A research-backed report for Granite State Report
TL;DR
New Hampshire has talent, proximity to Boston, and a handful of serious investors. Yet early-stage capital remains thin because: (1) the state lacks dense investor networks and large anchor institutions that consistently spin out fundable companies; (2) capital has a strong geographic gravity—money clusters where investors can drive across town to meet founders; (3) state programs mostly backstop loans, not true pre-revenue risk; (4) university commercialization and competitive grant capacity are improving but still limited in scale; and (5) deal counts are too small to create a self-sustaining flywheel of serial founders, angels, and seed funds. The fix is not wishful branding—it’s pipeline, density, and instruments: build a feeder system that manufactures fundable companies, standardize founder-friendly capital, and wire NH into federal deep-tech flows.
1) The state of the NH early-stage market (what the numbers actually say)
Let’s start with evidence, not vibes.
Venture flows. According to the National Venture Capital Association’s state snapshot using PitchBook data, 207 NH startups received venture funding from 2019–2023, totaling $1.5 billion invested. That’s real money, but it’s a small trickle compared to our neighbors; most activity concentrates in a few sectors (notably business products/services, IT, and healthcare).
Who’s writing checks in-state? The NVCA profile highlights three NH-based firms frequently at the center of deals:
- Borealis Ventures (Hanover): life sciences, digital health, animal health. (NVCA)
- New North Ventures (Manchester): national-security-adjacent tech; seed to early A. (NVCA)
- York IE (Manchester): early-stage B2B tech with a hands-on advisory model. (NVCA)
Public capital programs. The NH Business Finance Authority (BFA) remains the state’s central lever. Its Early Stage Capital page lists three vehicles: the historic Granite Fund (fully invested), the Vox Health Fund (active life-sciences/digital health), and Millworks Fund II (angel partnership), alongside credit programs like CAP that guarantee bank loans up to $500k. These are useful—but note their emphasis on de-risking loans or sector-specific venture, not general pre-seed. (NH Business Finance Authority)
Federal pass-throughs. NH participates in the Treasury’s State Small Business Credit Initiative (SSBCI 2.0) via BFA—again, mostly debt/credit enhancements rather than equity checks to pre-revenue founders. (U.S. Department of the Treasury)
University pipeline. UNH’s historic NH Innovation Research Center (NHIRC) seeded industry-university R&D for years, but the program has largely wound down to legacy notes on UNHInnovation’s site. Meanwhile, UNH now runs FOSTER to improve SBIR/STTR grant readiness. Dartmouth’s OETT/TTO is active but small relative to mega-research peers. Translation: good signals, limited scale. (UNH Innovation)
Angel density. eCoast Angels (Seacoast-based) and Millworks-linked angels remain present, and UNH has honored eCoast for its regional role—but this is not a high-volume, high-velocity angel market like in Boston or NYC. (eCoast Angels II)
Competitions and ecosystem events. TechOut historically provided six-figure equity awards (backed by Millworks/BFA). It signaled momentum, but activity has been episodic, with legacy pages still referencing 2014–2019 dates and news features noting the need for “another group” to step in post-2021. Episodic money ≠ reliable seed market. (New Hampshire Tech Alliance)
Takeaway: New Hampshire does have capital—but it’s concentrated in a handful of funds and programs, not a thick seed-stage market with dozens of competing term sheets. That thinness is the core problem.
2) Why is early-stage capital so hard to find here? The five structural frictions
A) Capital has geographic gravity, and NH sits outside the heaviest orbit
Venture is notoriously local. Decades of research and market data confirm a local bias—investors prefer deals they can actively monitor. Distance dampens both the likelihood of investment and post-investment engagement. Even as Zoom normalized remote diligence, 2024–2025 data show a reconcentration of venture dollars in a few hubs, especially California (with outsized AI rounds). That’s gravity, not gossip. (ScienceDirect)
What this means practically: Being a one-hour drive from Boston helps, but the money still tends to settle in Boston. NH startups must compete on the visitor’s side of the river. That alone reduces spontaneous coffee-chats, events, and syndication serendipity that power seed markets.
