At last week’s dinner we were talking about the realities of starting a company in Sacramento and getting outside investment. I’d recently seen a chart on Paul Kedrosky’s blog that shows investment by locale with the SF Bay Area getting a whopping 39% of investment dollars and Southern California and New England tied for second with 10% each.

It’s not clear from the graph what investments are counted (all VC, angel, public companies…?) but it’s clear that if you aren’t in the Bay Area you have an uphill battle when it comes time to raise outside investment.

I also wonder if the numbers are skewed somewhat by the locations of the companies that are seeking investment. Did 39% of investments go to the Bay Area because that’s where investors are looking or because there’s more startups in the Bay Area? If you’re in the Bay Area, is it perhaps harder to raise money because there’s more local startups? In Sacramento, you have a much smaller pond to play in.

There’s a couple of Sacramento-focused VC funds and a local angel group, not to mention a number of unaffiliated investors in the area. The fact that there’s less startups competing for their attention may make it easier to get in the door.