Vermont, Hawaii and Arkansas aren’t on the short list of states likely to serve as home to the next Silicon Valley contender.

However, by one measure worth watching — increased venture funding — these are all geographies on the rise.

Per a Crunchbase News analysis, startup investment in a majority of U.S. states is on track for an annual decline in 2024. While overall U.S. funding is up, the flood of dollars to AI-focused companies that has driven the rise remains heavily concentrated in California.

For perspective, below we charted out funding so far this year to each U.S. state, comparing it to 2023’s full-year total.

So far this year, a handful of states with smaller startup scenes (defined here as below $2 billion in annual funding) have defied the odds and posted sizable investment gains. By our count, there are seven standouts: Arkansas, Connecticut, Hawaii, Kentucky, Montana, Oregon and Vermont.

In some states, the increase is mostly due to a single really big round. In Hawaii, for instance, Maui-based Privateer, a Steve Wozniak-founded startup that tracks data on objects in space, scooped up more than two-thirds of statewide funding with a $57 million financing.

In Vermont, meanwhile, more than 90% of statewide startup investment this year went to Beta Technologies, a developer of electric vertical takeoff and landing aircraft that secured a $318 million Series C. And in Connecticut, Norwalk-based Infinite Reality landed $350 million, more than 40% of all that state’s investment.

And then there’s Arkansas

So far this year, Arkansas startups have raised $175 million — up nearly 50% from the 2023 full-year total, with gains coming from several larger deals. Much of the funding activity centers around Bentonville, a picturesque city in the Ozark mountains that also happens to serve as headquarters for the world’s largest retailer, Walmart.

The largest investment in Arkansas went to Laravel, a Bentonville-based web app development framework that picked up $57 million in an Accel-backed September round.

Apparently, Laravel wasn’t looking for the money. Per Accel, it took “a year of persistence and 21 cold calls” to get in front of founder Taylor Otwell for eggs and biscuits in Little Rock. Previously, Otwell had bootstrapped the 13-year-old company to profitability.

Another big round went to Crisp, a Bentonville-based retail data provider. It raised $37 million in equity and $30 million in debt financing this year to scale its fast-growing business, per Crunchbase data.

Arkansas healthcare startups also picked up some good-sized rounds. Little Rock-based Panacea Financial, which provides financial services to doctors and doctors’ practices, raised a $24.5 million Series B backed by Valar Ventures. And NowDiagnostics, a Springdale-based provider of at-home medical tests, secured $22.5 million.

Oregon is up too

Oregon is also having a comparatively good year, with more than $600 million in funding to date, up 77% from all of last year, Crunchbase data shows. However, 2023 was unusually weak for a state with a good-sized tech talent base and startup scene.

This year, the largest round went to Bend-based Serán Bioscience, a provider of development and manufacturing services to pharmaceutical and biotech companies that raised a $200 million-plus round led by Bain Capital Life Sciences.

The next-largest expected financing is for Agility Robotics, a maker of humanoid robots that has reportedly landed commitments for a $150 million funding round.

Finding the next startup hub

Because funding totals in smaller venture ecosystems are usually mostly driven by few deals, they tend to be pretty volatile from year to year. Thus, it’s probably unwise to read too much into a single banner year or short-term dry spell.

That said, it does certainly look as though Arkansas is coming into its own as a startup hub, with an impressive array of funded companies for a relatively sparsely populated state. Data also looks encouraging for Oregon, Kentucky and other locales with room to grow on the funding front.

By the same token, we’ll also be tracking states that saw large year-over-year declines, including Missouri, Nevada and Alabama, to see if startups in these areas can regain investors’ interest.

Related reading:

• Among Biggest Startup Funding States, California Gains While Massachusetts Declines

Illustration: Dom Guzman