New Research Quantifies the Breadth, Growth, and Resilience of Jobs at VC-backed Companies

From coast to coast, the venture capital industry is fueling resilient American jobs, and we have new data to prove it. NVCA, Venture Forward, and the UNC Kenan-Flagler Institute of Private Enterprise embarked on a first-of-its-kind study to explore the employment dynamics of workers at VC-backed companies in the U.S. Using a list of over 67,000 companies that received venture financing as early as 1970 and administrative data on employment for U.S. establishments dating from 1990 to 2020, we successfully mapped the location of workers at VC-backed companies in 2020 by both state and congressional district. Our results, as detailed in this newly released report, were striking.

First, we found that workers at companies that received venture financing are distributed broadly across the U.S. Despite 73% of VC investment dollars going to California, Massachusetts, and New York in 2021, our analysis shows that 62.5% of employees at the companies in our national data set were located outside of those three states. The distribution of VC-backed jobs is geographically dispersed with workers at VC-backed companies located in all 50 states and all 435 congressional districts (as well as Washington, D.C. and Puerto Rico). These results add grist to the sentiment that venture capital is spreading through the country and benefiting labor markets and local economies that span the whole country.

The dynamics of these jobs at VC-backed companies over time were also eye-opening. We found that employment at VC-backed companies grows faster than employment at non-VC-backed companies. What we did not expect was how much faster employment at VC-backed companies grows. The annualized growth rate of employment at VC-backed companies in our dataset between 1990 and 2020 is 8.2%. In comparison, the growth rate of total private sector employment (as provided by the Bureau of Labor Statistics) between January 1990 and February 2020 is just 1.1%. This means that employment at our set of VC-backed companies grew at roughly eight times the pace of employment at non-VC-backed companies.

Finally, we were struck by the resilience of job growth at VC-backed companies and noted that growth rates of employment at VC-backed companies were strong and positive regardless of the stage of the business cycle. To provide one example of this resilience, consider employment dynamics following the most recent financial crisis of 2007-2008. Following the financial crisis and during the Great Recession, annual job growth at our set of VC-backed companies exceeded 4% for every year between 2009 and 2018. In contrast, total private sector employment shrank by 4.3% in 2009, contributing to a decrease of 7.4 million private sector jobs during the recession.

We believe the findings in our report concerning the breadth, growth, and resilience of VC-backed jobs provide motivation for further exploration of this subject, and hope that others will build on our research. In addition, we hope that our findings indicating that VC investment serves as a catalyst for job creation not merely in a select few metropolitan hubs will promote policies that encourage more VC activity in the U.S., helping to fuel broad-based prosperity across the entire nation.