No Other Silicon Valley In Sight, Report Finds

By Alberto Onetti

Is Silicon Valley losing its edge?  Are we experiencing an exodus of tech workers and companies from Silicon Valley? Where is the next Silicon Valley?

These have been the most asked questions in the Bay Area for a while and particularly during the pandemic.

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In seeking to answer these–and other–questions, Mind the Bridge dug even deeper into the Crunchbase database to collect more data points. The result is the new report “Tech Scaleup Silicon Valley” which was presented on Sept. 15, 2021, at the opening of the Scaleup Summit, San Francisco.

Here are some answers, and there are more in the report.

Relax. There is no other Silicon Valley in sight

No ecosystem in the world realistically has the possibility to close the gap with Silicon Valley. The Bay Area hosts 7,894 scaleups; tech companies that have raised over $1 million since inception. Elsewhere, it takes an entire continent or country such as Europe or China to provide similar figures. Silicon Valley has about 5x more scaleups than Israel (the so-called “Startup Nation”).

The gap is even wider in terms of investments. Scaleups headquartered in the Bay Area raised $501.3 billion in capital, which is about half of the total capital made available to U.S. tech companies. This is about 2.6x more than the amount raised by their European counterparts ($195.5 billion) and 1.1x higher than China ($468 billion).

Source: Mind the Bridge and Crunchbase, Tech Scaleup Silicon Valley, 2021 Report.

Are startups leaving Silicon Valley?

More and more tech startups are leaving California. Large companies have made the leap as well.

Behind this choice are several factors: The insane cost of living, followed by intense competition for hiring, overreaching state regulation, and high taxation on personal income.

New York, Los Angeles County area, Boston and Cambridge, Austin (and Texas in general), Seattle, Atlanta, Chicago and the North Carolina tech triangle have seen a sharp increase of their scaleup population in the last three years. Seattle and Chicago’s figures show an increase of 45 percent, New York, Boston/Cambridge and Texas about a 40 percent increase, while Atlanta stands in the 30 percent growth range.

Does it mean that a tech democratization is taking place across the U.S.?

Not really. The Bay’s dominance still looks formidable.

Silicon Valley hosts 2.3x more scaleups than New York, 4.6x more than LA, slightly less than 7x more than Texas, 8x more than Boston/Cambridge, and 11x more than Seattle and Chicago. Atlanta and Miami are not yet comparable in size.

Investments in Silicon Valley scaleups are 4.9x higher than in New York, about 7x more than in LA, slightly less than 7x that of Austin, over 10x more than Boston/Cambridge and Austin, and over 30x more than the other hubs.

No hub can match Silicon Valley in terms of tech giants. The eight hubs altogether host 16 super scalers vs. 59 in the Bay Area.

Source: Mind the Bridge and Crunchbase, Tech Scaleup Silicon Valley, 2021 Report.

Looking for startups? Follow the corporates

The centrality of Silicon Valley is also confirmed by the large contingent of corporates from all over the world that have set up their innovation outpost in the Bay Area: According to our latest dedicated study, 319 of the Fortune 500/Forbes 2000 companies have a stable innovation presence (many have more than a single outpost). While it is undoubtful that the COVID-19 epidemic has had some effects on the medium-term commitment of such companies (we have seen a few “retreats”), for the most part, data shows that both the number and the size of such units are experiencing steady growth. No other hub in the world has such concentration of corporate innovation hunters.

At the end, rumors of the supposed “death” of Silicon Valley appear to be greatly exaggerated, data say. It is unlikely that a single hub might reach the density levels of the Bay Area. Nevertheless, there will likely be multiple clusters in different places (U.S. and abroad) able to get beyond critical mass. But there’s no new Silicon Valley in sight.

Alberto Onetti is chairman of Mind the Bridge.