The National Beat: VC funding dips, but small startup cities are booming – The Business Journals

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After a historic year for venture capital funding in 2021, this year has proven to be a different story for U.S. startups. American upstarts received $58.7 billion in funding last quarter, down 18.6% compared with the first quarter and down 20.8% year over year.
As investors pump the breaks, startups have laid off thousands of workers this year in an economy marked by rising interest rates, high inflation and a struggling stock market.
But a new study shows smaller markets — cities like Madison, Wisconsin, Kirkland; Washington; and Birmingham, Alabama; — have seen increases in venture capital financings.
Kirkland, a suburb east of Seattle, saw startups raise $298 million, a 1,724% increase compared with its average quarterly funding amount over the prior 12 months. Madison, Wisconsin, startups raised $299 million, which was up nearly 800%, according to a report from investment and research firm York Investments LLC.
Fastest-growing U.S. startup cities in Q2 2022
A couple big fundraising deals can create major swings in venture capital data, and that’s especially true in smaller markets where fewer deals are getting done. (In Madison, loyalty app Fetch Rewards’s $240 million round made up the bulk of the city’s quarterly venture funding.) But it shows that even as the national tech market wobbles, startups in lesser-known tech hubs can still reel in large checks.
In the competitive children’s toy space, Portland-area startup Slumberkins has taken off. After an appearance on Shark Tank, $12.2 million in revenue last year and a $12 million venture funding round, the Slumberkins founders are now bringing their characters to your TV screen. Slumberkins has partnered with The Jim Henson Co., creator of The Muppets, on a new series for Apple TV+. Portland Inno spoke with the Slumberkins founders on how a combination of timing, connection and determination got the show off the ground.
The ultimate vision is for Slumberkins to be a legacy brand and fundamentally change what a healthy childhood looks like with emotional wellness at its core. “We want to set our sights on redefining what health looks like for families and children in this space,” co-founder Kelly Oriard said.
Chicago startup Clever Carnivore is rethinking how meat can be produced. The startup makes actual pork, beef and chicken using stem cell biology and bioengineering in a process that’s similar to fermenting beer. Costs for lab-grown meat products are currently higher than those of their conventional counterparts, but the firm hopes that with increased volumes, production costs can be lowered.
“We have what amounts to at this point a $10 burger, and as we continue to scale, we’ll bring that cost down considerably,” CEO Virginia Rangos said. “We’re hoping to eventually get — and we think this is quite a practical — to a $1 burger, essentially.”
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