Non-Coastal Startups are Leaner and Offer Better Returns than Coastal Counterparts
At Connetic Ventures, we have always focused on investing in founders from overlooked regions that do not have a surplus of local capital. We call these regions several things… like overlooked regions, middle America, flyover country, non tech hubs, non-coastal, heartland, and many more. Regardless of what phrase we choose at the time starts, Connetic is generally talking about startups that AREN’T located in the major VC hubs of San Francisco, New York, and Boston.
For the purposes of this article, we are going to refer to these startups as non-coastal. Even though some of them are coastal (DC, Seattle, Miami, and many others).
Historically, we chose to invest in startups located outside of those regions primarily because there is much more of a need for capital and non-coastal deals were easier to participate in. Over time we have noticed trends (qualitatively) and wanted to do some quantitative research to see how non-coastal startups were different from their coastal counterparts.
To do this, we leveraged a variety of data sources including Crunchbase, Tracxn, Pitchbook, and our own internal data. The source we used for 80% of the data was Crunchbase and we looked across 20,000+ startups that had raised at least $1M over the last 10 years. This was our threshold for a VC-backed company.
