Venture capital-backed rounds of funding surge in US Southwest

Private equity- and venture capital-backed rounds of funding in the US remain concentrated in the West and Mid-Atlantic regions, though other areas are gaining ground, according to S&P Global Market Intelligence data.

The Southwest region recorded the most dramatic growth, with funding values surging more than 159% year over year to $27.26 billion in 2024. It was the largest regional increase outside the dominant West and Mid-Atlantic markets.

In 2025, transaction value in the Southwest is on track for a down year, with venture funding at $12.50 billion through Sept. 30, or only about 46% of the 2024 value.

Some regions are showing a rising trend. Year-to-date rounds of funding in the West and Midwest have already surpassed 2024 totals.

Most attractive states for venture capital

Among the Southwest states, Texas is seeing exceptional growth in venture capital activity. High profile companies such as Space Exploration Technologies Corp. and X Corp., for example, announced in 2024 that their headquarters were moving to Texas from California.

Deal volume in Texas was 324 in 2024 and already stood at 227 in the year through Sept. 30. Colorado was the only other state that had a deal count of over 100.

Texas is one of five states with over 1,000 companies in the technology, media and telecommunications sector, which represents the largest portion of private equity-owned enterprises in the US, according to an earlier Market Intelligence report.

Certain locations attract venture capital investors due to a combination of regional clusters, government incentives and the presence of large companies that foster new startups, said Daniel Zimmermann, partner and chair of emerging company and venture capital practice at international law firm WilmerHale.

California, New York and Massachusetts continue to dominate venture funding, but other markets like Texas and Colorado are gaining traction due to lifestyle benefits and supportive ecosystems, Zimmermann said. Additionally, the proximity to talent and resources plays a crucial role, as venture capital firms value the ability to collaborate closely with companies and leverage local networks.

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Top transactions

The largest transaction in the Southwest so far is the $1 billion round of funding by Texas-based social networking platform X. 1789 Capital Management LLC and Darsana Capital Partners LP participated in the round.

Autonomous vehicle manufacturer Saronic Technologies Inc., also a Texas-based company, raised the second-largest amount at $600 million from investors including Andreessen Horowitz LLC, General Catalyst Group Management LLC and 8VC.