Vanishing Venture Capital? MA Investment Lags Behind Competitor States

Texas may be on track to surpass the Commonwealth in venture capital funding for the first time in over a decade. 

Massachusetts has long led the nation in attracting startup business investment. While the state still ranks among the top in the country for venture capital funding, new data reported by the Boston Globe suggests we might be slipping. We dig into why that could be and what other states are doing to boost investment.

Venture Capital Investment in MA Slowed in Recent Years

New data published by Pitchbook and the National Venture Capital Association on funding deals shows venture capital funding across the country nearly doubled (up 92%) from 2023 to 2025, the latest full year of data available. It was a different story in Massachusetts, where funds have nearly stagnated, growing only 9% ($15.2 billion to $16.6 billion) over the last two years.

In fact, Massachusetts’ share of total funds doled out nationally has dramatically declined over the last few years. In 2023, the Commonwealth received 9.1% of venture capital funding across the country. Two years later, that share dwindled to just 5.2%. In the first quarter of 2026, Massachusetts captured just 2.0% of all funds. 

One explanation for this change could be fewer funds going to life sciences companies, a dominant industry for Massachusetts. In 2025, the share of venture capital deals that went to life sciences companies nationally dropped to 12% from 19% in 2023. On the other hand, tech companies have received a growing share of funds, especially those working on artificial intelligence.

The amount of funding for startup companies fluctuates annually, and is subject to a variety of economic factors. At the same time, uncertainty surrounding federal funding for research and life sciences programs has created additional headwinds for the industry. But this recent trend in Massachusetts is concerning, especially since high profile companies in key industries like biotech and life sciences have announced investment in other states with friendlier business environments.

Competitor States

Massachusetts’ competitor states seem to be attracting more funds for local startups.

Take North Carolina, for example. The state has some similar economic conditions to the Commonwealth: it is a regional economic driver, home to academic hubs, and relies on key industries such as life sciences, manufacturing, financial services, and other research industries. In GDP terms, North Carolina is still smaller than Massachusetts, but its lower-tax, lower cost environment has led several companies to move and prioritize investment there instead of here. 

That means growing states like North Carolina are increasing opportunities for investment. The Tar Heel State’s venture capital funding grew 34% over the last two years, outpacing Massachusetts’ 9% growth. A recent Pioneer Institute study found North Carolina implemented incremental tax reforms over the last few decades, including lowering income taxes to a single flat rate and lowering the corporate tax rate. As a result, the state has seen a net in-migration of residents (compared to Massachusetts losing more residents than it is gaining), and nearly half a million jobs added in the last five years.

Other lower-cost, business-friendly states like Florida and Texas are surpassing Massachusetts in venture capital funding growth too. Florida’s investment more than doubled (111% growth) since 2023, and Texas’ investment grew 51%. 

Historically, these economies may have relied on some different industries than Massachusetts, but recently they have attracted deals in some of the Commonwealth’s cornerstone industries.

Several major finance and tech companies previously headquartered in California recently made the move to growing hubs in Austin, Dallas, and Houston. According to the Boston Globe, funding deals in defense and tech marked the Texas’ capital influx in 2026 so far. Florida has recently attracted some tech companies too, as well as CEOs and founders looking to escape high regulatory, high tax environments.

Conclusion

Investment in startup businesses is an important indicator of business potential and growth. Healthy venture capital investments help Massachusetts new industries grow, boosting the state’s attractiveness and competitiveness for companies across the nation. More business investment also drives the state economy, bringing workforce talent, expanding the state’s tax base, and making Massachusetts a better place to live and work.

It isn’t all bad news: Massachusetts still ranks in the top 5 states nationally for attracting venture capital dollars. The state has announced several initiatives over the years to boost the state’s emerging industries, and our higher education hub makes the Commonwealth an attractive talent pool.

However, slipping venture capital funding mirrors what we are already seeing. Businesses are finding the state’s regulatory and cost environment is making it difficult to start and operate here. The MassCPAs 2026 Competitiveness Report found cost of doing business in Massachusetts was the most frequently cited concern in a survey of its clients.

Massachusetts has historically been a leader in attracting new business funding. Policymakers should look for ways to holistically reduce barriers to investment and business growth to stop the slip.