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Rise of the Startup City: The Changing Geography of the Venture Capital Financed Innovation

Author

Listed:
  • Florida, Richard

    (University of Toronto’s Rotman School of Management and Global Research Professor at NYU)

  • Mellander , Charlotta

    () (Prosperity Institute of Scandinavia, Jönköping International Business School (JIBS), & Centre of Excellence for Science and Innovation Studies (CESIS), Sweden.)

Abstract

The prevailing geographic model for high-technology industrial organization has been the “nerdistan,” a sprawling, car-oriented suburb organized around office parks, of which Silicon Valley is the prototypical example. This seems to contradict a basic insight of urban theory, which associates dense urban centers with higher levels of innovation, entrepreneurship and creativity. Our research examines the geography of recent venture capital finance startups in the United States across metros and within a subset of them by neighborhood and finds compelling evidence that the model is changing. Venture capital investments are clustering in larger, denser urban centers with high levels of human capital, like San Francisco and Lower Manhattan, as well as in walkable suburbs. We suggest that the suburban model might have been an historical aberration, and that innovation, creativity, and entrepreneurship are realigning in the same urban centers that traditionally fostered them.

Suggested Citation

  • Florida, Richard & Mellander , Charlotta, 2014. "Rise of the Startup City: The Changing Geography of the Venture Capital Financed Innovation," Working Paper Series in Economics and Institutions of Innovation 377, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  • Handle: RePEc:hhs:cesisp:0377
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    1. repec:eee:bushor:v:60:y:2017:i:6:p:843-853 is not listed on IDEAS

    More about this item

    Keywords

    Venture capital; investments; start-ups; cities; suburbs;

    JEL classification:

    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General

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