B) NH’s instruments skew to credit, not true pre-revenue risk capital
The BFA’s CAP is useful—100% guarantees on loans up to $500k can help small businesses. But many venture-scale startups need equity, not debt, especially before revenue. SSBCI 2.0 primarily supports loan participation/guarantees, with limited scope for true equity injections. The result is a financing instrument mismatch at the riskiest stage. (NH Business Finance Authority)
C) The pipeline from research to startups is real but thin
UNH and Dartmouth produce IP and founders, but the absolute scale of disclosures, licensing volume, and repeatable spin-outs is small versus R1 powerhouses (MIT, Harvard, Northeastern, BU). UNHInnovation touts SBIR/STTR prep and legacy NHIRC impact; Dartmouth’s OETT/TTO also highlights patents/licensing and campus accelerators—good signs, insufficient volume to flood the state with fundable Series-A-bound companies each year. That throttles the deal flow density angels and micro-VCs need. (UNH Innovation)
D) Episodic ecosystem signals make it harder for outside investors to map NH
When pitch competitions and accelerator cohorts run inconsistently, outside investors can’t put NH on a predictable scouting calendar. TechOut’s historical role was strong (and well-covered), but with gaps and legacy pages, the signal is “sometimes.” Investors chase repeatable funnels; “sometimes” reduces dealflow confidence. (New Hampshire Tech Alliance)
E) The broader macro climate pushes investors up-market
Post-2022, venture dollars tilted toward later-stage winners, and early-stage risk appetite fell. NVCA/PitchBook noted a supply-demand gap in growth capital; Carta showed a first-quarter 2024 flight back to California. If you’re in a small state without scale advantages, you’re hit twice: macro risk-off plus local thinness. (NVCA)
3) “But NH has no investors” is false. The issue is density and fit
It’s more accurate to say New Hampshire’s investor base is specialized and finite, not nonexistent.
- Borealis Ventures focuses on healthcare and allied bio verticals; if you’re SaaS for contractors, you’re outside their wheelhouse. (Borealis Ventures)
- New North Ventures targets national-security-relevant tech; they want dual-use potential or adjacency to DoD priorities. (New North Ventures)
- York IE favors B2B software with traction and a path to capital-efficient growth. It’s not a “spray and pray” pre-product fund. (York IE)
- eCoast Angels deploy selectively and often syndicate—again, not a volume machine. (eCoast Angels II)
- Millworks Fund II and TechOut historically infused six-figure checks tied to competitions or accelerators, not continuous rolling investments. (Millworks Fund)
The result: worthy companies can still struggle to find a lead in-state, especially for pre-seed/seed outside the favored lanes. That’s not a quality problem with NH founders; it’s a market structure problem.
4) Policy context: taxes and credits help at the margins but don’t replace seed capital
Business taxes. NH’s Business Profits Tax (BPT) sits at 7.5% for taxable periods ending on/after Dec 31, 2023, and there’s an ongoing policy debate about further reductions versus forgone revenue capacity. Useful for operating companies, but tax rates don’t conjure pre-seed equity. (NH Revenue Administration)
Interest & Dividends tax repeal. As of Jan 1, 2025, NH fully repealed the Interest & Dividends tax. Good optics for investors domiciled here, but seed funding decisions still hinge on deal density and proximity. (NH Revenue Administration)
R&D tax credit. NH offers a 10% credit on qualifying R&D wage expenses, with a statewide cap historically at $7M and proposals to raise it to $10M and the per-entity cap to $100k (from $50k). Smart incentive, but it benefits companies already spending on R&D payroll; it’s not a substitute for first-money-in capital. (NH Revenue Administration)
CDFA tax credits. The Community Development Finance Authority’s tax credit program mobilizes private donations for community/economic projects. It’s valuable, but it is not a seed equity program. (NH CDFA)
Bottom line: favorable taxes and credits reduce friction; they do not replace the risk appetite and pattern-recognition capacity of deep seed investors.
