Venture capital investment drives both innovation and high-tech companies, but it remains exclusive to just a handful of regions in the United States.

This report uses detailed data from Thomson Reuters to examine the geography of venture capital investment in the United States.

Its main findings are as follows.

• The top 50 metros account for 97 percent of all venture capital investment; the top 20 account for nearly 90 percent and the top 10 account more than three-quarters of all venture capital investment nationwide.
• The San Francisco Bay Area is the leading center for venture capital with $13.5 billion in investment, more than a third of all venture capital investment in the United States.
• San Francisco tops Silicon Valley with $8.5 billion in investment, 25 percent of the national total. In comparison, San Jose attracted $4.9 billion, roughly 15 percent.
• Venture capital investment is concentrated in three broad clusters which account for more than 80 percent of all investment: the San Francisco Bay Area, which spans San Francisco, San Jose, and several smaller metros; the Boston-New York-Washington, D.C. Corridor; and Southern California, spanning Los Angeles, San Diego, Santa Barbara, and Orange County.
• Venture capital investment is even more concentrated across neighborhoods or zip codes. The top 50 zip codes account for nearly half of all venture capital investment; the top 20 just under a third, and just the top ten over a fifth of all nationwide venture capital investment. Less than 4 percent of all zip codes receive venture capital investment.
• Venture capital investment flows not just to metros with more high-tech industry, science and tech workers, and higher rates of innovation; it is also associated with metros that are larger, denser, more affluent, more open and diverse, and with greater concentrations of talent.
• Venture capital investment is also associated with higher housing prices, greater levels of wage inequality, and economic segregation, which itself is associated with larger, more affluent, knowledge-based metros, but not with greater levels of income inequality.

The geography of venture capital investment is both a product and a reflection of the increasingly spiky nature of America’s knowledge-based, innovation-driven, and talent-oriented economic landscape.

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Exhibit 2: Top 20 Metros for Venture Capital Investment in the United States