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To say that hedge funds’ performance has ramped up in recent years would be an understatement. In fact, investments into startup companies with hedge fund participation are now challenging VC’s long-standing foothold on the space. In 2021, PitchBook’s news team reported that situations where traditional venture capital firms are being significantly outbid by hedge funds and other crossover investors—sometimes by as much as 50-100%—have become a frequent occurrence.

Given their growing prevalence in the private markets, we wanted to take a closer look at top-performing hedge funds across the US based on their regionality and number of investments.

What are hedge funds?

Hedge funds are alternative investment funds. They pool money from professional investors and invest that capital with the intent of making a profit AKA realizing a return on their investment (ROI). Hedge funds are often managed by institutional investors who use an array of nontraditional investment strategies to mitigate risk. For more, read our blog post all about hedge funds including why they’re called hedge funds, how they work and how they make money. Curious how you can assess hedge fund opportunities for yourself and your firm? We’ve got you covered there, too.

Notable VC investments with hedge fund participation in the United States by region

For this list of top VC deals with hedge fund involvement, we categorized a limited selection of top cities by their geographical regions, as defined by the US Census.

The Northeast

Including New York City in our exploration of hedge funds in the northeastern US was a no-brainer. We rounded out this section of the list with three other top demographic areas from the region—Philadelphia, Boston and Pittsburgh. The population of these powerhouse cities is more than 30 million combined, and each is home to a variety of robust, economy-driving industries—from the finance sector in New York City to Boston’s thriving healthcare space.

VC investments by hedge funds in New York

DMA rank: 1

Total number of VC investments with hedge fund participation in the last 5 years: 198

Largest VC deal with hedge fund participation in the last 5 years:

• Company: Exos
• Deal amount: $750 million
• Date: September 28, 2018
• Number of New York City hedge funds that participated: 1

VC investments by hedge funds in Philadelphia

DMA rank: 4

Total number of VC investments with hedge fund participation in the last 5 years: 14

Largest VC deal with hedge fund participation in the last 5 years:

• Company: Gopuff
• Deal amount: $1.15 billion
• Date: March 23, 2021
• Number of Philadelphia hedge funds that participated: 1

VC investments by Boston hedge funds

DMA rank: 9

Total number of VC investments with hedge fund participation in the last 5 years: 111

Largest VC deal with hedge fund participation in the last 5 years:

• Company: Intarcia
• Deal amount: $615 million
• Date: August 3, 2017
• Number of Boston hedge funds that participated: 2

VC investments by hedge funds in Pittsburg

DMA rank: 23

Total number of VC investments with hedge fund participation in the last 5 years: 3

Largest VC deal with hedge fund participation in the last 5 years:

• Company: Gecko Robotics
• Deal amount: $73 million
• Date: March 3, 2022
• Number of Pittsburgh hedge funds that participated: 1

The Midwest

Investment activity in the US Midwest is has ramped up in the last five years, following a mostly stable period throughout the aughts and most of the 2010s. Chicago is among the top 3 US DMAs, with a growing technology startup presence, and we’ve paired it with some of the region’s other major metropolitan areas.

VC investments by Chicago hedge funds

DMA rank: 3

Total number of VC investments with hedge fund participation in the last 5 years: 31

Largest VC deal with hedge fund participation in the last 5 years:

• Company: Uber Freight
• Deal amount: $550 million
• Date: November 15, 2021
• Number of Chicago hedge funds that participated: 1

VC investments by hedge funds in Minneapolis

DMA rank: 15

Total number of VC investments with hedge fund participation in the last 5 years: 1

Largest VC deal with hedge fund participation in the last 5 years:

• Company: GeneMatters
• Deal amount: $10.2 million
• Date: March 26, 2021
• Number of Minneapolis hedge funds that participated: 1

VC investments by hedge funds in Indianapolis

DMA rank: 27

Total number of VC investments with hedge fund participation in the last 5 years: 4

Largest VC deal with hedge fund participation in the last 5 years:

• Company: Sexton Biotechnologies
• Deal amount: $5 million
• Date: September 24, 2019
• Number of Indianapolis hedge funds that participated: 1

The South

Though the census definition of the south combines many seemingly dissimilar cities, something they do share is their high rank among DMAs, with the four that we’ve chosen all falling within the top ten in the country. These cities not only place high, but also very close to one another, suggesting more regional similarities than one might initially assume.