5) The Boston question: proximity helps, but cross-border fundraising is a contact sport
Being near Boston is an asset only if NH founders are fully integrated into Boston’s networks—accelerators, CTO dinners, vertical meetups, and co-investor lists—so that distance isn’t a cognitive tax for investors. The broader market’s reconcentration in a few states underscores how crucial embeddedness is. Founders who treat Boston as their second office fare better; founders who wait for out-of-state investors to show up in Manchester usually wait longer. (Carta)
6) Founder-level realities: what makes NH rounds hard to close
Let’s speak plainly—this is what early-stage investors quietly screen for here:
- Pre-seed rounds are too small and too bespoke. Without standardized SAFE/seed docs and known lead angels, rounds drag. Investors prefer velocity. (NHTA’s guidance is helpful but isn’t a substitute for an active lead list.) (New Hampshire Tech Alliance)
- Insufficient proof points at first pitch. With thin local risk appetite, NH founders must “over-prove” (real customers, real unit economics, cost-efficient growth) to earn an out-of-state lead. York IE’s model—capital plus advisory—leans into this bias: execution clarity wins. (York IE)
- Underused federal non-dilutive pathways. SBIR/STTR can be a decisive wedge for deep-tech here, yet many founders under-apply. UNH’s FOSTER program exists to correct that; use it. (UNH Innovation)
- Sparse serial-founder loop. The fastest way to create angels is exits. NH’s past wins (e.g., Dyn, Newforma, Avitide) mattered, but the flywheel needs more frequent spins. Millworks-adjacent efforts helped; continuity is the issue. (NH Business Finance Authority)
7) What’s working in NH (and worth doubling down on)
- Sector specialization: Health tech/life sciences (Borealis), national-security tech (New North Ventures), B2B SaaS (York IE). Founders aligned with these lanes see a clearer local path. (NVCA)
- Angel-state partnerships: Millworks II demonstrated that structured angel consortia paired with BFA can move six-figure checks into promising startups and prize competitions. Revive and scale this logic. (NH Business Finance Authority)
- University engagement: UNH/Dartmouth commercialization, SBIR prep, and accelerators form a legitimate pipeline. It’s small but real. (UNH Innovation)
8) What to fix: a blunt, practical playbook for policymakers and ecosystem leaders
1) Create a permanent, rolling pre-seed facility—not just competitions.
Reconstitute a Millworks III with a modern design: a rolling $10–15M evergreen pre-seed/seed fund seeded by BFA capital plus matching private LPs, with an explicit mandate to co-lead 20–30 checks/year at $250–750k. Tie carry to in-state HQ and job persistence to keep politics clean. Use standard SAFEs to increase velocity. (BFA has already proven it can partner with private investors; this expands the aperture from events to a constant funnel.) (NH Business Finance Authority)
2) Wire NH into federal dual-use capital.
National security VC is growing, and NH already has a leader (New North Ventures). Build a statewide dual-use consortium around DoD labs, SBIR, AFWERX, DIU, and prime contractors across I-93. Fund professional proposal support using non-SSBCI dollars (SSBCI TA is narrow) and stage biannual Defense Tech Demo Days in Manchester/Portsmouth to bring in co-investors. (New North Ventures)
3) Make SBIR/STTR win-rates a KPI.
UNH’s FOSTER efforts are a great start—now scale them. Offer state bridge grants for Phase I awardees to speed customer discovery and a Phase II matching program capped per firm to stretch dollars. Publicize quarterly dashboards of NH SBIR counts and amounts to normalize non-dilutive capital as seed fuel. (UNH Innovation)
4) Stand up a statewide “Lead List” and syndication calendar.
Publish (and constantly update) a transparent directory of angels, micro-funds, corporate venture units, and family offices actively investing in NH or within a two-hour drive; include typical check sizes and sector theses. Pair it with a 12-month cadence of investor showcases (Boston, NYC, Hanover, Manchester) so out-of-state funds can reliably plan trips.
5) Modernize founder education beyond the basics.
NHTA’s resources on financing options are helpful. Now add term sheet literacy workshops, pricing/metrics masterclasses for B2B SaaS, and regulatory roadmaps for medtech—delivered by operators who’ve closed rounds recently. Record these as open content. (New Hampshire Tech Alliance)
6) Expand the R&D wage credit while focusing it on commercialization.
