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How would an ecosystem-led investment fund perform?

• After 10 years of curating the most promising early-stage firms, we analyzed close to 700 RealLIST Startups as a hypothetical venture portfolio.
  
  

• Our newsroom appears unusually good at identifying durable companies, even if it isn’t optimized for venture-scale home runs.
  
  

• Even most VC firms, though, underperform public markets. Local investing has grown as an economic development strategy, and less for financial performance alone.
  

Venture capital is led by a few wolves and crowded by a pack of stray dogs — all wearing Allbirds.

The big open trade secret is that roughly three-quarters of venture funds fail to outperform an index fund of large public companies, especially with risk and illiquidity in mind. But the top quartile of funds absolutely crush the rest. One famous analysis by the Kauffman Foundation found that just 20 venture investments generated about 80% of the total returns across a large portfolio.

Venture capital famously operates according to a power law: A tiny number of winners cover the losses from everything else. It turns out the venture industry itself works the same way.

So the next time an investor in an expensive blazer confidently explains startup strategy at a networking event, remember: Your uncle with a Vanguard index fund may be the better capital steward. For all the diligence, pattern recognition and investment theses, picking startup winners is famously unpredictable.

How much worse could a newsroom of local journalists do?

Technical.ly just released the 10th cohort of RealLIST Startups, our curated lists of promising young companies across the ecosystems we cover most closely. That milestone got me wondering: After nearly a decade of selections, what would happen if we treated those picks like a venture portfolio?

With the help of AI-assisted analysis tools, we compiled every RealLIST startup from 2017 to 2025 (close to 700 in total) and enriched the dataset with publicly available signals — company status, exits, funding and headquarters location. (Our 2026 cohort presents fascinating insights, but these companies are too young to include just yet.)

Private startup data is famously opaque. Most acquisitions never reveal their purchase price, and private companies disclose little financial detail. So this exercise is less a precise financial model than a structured thought experiment. But the patterns are revealing.

Overall, if RealLIST Startups had been a venture fund allocating $10,000 to each of 689 startups over eight years, 63% would have raised follow-on capital, 80% would still be operating and 7% would have exited.

The dozen top-quartile exits, led by a $4.3 billion acquisition, would have returned the entire fund many times over. With half the portfolio less than four years old, the final returns are still being written. They already have lessons for the rest of us.

Hardware, robotics and life sciences are quietly outperforming

Technical.ly journalists get training and plenty of industry experience, but none would identify as portfolio managers. Close to two dozen reporters and editors across a half-dozen markets over a decade made these picks, informed by trusted sources, economic trends and — let’s be honest — ecosystem vibes. 

That might sound fuzzy, but over a decade, it’s a useful hypothesis: How would an ecosystem-led investment fund perform?

The RealLIST portfolio has shifted dramatically over time. The earliest, pre-pandemic cohorts were overwhelmingly SaaS, close to 95% of the first three classes. Last year, just 4 in 5 were.

The difference is largely hardware, robotics and life sciences companies — sectors that reflect the research strengths of regional ecosystems like Pittsburgh’s robotics community, the DC metro’s national defense, Maryland’s health and Philadelphia’s life sciences clusters.

Interestingly, those companies also appear to exit at nearly twice the rate of purely software companies in the dataset. That shift may not be accidental. Deep-tech companies are harder to start, but when they succeed they are often acquired by large strategic buyers looking for specialized technology.

Most startups don’t leave their hometowns

Another persistent startup myth is that any company that becomes successful eventually moves to Silicon Valley. The RealLIST data suggests something different.

More than 90% of the startups we selected are still headquartered in the same city where they started. 

No doubt there’s likely selection bias: Our newsroom is far more likely to know an entrepreneur who is invested in where they live. Still, that doesn’t mean companies never relocate — some certainly do — but the narrative that regional startups inevitably migrate west appears overstated. 

For founders building companies tied to local universities, hospitals or industry clusters, staying put often makes sense. Startups grow where early customers cluster.

Healthcare and biotech companies represent only about 10% of the RealLIST portfolio, yet they likely account for more than half of the exit value.

The most obvious example is Spark Therapeutics, the Philadelphia gene-therapy company acquired by Roche for $4.3 billion, the largest reported exit in the dataset by an order of magnitude. Then still-young, Spark was named to our inaugural RealLIST, though they’ve since struggled as a division.

A steady stream of healthcare startups across the Mid-Atlantic has produced acquisitions by major pharmaceutical, diagnostics and medical device companies.

In other words, the region’s hospital and university research infrastructure continues to generate companies that strategic buyers find valuable. A few produced outsized “home run” returns like Spark, but far more were reliable “doubles,” as healthcare investors predict

Our newsroom portfolio looks a lot like venture capital

Taken together, the results look surprisingly familiar. The RealLIST “portfolio” appears to behave much like the average venture fund: 

• A small number of large wins carry the financial outcome
• A modest number of exits produce meaningful returns
• Many companies survive but never reach venture-scale outcomes

That’s not entirely surprising. Journalists selecting companies that appear meaningful in local ecosystems are likely to pick businesses that are credible and durable, even if they are not chasing the hyper-growth trajectory venture investors typically seek.

In that sense, the RealLIST portfolio may resemble something closer to state-backed economic development funds, which aim to grow regional economies rather than maximize financial returns alone. This aligns with a shift in economic development toward cultivating a “grow your own” strategy: New firms, not big ones, create a disproportionate share of new jobs.

According to the latest annual report from Rise of the Rest, roughly 40% of venture deals last year included at least one local investor. But that national average masks enormous variation.

More than 90% of startup deals in Nebraska involve a local investor. In Louisiana, the share is roughly 70%. Like Pennsylvania, Virginia and Tennessee, these states have an economic development agency that doubles as an early-stage investor. In New Jersey, by contrast, only 11% of deals involve a local investor.

Those differences highlight the uneven maturity of startup ecosystems across the country.

If venture capital itself follows a power law — with a handful of firms dominating the industry — perhaps regional ecosystems operate similarly. A few strong networks of founders, investors and institutions may ultimately determine which places produce the next generation of companies.

Investors then are followers, not leaders. “Ecosystem building” comes first. Come to think of it, that’s what our newsroom intends to support.