The United States hosts various leading global innovation ecosystems including Silicon Valley, New York, Houston and Boston, as well as Seattle, Austin and Los Angeles. The country ranked third after Switzerland and Sweden in the Global Innovation Index compiled by Cornell University’s SC Johnson College of Business, Insead and the World Intellectual Property Organisation.
The US has some of the world’s most valuable brands, such as e-commerce group Amazon, internet technology provider Google, electronics producer Apple, software supplier Microsoft, social media platform Facebook, big-box retailer Walmart, wireless network operator Verizon and telecoms firm AT&T.
Many of these corporations have attempted corporate venturing, either through direct investments or fund-of-funds strategy. Amazon operates the Alexa Fund while Google’s parent firm Alphabet has various vehicles: Gradient Ventures, GV and CapitalG.
Facebook began investing in emerging technology developers through its New Product Experimentation subsidiary. Walmart invests directly and runs Store No 8 incubator while Disney owns Disney Accelerator in addition to participating in funding rounds directly. Verizon Ventures represents Verizon in the innovation ecosystem, and AT&T and The Home Depot conduct corporate venturing without dedicated vehicles.
Only about a sixth of 1% of new businesses raise venture capital funding in the US, according to Steven Kaplan, a research associate at University of Chicago, and Josh Lerner, director of the productivity, innovation and entrepreneurship programme and a research associate at Harvard University. However, its impact is considerably greater – roughly 60% of the US-based companies that listed publicly in the last two decades had VC backing, according to University of Florida’s Warrington College of Business finance professor Jay Ritter’s IPO Database.
California, New York and Massachusetts spearhead the country in corporate investment involvement in terms of deal count and deal value. Texas, despite the considerable number of corporate venture capital (CVC) transactions, represents the lower end of activity with fewer disclosed dollars invested in the ecosystem.
Alphabet’s GV unit leads the US and is joined by CVC investors including Intel Capital, Comcast Ventures, Qualcomm Ventures, Alexandria Venture Investments, Samsung Venture Investment, GE Ventures, Vulcan Capital and Cisco Investments, which invest on behalf of chipmaker Intel, mass media group Comcast, mobile semiconductor producer Qualcomm, life sciences real estate investment trust Alexandria Real Estate Equities, electronics manufacturer Samsung, industrial and power technology producer General Electric, conglomerate Vulcan and networking technology provider Cisco, respectively.
California
Silicon Valley is the mecca of the tech industry, with research universities such as Stanford University and University of California, Berkeley and abundant VC, helping the state produce successful high-tech entrepreneurs.
Los Angeles is also a notable ecosystem. The latter’s labour costs are much lower than those of the Bay Area, and its augmented and virtual reality-enhanced digital media business is thriving owing to the film industry behind companies such as Disney and Warner Bros.
Similar to the national level, GV, Intel Capital, Qualcomm Ventures, Comcast Ventures, Samsung Venture Investment and Cisco Investments take the lead in California, and they are joined by computing equipment provider Dell’s Dell Technologies Capital unit, GE Ventures, software provider Microsoft’s M12 subsidiary and workplace collaboration platform Slack’s Slack Fund.
New York and New Jersey
Active CVCs in New York include GV, Comcast Ventures, telecoms and internet group SoftBank’s SoftBank Capital unit, Intel Capital, media group Bertelsmann’s Digital Media Investments vehicle, cryptocurrency holding company Digital Currency Group, Alexandria Venture Investments, advertising holding company MDC Partners’ MDC Ventures unit, payment services firm American Express’s American Express Ventures subsidiary and SoftBank Group.
New York – especially New York City – is dominated by “hyphen tech”, namely fintech, martech, fashiontech and mediatech, among others. NYC’s massive and diverse consumer market is also ideal for test marketing of new products and services – many startups originating from the west coast set up their sales bases there for this reason.
Nearby New Jersey, which forms part of the New York metropolitan area, hosts wide-ranging CVC groups including pharmaceutical group Astellas Pharma’s Astellas Venture Management unit, oil and gas group BP’s BP Ventures vehicle, chemicals producer BASF’s BASF Venture Capital subsidiary, healthcare consortium Kaiser Permanente’s Kaiser Permanente Ventures fund and ServiceNow Ventures, part of enterprise software producer ServiceNow.
Networking technology producer Juniper Networks, GV and pharmaceutical firm Celgene and corporate joint venture Rafael Development Corporation follow these groups, and they are joined by other ecosystem players including Consensys Mesh, a VC firm spun out of blockchain software provider ConsenSys’s Consensys Ventures unit; Evonik Venture Capital, the corporate venturing arm of speciality chemicals provider Evonik Industries; and IT services firm Wipro, which also invests through its Wipro Ventures arm.
Massachusetts
Massachusetts, and especially its capital city of Boston and its surrounding area, is home to many research and development (R&D)-heavy startups, covering areas such as life sciences, biotechnology, pharmaceutical and medical companies, thanks to Massachusetts Institute of Technology (MIT), Harvard University, Lesley University and Hult International Business School in Cambridge. Cambridge’s Kendall Square has an active tech scene that was dubbed “the most innovative square mile on the planet” by MIT.
Startups based in greater Boston concentrate their efforts on artificial intelligence, big data and robotics technologies that can be applied in the pharmaceutical and healthcare industries. GV, which has an interest in life sciences, leads the region and is joined by the similarly focused Alexandria Venture Investments, as well as SR One, the VC firm spun off by pharma firm GlaxoSmithKline.
Other pharmaceutical groups such as Novartis, Pfizer, Sanofi and Johnson & Johnson and their specialised CVC units Novartis Venture Fund, Pfizer Ventures, Sanofi Ventures and Johnson & Johnson Innovation – JJDC are among the most prolific corporate investors in the state, as are hospital operator Brigham and Women’s Hospital’s Mass General Brigham Innovation as well as Intel Capital, Astellas Venture Management, Celgene and GE Ventures.
Texas
In the south, Austin, Houston and Dallas form part of the Texas Triangle that count university partnerships, energy and healthcare as their forte. University of Texas at Austin’s IC² Institute, dubbed the institution’s “think-and-do tank”, has built a cleantech and cybersecurity ecosystem.
In addition, University of Texas at Dallas helps entrepreneurs grow with its Institute for Innovation and Entrepreneurship, while public-private partnership Dallas Innovation Alliance is helping execute a smart city strategy using AI.
Houston has a robust energy industry, with oil and gas majors playing a significant role in the venture scene. Chevron Technology Ventures, Equinor Ventures, Shell Ventures, Saudi Aramco Energy Ventures, Total Carbon Neutrality Ventures and ConocoPhillips Technology Ventures are examples of such CVC outfits.
Intel Capital and Qualcomm Ventures and another semiconductor technology producer Applied Materials’ Applied Ventures unit are among the most productive players in the state, alongside M12, GE Ventures, financial services and investment firm Citigroup’s Citi Ventures vehicle, industrial equipment manufacturer Holt Cat’s Holt Ventures subsidiary, pharmaceutical group Merck’s Global Health Innovation Fund and Northwestern Mutual Future Ventures, part of financial services group Northwestern Mutual.
Houston’s Texas Medical Center is situated next to Rice University and has the largest medical complex in the world with more than 60 medical institutions under the nonprofit Texas Medical Center Corporation that include hospitals, universities and other academic and research institutions. National Aeronautics and Space Administration’s Johnson Space Center is located in Houston and helps foster an aerospace ecosystem.