VC investments by Dallas hedge funds

DMA rank: 5

Total number of VC investments with hedge fund participation in the last 5 years: 8

Largest VC deal with hedge fund participation in the last 5 years:

• Company: Instil Bio
• Deal amount: $170.2 million
• Date: August 3, 2020
• Number of Dallas hedge funds that participated: 1

VC investments by hedge funds in DC

DMA rank: 7

Total number of VC investments with hedge fund participation in the last 5 years: 12

Largest VC deal with hedge fund participation in the last 5 years:

• Company: Cava
• Deal amount: $230 million
• Date: April 27, 2021
• Number of Washington, DC hedge funds that participated: 1

VC investments by hedge funds in Houston

DMA rank: 8

Total number of VC investments with hedge fund participation in the last 5 years: 10

Largest VC deal with hedge fund participation in the last 5 years:

• Company: HighRadius
• Deal amount: $300 million
• Date: March 30, 2021
• Number of Houston hedge funds that participated: 1

VC investments by hedge funds in Atlanta

DMA rank: 10

Total number of VC investments with hedge fund participation in the last 5 years: 6

Largest VC deal with hedge fund participation in the last 5 years:

• Company: Antios Therapeutics
• Deal amount: $96 million
• Date: April 9, 2021
• Number of Atlanta hedge funds that participated: 3

The West

The west coast is home to a very active startup culture, both within the Silicon Valley and beyond, which relies on investor activity. For this region, we’ve chosen two of most important urban areas in California and the country overall, as well as two other cities with considerable market activity.

VC investments by hedge funds in Los Angeles

DMA rank: 2

Total number of VC investments with hedge fund participation in the last 5 years: 34

Largest VC deal with hedge fund participation in the last 5 years:

• Company: VideoAmp
• Deal amount: $275 million
• Date: October 21, 2021
• Number of Los Angeles hedge funds that participated: 2

VC investments by hedge funds in San Francisco

DMA rank: 6

Total number of VC investments with hedge fund participation in the last 5 years: 136

Largest VC deal with hedge fund participation in the last 5 years:

• Company: Generate
• Deal amount: $2 billion
• Date: July 19, 2021
• Number of San Francisco hedge funds that participated: 1

VC investments by hedge funds in Seattle

DMA rank: 14

Total number of VC investments with hedge fund participation in the last 5 years: 45

Largest VC deal with hedge fund participation in the last 5 years:

• Company: Convoy
• Deal amount: $400 million
• Date: November 13, 2019
• Number of Seattle hedge funds that participated: 1

VC investments by Denver hedge funds

DMA rank: 17

Total number of VC investments with hedge fund participation in the last 5 years: 9

Largest VC deal with hedge fund participation in the last 5 years:

• Company: Guild
• Deal amount: $150 million
• Date: June 2, 2021
• Number of Denver hedge funds that participated: 1

A note on methodology

The map above illustrates high-level hedge funds metrics at a glance, allowing for an informal comparison between the four US regions. In terms of methodology, we calculated these totals by tallying the city-specific numbers we highlighted in this post and made our city choices based on the top designated market areas (DMA). Please note that we only looked at a few cities within each region, so this list is not exhaustive. Our goal is to give readers a sense of hedge fund activity across the US, not paint a complete picture of it.

Please note that all data in this article was source from the PitchBook Platform on March 29, 2022; data is subject to change frequently. 

More on hedge funds

Learn how to tap into hedge fund opportunities on the Pitchbook platform
Read our blog post exploring how to interpret and make the most of hedge fund data

See why custom benchmarks can take your hedge fund research even further
Check out our article examining how custom benchmarking can lead to better hedge fund insights

Discover the major differences between hedge funds, PE and mutual funds
Read our blog on the characteristics of hedge funds, their role in the market and some of the major players in the space

 

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