Given persistent levels of misinformation and/or confusion about venture capital data (learn more here), we encourage you to review our methodology and definitions to better understand the numbers presented in our Q3 2009 venture capital activity data and commentary.

When thinking about the top US cities for venture capital, Silicon Valley - the high-tech center in and around the San Francisco Bay Area - immediately comes to mind. Yet as we mentioned in last quarter’s report, the Valley is comprised of 20+ smaller cities which don’t necessarily fair as well when broken down and evaluated individually.

In Q2 2009, this individual city approach put New York on top of ChubbyBrain’s “urban league table,” both in terms of deals and investment dollars. In Q3, the city that never sleeps seems to have been caught taking a quick nap: in terms of deals, NY lost the top spot to San Francisco; and in terms of funding, it dropped to the number five position, trailing San Francisco, Santa Clara, San Diego, and Sunnyvale. In general, California’s uncontested domination in all things VC is once again very apparent in this city by city view, with eight of the top 10 cities that saw the most deals in Q3 residing in the sunshine state.

That said, it wasn’t all good news in the Valley - Palo Alto saw investment dip by $100 million, a decrease of about 35%, while the deal count remained fairly stable. The most striking third quarter decline, however, took place a little further up the coast. After coming in a strong second in Q2 in terms of deals, Seattle dropped out of the top ten in Q3, reflecting the overall VC slowdown in the Pacific Northwest.