Startup funding is slowing in San Francisco

This is non-sensical: "The biggest winners, by contrast, are much smaller, less coastal, and low-cost cities just starting to incubate their own ecosystem"

Since when was Boston, which experienced a 45% increase in VC investment and which still ranks #2 in total Venture investment a NON-Coastal, low-cost city? And the top growth location is San Diego (coastal, high cost). I think the key is to look at which sectors are experiencing growth and shrinkage in VC investment and see how that correlates to the locations in which those investments are happening.

BTW, Austin - it's not doing well.

Isn't it just a maturation of the process? First we throw everything at a dart board, then we take notes on what sticks, and finally we repeat the steps that made them stick as best we can while wasting fewer darts.

Many of us here are founders and we'd love it if funding was effortless, but at the same time we can't allow hubris or denial to turn us into doomsayers. Things don't last forever.

Here is a theory, Software as a Culture and Info vehicle is pretty much mature, the social, the news, etc. An average 20 year old is not well equipped with deep domain knowledge, a good example is flexport, I do not know much about founders but its a business, you need to have a deeper understanding where a 30+ would usually have. So, you will see start-up coming from much older people at the helm and not the younger people. May be this is my bias, but Software fed a cultural need, a communication and information need, we are moving into different realms. Realms which are distributed across the country and world and over all need DEPTH(in Domain) rather than horizontal trends.

Here's the problem: most VC firms understand that 9/10 investments will fizzle out or make modest returns. 1/10 is the unicorn, the 100x. Everything depends on finding the unicorn and growing it like a weed, so every investment has to be treated like a unicorn - grow fast grow large NOW NOW NOW - whether it's actually beneficial for the company or not.

There's so much money sloshing around in the valley that when stupid apps that make no money like Yo or Yik Yak get enough attention, there is inevitably ONE investor who will think "what the hell, if I throw in 10k it could end up becoming the next Instagram or snapchat." As long as people keep joining, more investors will pile in, then the VCs, then Titans like Google will hopefully have their eyes on a shiny new acquisition.

The focus on huge fast returns when they seem to be happening all around you inevitably crowds out investments in companies that can create modest growth from real profit, and it makes investing in "slow" companies downright unfashionable.

To inverse the old Wall Street expression: "Nobody ever got rich from buying Big Blue."

Surprise for me at the end of the article; I went to college with the Chicago guy who sold his startup to IBM. I should be happy for the guy but all I can muster is feeling intensely bad about my own startup failures.

Oddly, it felt good to confess that to strangers on HackerNews. Thanks for reading

Remember Yo[0]? Maybe it's just stuff like that not getting funded anymore.

[0] http://techcrunch.com/2014/07/18/yo-raises-1-5m-in-funding-a...

I've seen Detroit mentioned as a potential tech city due to low costs, was not expecting to see that much funding there already. What companies/categories is that $66m going into?

"To be sure, the numbers outside the Bay Area are still relatively small. More capital was invested in Bay Area startups in the first three months of the year—$1.7 billion—than Boston and New York combined."

Have we seen anything to confirm that this statistic will change in the next 5-10 years? Boom and busts are quite normal but maybe the real-estate market will make this slowdown permanent? Is that with precedent?

How come Raleigh never appears in these lists? Does it just not have much of a startup scene, despite being a tech hub with software company presence?

What about the number of startups asking for money vs the number of startups that received funding. I don't think you can compare dollar amounts here making the assumption that there are a constant or growing number of companies requesting money.

Denver has not felt like it has slowed down at all, though it has seen a -45% drop. I guess these numbers are somewhat divorced from the 'feeling' of an area then. It'll be interesting to watch.

I had no idea that the Seattle VC market was that much smaller than San Francisco's (less than 10% the size), and I never would have guessed that San Diego's is nearly 70% larger.

For markets with <200m of funding, a few big rounds could skew the entire market as being way up or down.

I will be interested to see a study one day that shows the exact moment silicon valley investors decided enough was enough, and stopped investing in ventures that failed to generate returns.