Supporting SB 276’s proposed expansion (from $7M to $10M statewide; $100k per firm) is sensible. Reserve a carve-out for first-time awardees and companies with <$2M ARR to avoid large incumbents soaking the pool. (LegiScan)
7) Recruit 3–5 external micro-VCs to open NH satellites.
Offer time-boxed office grants and co-GP partnerships from the state pre-seed fund for sector-aligned micro-VCs that put a partner in-residence in NH and commit to 5+ local deals over three years. Local presence beats Zoom.
8) Replace episodic pitch nights with investor-ready pipelines.
Build a standing Founder Readiness Program that runs quarterly: diligence rehearsals, customer pipeline proof, data-room audits, and mock partner meetings. Invite Boston/NYC partners to the finals to force-test quality.
9) What founders can do now (no waiting for policy)
Treat Boston like a second home. Spend one day a week there until you have two warm intros into every relevant partner in your sector. The post-2024 reconcentration is real; be physically present where capital is densest. (Carta)
Sequence your capital stack. Use non-dilutive first (SBIR, state R&D credit), then angels/micro-VCs. If you’re dual-use, aim for AFWERX/DIU while you develop commercial proof. UNH’s FOSTER program can raise your SBIR hit rate—use it. (UNH Innovation)
Pitch like an operator, not a tourist. York IE’s philosophy is a tell: investors want crisp go-to-market math and an execution plan, not platitudes about lifestyle or “Live Free or Die” vibes. Show pipeline, CAC/LTV scaffolding, and a believable first 10 customers. (York IE)
Standardize your round. Publish a clean data room, pick a standard SAFE (or NVCA seed), set a rational cap, and line up 3–5 anchor angels before you ask a lead to take risk. NH’s small market penalizes messy raises.
Don’t wait for a local lead if your niche is thin here. If you’re climate-hardware or fintech infra, your lead may well be in Boston, NYC, or SF. Run a hub-first process and invite NH investors into the syndicate.
10) Counter-arguments (and why they fall short)
- “We don’t need more VCs; bootstrapping is better.” Bootstrapping is great when your category allows it. But capital-intensive sectors (medtech, hardtech, dual-use) require equity. NH’s hardest-to-fund categories are precisely those where bootstrapping won’t cover clinical, regulatory, or hardware timelines.
- “Taxes are low so capital should flow.” Taxes marginally help domiciling investors but do little to change venture’s local network dynamics or the need for dense deal flow. The I&D repeal is positive optics; it doesn’t manufacture seed leads. (NH Revenue Administration)
- “Episodic competitions prove there’s enough money.” One-off checks are morale boosts. Companies need predictable pre-seed/seed capital available year-round to hit milestones on schedule. The evidence from TechOut’s cadence shows value but not continuity. (New Hampshire Tech Alliance)
11) Signs of momentum to watch (the opportunity case)
- Sector-focused anchors. If New North Ventures continues to syndicate dual-use deals and Borealis keeps landing meaningful life-science wins, NH can brand around two credible clusters—defense tech and health tech. Clusters attract specialized angels, advisors, and corporate partners. (New North Ventures)
- York IE’s builder model. If more NH startups adopt capital-efficient B2B motions and show strong revenue per head, that will appeal to today’s risk-sensitive seed market. (York IE)
- A revived Millworks-style fund. Re-establishing a constant, rolling pre-seed facility that co-leads across verticals would compress time-to-first-check and anchor more companies in-state. (NH Business Finance Authority)
- SBIR/STTR scale-up. A visible jump in NH’s SBIR/STTR awards—helped by UNH’s programming—would pour tens of millions of non-dilutive dollars into the earliest stages, strengthening cap tables for later venture rounds. (UNH Innovation)
12) Related videos (for founders who want to go deeper)
Below are relevant YouTube videos you can watch directly in this piece. They’re not endorsements; they’re useful perspectives from operators tied to NH’s ecosystem and capital markets.
