Emerging markets tend to go in and out of vogue. First, Austin was the next biggest thing, then Atlanta and, more recently, Miami. Pittsburgh has yet to have its moment, but all the signs are there that it could be next. Having local expertise in the category every VC wants to invest in right now doesn’t hurt, either.
The Steel City has all the ingredients to be a hub for startups: a good university system, a cheaper cost of living — definitely when compared to places like New York and the Bay Area — and a proliferation of seed firms and startup accelerators. Plus, it has seen a homegrown success story in language learning app Duolingo, which went public at a nearly $4 billion valuation in 2021.
Startups in the city raised more than $534 million through December 12, 2022, according to PitchBook, which, while not a lot of capital, is better than 2021, when they raised $336 million. And while the data is not consistently trending up and to the right — there was a huge outlier deal (Uber Advanced Technologies) in 2019 that spiked the yearly investment total to $1.3 billion — venture investors on the ground can feel the city’s potential. (I talked about Pittsburgh’s startup ecosystem on the City Cast Pittsburgh podcast recently in the context of two high-profile startup failures there, Ford- and VW-backed Argo AI and robotic vertical farming outfit Fifth Season. You can give it a listen here.)
Ven Raju, the president and CEO of Innovation Works, a local startup accelerator and seed fund, said he’s seen the market grow 10x in the last decade and 6x in the last three years.
“The ecosystem is on a tremendous upward trajectory,” he added.