Steve Case: 47 states have to fight for 25 percent of venture capital dollars

Venture capital funding doesn’t stretch very far — geographically, that is.

California, Massachusetts and New York drew 75 percent of venture capital last year, Revolution CEO Steve Case told Walt Mossberg Thursday at the Code Conference in Rancho Palos Verdes, California.

That left 47 states to fight over the remaining quarter of funds, he said. And the division was similar if you looked at how VC funding was split between states that went for Hillary Clinton versus Donald Trump in the 2016 election.

“So this feeling people have of being left out and left behind, it’s because they have been left out and left behind,” said Case, who before heading up Revolution was co-founder and CEO of AOL.

Where that funding goes matters because startups are a core driver of economic growth, according to Case, who now heads up investment firm Revolution.

While gains in the small-business sector and among Fortune 500 companies tend to be offset by losses in those areas, startups have a net positive impact on job growth, he said.

The AOL founder also said he’s seeing a reversal of a brain drain to cities on the coasts, as smart people who left states like Arizona, Tennessee and Pennsylvania return to build up the economies they grew up in.

Here’s an excerpt:

“Right now most of the venture capital, 75 percent last year, goes to three states: California, New York, Massachusetts. So 47 states fight over 25 percent. If you look at this last election, and part of the reason Donald Trump is president, [there] is a sense out there that a lot of people feel left out and left behind. If you look at the states that he won versus Hillary Clinton won — the states that she won, 85 percent of venture capital went to. The states he won, 30 states in aggregate, 15 percent of venture capital went to. So this feeling people have of being left out and left behind, it’s because they have been left out and left behind.”

This article originally appeared on Recode.net.