San Francisco Round Sizes Have a Premium Beyond Just Salaries

Startups raise bigger rounds in SF. Is that solely because startup salaries are higher in the Bay Area?

Data says: not entirely.

It's common to hear folks around venture say that "yea, SF rounds are bigger but you're paying more for talent so it comes to the same thing". Our data shows that even controlling for startup salary, there is an SF round premium.

And because dilution is not higher in SF than anywhere else, that of course means valuations are higher in the Bay.

Data below shows the median Series A round size for SaaS companies by metro area. The blue dot is the percent difference in round size compared to the Bay and the brown dot shows the percent difference in average startup salary compared to the Bay.

So for NYC - rounds are about 84% the size of SF but of course salaries are basically equal to the Bay.

𝗚𝗮𝗽 𝗕𝗲𝘁𝘄𝗲𝗲𝗻 𝗥𝗼𝘂𝗻𝗱 𝗦𝗶𝘇𝗲 𝗮𝗻𝗱 𝗦𝗮𝗹𝗮𝗿𝗶𝗲𝘀 𝗖𝗼𝗺𝗽𝗮𝗿𝗲𝗱 𝘁𝗼 𝗦𝗙

• NYC: 84% round size vs 100% average salary (16% gap)

• Boston: 72% cash vs 90% salary

• Los Angeles: 68% cash vs 91% salary

• Austin: 68% cash vs 90% salary

• Atlanta: 62% cash vs 83% salary

• Salt Lake: 61% cash vs 82% salary

• Denver: 58% cash vs 91% salary

• Phoenix: 55% cash vs 79% salary

• Detroit: 41% cash vs 78% salary

So what's the takeaway here for founders?

Yes - hiring outside the Bay means you'll pay less for talent, it's true.

But VCs really do give higher valuations and bigger round sizes to companies in SF, even controlling for talent cost.

Now is that a good thing? That's a great question! Can make a pro and con case 🙏

#startups #founders #SeriesA #startuptalent #venturecapital