Venture capital represents an important source of funding for start-up companies and firms seeking to commercialize emerging technology. It supports the growth and expansion of these companies early in their development, before they would otherwise qualify for other types of financing.

This indicator represents the relative magnitude of venture capital investments in a state after adjusting for the size of the state’s economy. The indicator is expressed as dollars of venture capital disbursed per $1,000,000 of gross domestic product. High values indicate that companies in those states are successfully attracting venture capital to fuel their growth. Access to venture capital financing varies greatly across the nation, and venture capital investment is concentrated in relatively few states, with California and Massachusetts accounting for around half of the total in recent years. Some states have relatively little venture capital investment taking place in a given year; thus, the value of this indicator may show large fluctuations on a year-to-year basis.

Venture capital data include financing at seed, early, and later stages of venture investment. Seed financing supports proof-of-concept development and initial product development and marketing. Early stage financing supports product development and marketing, the initiation of commercial manufacturing, and sales; it also supports company expansion and provides financing to prepare for an initial public offering. Later-stage financing includes acquisition financing and management and leveraged buyouts.

Data sources: PitchBook, venture capital and private equity database; Bureau of Economic Analysis, gross domestic product data; Government of Puerto Rico, Office of the Governor, gross domestic product data.