Venture Capital Decentralizes Beyond Coastal Tech Hubs

February 2026 — Venture capital (VC) investment across the United States is shifting from high-cost tech centers toward smaller and emerging markets as investors pursue lower valuations and opportunities for untapped innovation.

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“People are realizing that innovation doesn’t just happen in the Bay Area or Boston. There’s deep expertise, real industrial know-how, and strong government support here in the middle of the country,” Nathaniel Harding, a managing partner at early-stage VC firm Cortado Ventures, told Silicon Valley Bank.  

Fast-growing U.S. regions like Middle America are now capturing a greater share of capital than ever before; meanwhile, developing innovation hubs in the Southeast are attracting growing interest from big players across the country. 

“There is significant interest from investors in Silicon Valley, Boston, and New York in Georgia’s tech ecosystem,” Larry Williams, president and CEO of the Technology Association of Georgia, told Focus: Atlanta, referencing his conversations with national VC and PE firms. That interest has also extended locally with many VC firms doubling down on home markets they believe are poised for rapid expansion.

Looking for fast growth

“We’re looking for markets that are small today but very fast-growing,” Dave Cummings, CEO of investment company, Atlanta Ventures, told Focus: Atlanta. “We like markets that have the opportunity for subscription revenue.”

As Cummings explained, Atlanta has established a strong base for startup formation and early-stage growth companies, but that there are unrealized opportunities to extend that momentum beyond the early stages. This means tapping into markets with high-growth potential where companies can be supported as they scale, expand, and mature into later-stage enterprises.

“The opportunity ahead of us is to really get stronger at the next stage beyond the early stage, which includes the growth stage, the expansion stage, and the pre-IPO stage,” he said.  

For Invest: Atlanta CEO Eloisa Klementich, this level of VC investment in the region could inject the local economy with a major boost. “Like many cities, we need more venture capital to support entrepreneurs … (and help) early-stage businesses get off the ground.”

Beyond the Southeast, regions in Middle America has recently gained significant traction in the venture capital landscape. 

According to Silicon Valley Bank’s Future of Frontier Technology report, the U.S. Midcontinent surpassed the East Coast in total VC funding in 2024, signaling a meaningful geographic rebalancing of capital flows.

The advantages of these markets are clear: deep talent pools, innovative startups, and growing infrastructure to support tech and industrial automation. 

More specifically, entrepreneurs from outside the so-called “elite tech hubs” in the East and West Coasts can benefit from lower labor costs and operating expenses, leading to lower deal sizes and valuations, which creates bias toward efficiency and profitability. 

In other words, these lower priced startups in Middle America can avoid the inflated valuations seen in overheated markets and instead achieve more realistic scale, as explained by Harding.

Growing venture capital interest

For VC firms, this implies more reasonable deal terms, qualified industry expertise, and strong government backing, all of which has contributed to their growing interest in the region.  

VC funds based in the Midcontinent now account for approximately 12% of all funds raised over the past three years — roughly double the share from a decade ago — highlighting how emerging markets are capturing a greater role in the U.S. innovation economy. 

In fields like deep tech and AI, smaller, emerging VC markets offer core competitive advantages. This is because venture capital opportunities are highly bifurcated in the United States, as Wellington Management’s 2026 Private Investing Outlook notes. 

While most startups are struggling to secure investment given a tighter financing environment, AI companies are raising funds faster and at higher valuations across all stages. (Currently, nearly two-thirds of U.S. VC deal value is concentrated around AI companies, as data from SG Analytics suggests.)

The result has been narrower fundraising conditions for companies outside the sector and a more selective investment landscape in general. 

Shifting landscape

While experts believe that financial markets are headed toward a reset given signs of improved liquidity, VC firms are shifting their attention to ventures in regions like Georgia and Middle America, where valuations are grounded in reality and the potential for growth is long term. 

This shift does not mean tech centers such as Silicon Valley or Boston are fading away from prominence. Established tech hubs continue to house many of the country’s largest technology companies and dominate overall deal value. However, the center of gravity in venture capital is broadening as emerging regional markets offer value-oriented investment opportunities amid higher costs and stretched valuations at traditional hubs. 

For founders, the rise of regional VC markets signals greater access to capital closer to where their core operations and talent are based. For investors, the trend represents a diversification strategy that blends emerging sectors with traditional technology portfolios. 

While funding levels continue to vary by region and ecosystem, the broader direction is clear: U.S. venture capital is decentralizing. Areas once considered peripheral are increasingly competing for early-stage deals and fund formation, even as primary VC hubs maintain their dominance in mega-rounds and later-stage financing. 

Want more? Read the Invest: reports.