Correlation is not causation. I know. Anyone who’s ever watched a scientist raise distraught eyebrows at a piece of shoddy science journalism knows that.
Nonetheless, correlation has its place. While it may not prove anything, it provides a sense that seemingly disparate indicators are somehow linked.
For today’s experiment in correlation, I’ve followed up on yesterday’s widely reported Gallup Poll numbers on U.S obesity, to see how obesity rates correlate with venture capital investment. (The report showed a wide disparity in obesity rates state-to-state, ranging from 34% in West Virginia to 19.5% in Colorado, with an average of 26.7% nationwide.)
Correlation between obesity and low venture funding was shockingly high. The eight states with the lowest obesity rates saw 100 times more venture funding per capita than the eight states with the highest rates.
Here’s how it breaks down:
The eight states with the highest obesity rates are: West Virginia (34%), Kentucky (32.8), Mississippi (32.7), Arkansas (32), South Carolina (31.1), South Dakota (30.8), Oklahoma (30.7), and Louisiana (30.6%).
Here’s how much VC funding companies in those states have raised so far this year, according to Thomson Reuters:
West Virginia: 0
South Carolina: 24.7m
South Dakota: 0
Oklahoma: 3 m
Total: $45.5 million
VC per capita: $1.78
The eight states with the lowest obesity rates were: Colorado (19.5%), Massachusetts (20.9), Utah (21.3), Hawaii (21.8), Connecticut (22.2), Rhode Island (22.6), California (23.2), New Mexico (23.5).
Here’s how much venture capital companies in those states have raised this year:
Rhode Island: 51.6m
New Mexico: 20.8m
Total: $10.68 billion
VC per capita: $180
Clearly there are a lot of data points that would show similar correlations. For example, the states with high obesity rates also tend to be, in general, poorer, more rural, more southern, less coastal, and further from a high concentration of VCs than those with lower rates. And it could be argued that California –which drew close to half of VC funding this year – skews the overall stats.
Nonetheless I walk away somewhat disturbed by the divergence in funding levels between the two groups. In particular, I’m surprised at the number of states with no companies raising reported venture rounds this year. Is there truly no fast-growth, innovative company worth backing in all of Mississippi, Arkansas and West Virginia? Are these regions simply ignored? Or, once a startup begins to see traction, does it move headquarters to be closer to a big money center?
Moreover, what does it mean that so much of the money spent fostering innovation is clustered in few areas? Will we see further bifurcation in opportunities – with those in the “have” regions getting access to capital and jobs in innovative sectors, and those in the “have not” areas unable to get a foothold in growth industries?
Of course, it’s tough to say. And arguably, I’m reading too much into limited correlation. Perhaps it’s time to get back to my real job.
Oh wait, this is my real job.
Hmmm. Only in California.