The Unicorns Behind San Francisco’s Burdensome Startup Success

San Francisco is an odd duck among cities. In most places, locals root for homegrown businesses to thrive and eyesore buildings to get a facelift; meanwhile, San Franciscans tend to wish their city would prosper a little less.

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It’s not just anti-gentrification. Here, even the well-off fear displacement by the more well-off. It seems like every week another local company joins the unicorn club, raises a massive funding round, or leaks news of a giant IPO or acquisition.

At times, it seems as if this burg of 47 densely populated square miles just prints money. Some data points of note:

  • More than 30 unicorns and near-unicorns are based in San Francisco, including the two most valuable in the U.S: Uber and Airbnb.
  • A San Francisco-based company, Dropbox, carried out the largest venture-backed tech IPO in more than a year.  It’s currently valued around $12 billion.
  • There are just over 1,400 companies based in San Francisco that have raised $10 million or more in venture funding, per Crunchbase data (see a partial list here).

So just how big is San Francisco as a center of startup valuation creation? In an effort to measure paper wealth creation, Crunchbase News tallied up a few datasets looking at citywide startup funding, unicorn creation, and valuable public companies.

We’ll be publishing our findings in installments. This week, we’ll start with a look at how San Francisco stands as a center for high-valuation startups and public tech companies. Next up, we’ll look the broader startup landscape (i.e., the one that includes non-unicorns). Finally, we’ll look for patterns in the data and see what traits the city’s most successful startups share.

Tallying Up The Big Private Companies

The collective value of the city’s 30 most valuable companies still stands at over $140 billion.

Cities change. Fifty years ago, San Francisco was ground central for the Summer of Love. Today, it seems like young people most commonly flock here to toil at tech and Internet companies.

That trend seems to be intensifying, much to the chagrin of fans of the old City by the Bay. Crunchbase data shows more San Francisco-based companies hitting the $1 billion or more valuation mark.

The Crunchbase Unicorn Leaderboard includes at least 32 companies believed to be at or near the $1 billion threshold. At least eight companies have raised more than a billion dollars in funding to date: Uber, Lyft, Airbnb, SoFi, Pinterest, Pivotal,, and Instacart. Messaging platform Slack, meanwhile, has raised nearly $800 million. Here’s the full list of 32 startups.

The collective valuation of San Francisco-based unicorns was quite a bit higher last year, when Uber was thought to be worth around $70 billion. What Uber is worth today is harder to nail down. A massive Uber secondary investment from SoftBank closed at a reported $48 billion. A blended valuation that takes into account other recent transactions values the firm at around $54 billion, which is the figure we’re going with. Even so, the collective value of the city’s 30 most valuable companies still stands at over $140 billion.

SF Public Company Valuations Outstrip Unicorns

In the past decade-and-a-half, we’ve seen the city cement its place as a hub for large-cap software and Internet companies

The collective valuation of San Francisco public and private technology and Internet companies is all the more striking when one considers that the city was comparatively late to the tech party. Silicon Valley used to refer to (and by many purists still does) San Mateo and Santa Clara Counties, to the south of San Francisco. The most valuable tech companies founded in the late 1960s through the 1990s (think Apple, Intel, Google, Cisco) were all traditional Valley companies.

It wasn’t till the dot-com bubble that San Francisco began really to take off as a hub for startups. In the past decade-and-a-half, we’ve seen the city cement its place as a hub for large-cap software and Internet companies, including Salesforce ($90 billion market cap), Twitter ($24B), Splunk ($15 billion), and Dropbox ($12 billion).

Those are some of the names on a list of 17 formerly venture-backed technology and Internet companies based in San Francisco that are currently publicly traded. Here’s the full list.

In addition, some of the city’s most valuable and heavily funded companies are neither unicorns nor publicly traded. Rather, they sold to an acquirer for a hefty sum. The largest recent example along these lines is MuleSoft, provider of a platform for building app networks, which sold to another local company, Salesforce, for $6.5 billion.

It Doesn’t Seem Sustainable, And Yet It Sustains

This being the end of the piece, it seems appropriate to wrap up with a bit of reflection and talk about whether or not this is a bubble.

At a certain level, the whole thing seems far-fetched. Take Twitter for instance. Twelve years ago, on a lark, a couple serial entrepreneurs launched a tool to express yourself in 140 characters or less. Now it’s worth nearly $25 billion and counts the president as a power user.

The city’s unicorn valuations are all the more astounding considering that the companies providing most of that paper wealth don’t even make money.

On the other hand, it is an ode to the longshot, to the ability to create big value from big losses, and to turn a city once renowned for its charm and livability into a place where six-figure-earners compete for cramped studio apartments.

So yes, at a certain level, it doesn’t seem like it should add up. And yet it does.

Illustration: Li-Anne Dias

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