcamp Online Training Open Data painter pandas Part-time performance phoenix pollutants Portfolio Development precision measurement prediction Prework Programming public safety PwC python Python Data Analysis python machine learning python scrapy python web scraping python webscraping Python Workshop R R Data Analysis R language R Programming R Shiny r studio R Visualization R Workshop R-bloggers random forest Ranking recommendation recommendation system regression Remote remote data science bootcamp Scrapy scrapy visualization seaborn seafood type Selenium sentiment analysis sentiment classification Shiny Shiny Dashboard Spark Special Special Summer Sports statistics streaming Student Interview Student Showcase SVM Switchup Tableau teachers team team performance TensorFlow Testimonial tf-idf Top Data Science Bootcamp Top manufacturing companies Transfers tweets twitter videos visualization wallstreet wallstreetbets web scraping Weekend Course What to expect whiskey whiskeyadvocate wildfire word cloud word2vec XGBoost yelp youtube trending ZORI