Through the glory of Diffbot's Knowledge Graph we've been able to categorize thousands of companies by their industry category using official NAICS codes, which are U.S. government census categories for classifying businesses. One of those categories is "Software Publishers" (code 511210) which is what I want to focus on today. "Software Publishers" is a primary industry category that gets applied to businesses in the USA by the federal government. There are secondary and tertiary categories that businesses can have too like "Custom Computer Programming Services". Diffbot's Knowledge Graph maps some of these tags to helpful and more recognizable categories like "Software As A Service" and "Artificial Intelligence". You can view all of Diffbot's industry categorizations here or login to the Employbl dashboard and begin filtering by industry.
In this post I'd like to provide some analysis of the 6,727 software companies we store in the Employbl database.
Software Companies by City
So, what city really is best for software companies? It's entirely possible these numbers can change as we add more and more software companies to the Employbl database. For these totals we only took in to account companies that are not acquired and only factored in Headquarters Locations, not satellite offices.
| City Name | Number of Software Companies |
|---|---|
| San Francisco | 1296 |
| New York | 794 |
| Los Angeles | 527 |
| Boston | 518 |
| Chicago | 514 |
| Seattle | 497 |
| Oakland | 126 |
| Palo Alto | 106 |
| San Jose | 76 |
| Austin | 69 |
Now clearly there are more than sixty nine software companies in Austin and 500 software companies in Seattle. We're expanding looking to add new tech companies that are profitable or venture backed and not yet acquired. As the Employbl database grows and changes so will these numbers.
What VC Firms Invest in Software Companies?
Which investors have back the most Software Companies? Well we collect the financial history of many tech companies. Only looking at companies tagged as "Software Companies" we see that these are the investors that have backed the most Software Companies in our dataset. We may not have every active Software Company in our database that all these investors have invested in, but we have a lot. We don't have all the investment firms, but we record investments by many top tier VCs. As we build our data we'll be including more VC firms, accelerators and angel investors.
| Investor | Number of Software Companies |
|---|---|
| Y Combinator | 258 |
| SV Angel | 147 |
| Sequoia Capital | 126 |
| Accel | 118 |
| 500 Startups | 111 |
| GV | 102 |
| Kleiner Perkins | 92 |
| Founders Fund | 92 |
| Lightspeed Venture Partners | 86 |
| First Round Capital | 82 |
Software Companies by Founded Year
These are the number of companies grouped by founded year for the past ten years. There looks to be a bell curve with higher number of currently active, non acquired companies being founded between 2015 and 2018. Perhaps these companies are new enough to not be acquired but old enough to be well established and raise multiple rounds of financing.
| Founded Year | Number of Software Companies |
|---|---|
| 2021 | 16 |
| 2020 | 232 |
| 2019 | 416 |
| 2018 | 599 |
| 2017 | 610 |
| 2016 | 514 |
| 2015 | 633 |
| 2014 | 508 |
| 2013 | 400 |
| 2012 | 405 |
It'll be interesting to see if fewer software companies actually were founded in 2020 than usual or if it's just a bias in the data that few of them are known since they've been founded so recently.
Conclusion
These are macro trends about software companies and how the industry is developing in the United States. If you're looking to discover, sort, filter or find sofware companies in the USA, whether it be for job hunting, business development, research or just general interest I suggest you use social login to access the Employbl dashboard and play around. We'll be doing more of these posts for various other industry categories, cities, investors and more. Stay tuned :)