Virginia ranks No. 8 in U.S. for VC investment

Virginia was ranked No. 8 in the nation for venture capital investment in 2023, marking the state’s highest rating so far and its first time back in the top 10 in the past 15 years, according to an announcement Thursday by Virginia Innovation Partnership Corp. (VIPC).

Earlier this month, VIPC hosted an event at Amazon.com’s HQ2 in Arlington County that included National Venture Capital Association President and CEO Bobby Franklin, and state and local officials. The NVCA releases an annual report listing how much venture capital funding businesses in all 50 states and the District of Columbia receive annually.

According to VIPC’s calculations based on NVCA’s data, Virginia recorded $2.484 billion in venture capital deal value in 2023, placing it in eighth place in the nation, just ahead of Illinois, which had $2.397 billion. Topping the list is California, with $79.2 billion, followed by New York, Massachusetts, Texas, Colorado, Florida and Washington.

Neighboring states North Carolina and Tennessee were ranked Nos. 13 and 14, with $1.87 billion and $1.7 billion, respectively. 

In the NVCA’s yearbook, released in May, Virginia is listed as having 235 companies that received VC funding last year, or 1.81% of the nation’s businesses that received venture capital investments. Virginia-based businesses raised $1.87 billion in VC funds in 2023, up from $792 million in 2022 and down from an all-time high of $2.82 billion in 2021, the report says. On the other side of the ledger, Virginia had 90 active investors in 2023, well below California and New York’s 1,000-plus investors, but within the top 20 states.

“The commonwealth is not only competing but outpacing other states in attracting investment, thanks to its supportive innovation landscape and growing pipeline of startups,” Franklin said in a statement.

The Top 10 ranking from NVCA comes in a year when Virginia won the title of CNBC’s Top State for Business in America and when the VIPC celebrated 10,000 new, high-growth startup companies being created in Virginia in the first two years of Gov. Glenn Youngkin’s administration. 

“Virginia’s top 10 national ranking demonstrates how dynamic high-growth companies in Virginia are offering VCs from across the country compelling opportunities to deploy capital,” VIPC President and CEO Joe Benevento said. “Capital fuels growth, and VIPC looks forward to fostering continued private sector engagement and investment within our thriving entrepreneur ecosystems, including through our new Virginia Invests venture capital partnership initiative.”

In May, the VIPC unveiled a partnership with seven venture capital fund managers to invest $100 million in 100 Virginia-based startups. VIPC expects Virginia Invests to attract at least $10 of private sector investment for every $1 committed by VIPC, according to Thursday’s release.