DiNapoli: NYC Area Is Country's Second Largest Market for Venture Capital

The New York City metropolitan area is the second largest market for venture capital (VC) funding in the United States, with $28.5 billion in investments, or 13.3% of the national total in 2024. The amount invested in the region has more than doubled since 2015, according to a report released today by State Comptroller Thomas P. DiNapoli. Individual deals valued at more than $50 million drove growth nationally.

"As the financial capital of the country, New York City is a natural hub for venture capital investing and the latest numbers bear that out," DiNapoli said. "State and local officials should look at ways to make New York City's business environment even more attractive to investors and support entrepreneurs that lack access to capital, especially as larger deals divert funds from startups hoping to establish themselves and spur growth in the area's economy."

After returning to more typical levels in 2022 and 2023 from a record high in 2021, VC investment again spiked in late 2024. In the first quarter of 2025, the United States saw $92.9 billion in deal activity, the second-highest level on record. Deals worth over $50 million increased from 56.9% of the total dollar value in 2019 to 68.7% in 2024.

The strong activity nationally and in New York has been fueled by investment in artificial intelligence (AI), with that sector's share of total investment nationwide increasing nearly three-fold from 16% in 2021 to 45% in 2024. Of the five VC firms making these investments, four were located in California, while the fifth was in Norwalk, Conn., part of the New York City metropolitan area.

While the San Jose metropolitan area (Silicon Valley) has long led VC investments by size and number of deals due to the longstanding and substantial investment made in the software industry, New York City is firmly in second place among peer U.S. regions for overall VC activity.

The New York City metropolitan area had more transactions in 2024 than the Boston and Los Angeles metropolitan areas combined, and a higher total value of investment than the Boston, Los Angeles, and Philadelphia metropolitan areas put together.

Nationally, total investment in software companies grew from $28.6 billion in 2015 (32.6% of total funding in the country) to $100 billion in 2024, accounting for nearly half of all investment that year. In the first half of 2025, the share jumped to 57.8%, with more than $94 billion invested in software companies.

In New York City, the software and tech services sector accounted for 52.4% of activity in 2024, up from 37.6% in 2019. For 2020 to 2024 combined, software and tech services investment accounted for more than half of all VC investment. This represented over $44 billion in total investment, supporting companies with a total employment of at least 13,000 employees.

As investors have supported AI-related firms in recent years, they have increasingly preferred higher-valued deals. In 2019, deals with a value of $25 million or less accounted for 75.7% of the total number of deals, falling to 59% by 2024. During the same period, deals worth over $50 million increased from 56.9% to 68.7% of the total dollar value.

Total deals by value, including deals for firms that undertook multiple rounds of funding, that exceeded $100 million more than doubled in the first half of 2025 compared to the prior year, reaching the highest level on record at $113.6 billion. The average deal size for these "mega deals" more than doubled from $261 million in the first half of 2024 to $541 million for the same period in 2025.

DiNapoli's report found that female founded companies in the NYC area raised $955 million in venture capital for 143 deals, outperforming those in San Francisco during the twelve-month period ending in June 2025. The industry has shifted to higher-valued deals, as investors are less interested in newer startups and first round investments, which have historically had a large share of female-founded and minority/women-owned business enterprises.

The recent tax and spending package passed by Congress is expected to have several positive impacts on VC activity. The qualified small business stock tax exemption, which has been used during exits to exclude gains from taxes, has been expanded, introducing a tiered gains-exclusions schedule and raising the tax-free cap to $15 million. The bill also reverses the requirement to amortize R&D costs over five years, and now allows them to be deducted upfront.

However, the bill also increases taxes on university endowments, replacing a flat 1.4% tax with a tiered system that raises the level to as much as 8% for elite institutions, which is likely to reduce their ability to finance VC. Cuts to Medicaid could impact healthcare startups, and the removal of the electric vehicle and clean-energy credits could have implications for the viability of related enterprises. New York state has made efforts to support the growth of VC, particularly through AI initiatives. The Enacted Budget for State Fiscal Year 2023-24 established the Empire AI consortium, a $400 million private-public investment to support research and development of AI technologies in the state.

The New York State Common Retirement Fund, led by Comptroller DiNapoli, also has committed funds to its In-State Private Equity Investment Program, which includes support for companies in the venture capital stage. This program invests in private equity funds that target technology-based startups and established businesses in the state seeking expansion capital, spurring private sector investments and jobs across the state. About $1 billion of this investment was made in over 450 companies in New York City, which includes funding for startups.

While AI has comprised a significant share of VC activity, financial services firms have also received a significant portion of the funding locally, providing another key area for the state and city to continue to monitor for growth. The city's role as a media hub and center for headquarters for pharmaceutical and consumer-focused firms should also continue to provide opportunities and talent for new startups.

Report
Venture Capital Investment in New York City

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