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Upon further review: Adding a Combined Statistical Area population lens to the VC investment analysis by Rise of the Rest

Yesterday, I shared a recent report by Rise of the Rest which illustrated the number of VC dollars from the Bay Area and New York City that were being invested elsewhere in the country. Portland did okay in the rankings. But something was gnawing at me. Like I needed some additional context. And suddenly it dawned on me this morning that that additional context might be the populations of the metropolitan areas that were highlighted — and what the per capita venture capital investments were.

Why? As has been highlighted any number of times, the strength of a startup community can be based on a number of factors, but one of the critical factors is the density of the startup population as a subset of the overall population. That is, if a town or region — take Boulder, Colorado, for instance — has an entrepreneurial density that eclipses other towns, then it stands to reason that there is a strong community and connection to startups in the town. And because of that, startups in Boulder should stand a greater chance of succeeding.

Granted, this density doesn’t guarantee success. But it is one of many factors that can make founders feel more supported as they pursue their startup ideas.

So, with that in mind, I spent some time this morning extracting some of the datasets from the Rise of the Rest report and then added the Combined Statistical Area (CSA) for each of the metro areas ranked. My reasoning being that if areas were capable of raising more VC dollars per capita, then that might be some kind of indicator of startup community density. Or, it might point to some interesting products and trends that are unique to a region. Or something else. I wasn’t quite sure. I just thought I might get something interesting out of it.

Okay. Let’s be honest. I was hoping to see if Portland ranked higher with the per capita lens. Spoiler alert: It doesn’t. Portland still ranks about the same even with VC dollars per capita.

Furthermore, I wanted to validate or negate an offhanded assumption I made. This data proves that that assumption was incorrect. So consider the following passage negated.

It is interesting to note, however, that Portland ranks 25th in the US in terms of population. So we’re seeing a higher per capita investment rate in startups than some of the other cities on the list that boast far larger populations. Like Austin, Chicago, Denver, LA, and Phoenix.

Portland ranks 16th in terms of CSAs. And, as the spreadsheet shows, the per capita dollars still had some much larger CSAs pulling in more dollars per capita than we do. And a number of smaller ones, too. Because according to a number of different CSA counts I came across, the Austin, Texas, CSA is about one million folks less than Portland.

And what about Reno, Nevada? Reno didn’t even report any New York dollars, they’re 34th in the CSA rankings, and they’re still ranking higher on the per capita dollars than Portland. In fact, the Reno VC dollars per capita are almost double the Portland dollars per capita.

That’s something worth digging into to be sure.

In closing, I do realize that VC dollars are far from the best indicator of the strength of entrepreneurial ecosystems, startup communities, or viable businesses. But they are a metric. And so it seems wise to pay attention to the data or ignore it at our own peril. Since it happens to be data that we can actually track.

To do some of your own analysis or to poke more holes in some of the stupid assumptions I make — or to highlight any errors I’ve made in the numbers at 5:00AM — feel free to make a copy of the spreadsheet below.