13) Action checklist (90-day plan)
For policymakers & ecosystem orgs
- Commit funding to a rolling pre-seed evergreen (Millworks III) with a transparent investment cadence and standardized terms; publish quarterly investment stats. (NH Business Finance Authority)
- Stand up a Dual-Use NH program with DoD-focused events twice a year and shared proposal support. (NH Business Review)
- Scale SBIR/STTR prep; add modest state Phase II matches. Publish win-rate dashboards. (UNH Innovation)
- Expand R&D credit with first-time and sub-$2M ARR prioritization; monitor uptake to avoid capture by incumbents. (LegiScan)
For founders
- Build a Boston cadence (weekly meetings), a clean data room, and a standard SAFE.
- Sequence non-dilutive → angels → micro-VCs; if you’re dual-use, parallel path AFWERX/DIU. (UNH Innovation)
- Target NH-aligned verticals (health, dual-use, capital-efficient B2B) unless you already have out-of-state leads.
14) Conclusion
Funding is hard in New Hampshire not because the people or ideas are weaker, but because market architecture matters. Capital pools follow density, pattern recognition, and repeatable funnels. NH currently runs a boutique model—select specialized funds, a few angel networks, some state credit tools, and university seeds. Boutiques can produce great wines, but they don’t fill supermarkets.
The good news: boutique ecosystems can scale if they build year-round dealflow, put professional pre-seed capital on rails, and pick two to three sector spikes where they can punch above their weight. Add disciplined SBIR/STTR usage, a revived Millworks-style engine, and intentional Boston integration, and the flywheel starts to hum.
The Granite State doesn’t need to be Silicon Valley. It needs to be predictably investable—on NH terms, with NH speed.
Sources & References
- NVCA / PitchBook: VC: Driving Innovation in New Hampshire (state snapshot with 2019–2023 totals; sector breakdown; employment).
- NH Business Finance Authority: Early Stage Capital partners (Granite Fund—fully invested; Vox Health Fund; Millworks Fund II) and CAP program (100% guarantees up to $500k). (NH Business Finance Authority)
- SSBCI 2.0: Treasury overview; NH implementation via BFA (Venturize summary). (U.S. Department of the Treasury)
- UNHInnovation (NHIRC; FOSTER SBIR/STTR) and Dartmouth OETT/TTO program pages. (UNH Innovation)
- Angel ecosystem: eCoast Angels (group site); UNH recognition of eCoast Angels. (eCoast Angels II)
- TechOut & Millworks: NH Tech Alliance releases; Millworks Fund site; NHBR coverage on post-2021 gap. (New Hampshire Tech Alliance)
- Tax policy: NH BPT rate; repeal of Interest & Dividends tax (DRA releases). (NH Revenue Administration)
- R&D tax credit: DRA program page; SB 276 proposal to expand aggregate cap and per-firm limit; industry commentary. (NH Revenue Administration)
- Macro VC geography: Carta 2024 Q1 geography; NVCA Venture Monitor (capital supply/demand); PitchBook regional mapping; academic literature on local bias and proximity. (Carta)
Video References
- “Redefining Startup Growth with Kyle York at York IE.” YouTube. (YouTube)
- “Founder-Market Fit First: Kyle York’s Investment Philosophy.” YouTube. (YouTube)
- “NH Startup Challenge – Full Video.” YouTube. (YouTube)
Appendix: NH investor & program quick-glance (selected)
- Borealis Ventures (Hanover): early-stage healthcare platforms, digital/animal health. (Borealis Ventures)
- New North Ventures (Manchester): dual-use/national security technologies. (New North Ventures)
- York IE (Manchester): B2B software with advisory. (York IE)
- eCoast Angels (Seacoast): regional angel network. (eCoast Angels II)
- BFA CAP: 100% loan guarantees up to $500k (credit enhancement). (NH Business Finance Authority)
- BFA Early Stage Capital: Vox Health Fund, Millworks Fund II; Granite Fund (legacy). (NH Business Finance Authority)
- UNH FOSTER: SBIR/STTR training and proposal support. (UNH Innovation)
