When inventors move to a U.S. county, the number of successful startups, especially those valued at $1 billion or more, goes up, as inventors become founders, employees and magnets for venture capital investment. But the effects are strongest in places already primed for innovation, according to new research from Cornell SC College of Business.

Matt Marx, the Bruce F. Failing, Sr. Professor of Personal Enterprise at the Charles H. Dyson School of Applied Economics and Management, and his co-authors found that an influx of inventors into a local area boost both the number and quality of new startups. This includes more venture-backed companies, more successful exits like initial public offerings and acquisitions, and more billion-dollar “unicorns” – privately held startups valued at $1 billion or more.

“The effect is strongest in regions that already have some entrepreneurial activity,” Marx said. “Moving inventors to an area with no startup scene won’t magically turn it into the next Silicon Valley.”

The paper “Startups, Unicorns and the Local Influx of Inventors” published Jan. 28, 2025 in The Review of Economics and Statistics. Co-authors include Benjamin Balsmeier, professor at the University of Luxembourg, Lee Fleming, professor at Harvard University and S. Ryan Shin, professor at Seoul National University.

The researchers examined how the arrival of inventors in U.S. counties influenced the growth of startups from 2000-16. They tracked the inventors through patent records and matched them with startup founders and executives using databases such as Crunchbase and PitchBook.

They found that for every 12 to 15 inventors who move into a county, one new venture-backed startup is likely to follow. These startups are not just more numerous; they also tend to be more successful.

“Inventors often bring specialized skills that are better suited to high-tech industries. Venture capital tends to follow that talent, shifting investment from low-tech to high-tech sectors,” said Marx. “With more technical talent available, startups are less likely to fail. Investors also make better bets, avoiding low-tech ventures that are less likely to succeed.”

Marx and co-authors found that inventors tend to spark growth in the industries they know. For example, a biotech inventor is likely to contribute to the launch of new biotech startups, not software or consumer goods companies. Many incoming inventors become founders, executives, or engineers at the startups they help create.

For cities and states hoping to become tech hubs, the findings offer both inspiration and caution.

On the one hand, investing in technical talent pays off. Attracting inventors through education, job opportunities, or relocation incentives can boost local startup activity.

On the other hand, it’s not enough to just import talent. Startups also need other key ingredients: investors, mentors, startup-friendly regulations and a culture that encourages risk-taking, Marx said.

This research also supports the idea that venture capital is drawn to talent. When skilled inventors move in, investors shift their money, accordingly, backing startups that align with the inventors’ expertise.

While the study focuses on venture-backed startups, those that raise money from professional investors, it also looked at those with patents but no venture capital. Even among those companies, the arrival of inventors made a difference, though the effect was smaller.

“We find that if you want more successful startups in your city, invest in people, especially inventors,” Marx said. “Their knowledge doesn’t just stay in a lab or on a patent filing. It shows up in the real world, in the form of new companies, new jobs, and sometimes, billion-dollar success stories.”

Sarah Magnus-Sharpe is director of public relations and communications for the Cornell SC Johnson College of Business.