Venture Capital Growing In Silicon Valley

Although the news media has reported both tech companies and venture capital firms leaving Silicon Valley, venture capital activity was actually fairly steady in 2020. The percentage of total US venture capital activity in the Bay Area has declined over the last decade but end of year 2020 venture capital data (from PitchBook) shows over 2,500 VC deals completed in the Bay Area, raising the number of deals to a level over that of 2019 with more data still expected.

During the last 10 years, US venture capital deal counts have increased by 120% and deal value has grown nearly 400%. This strong growth of VC during the last decade has helped other regions to grow but the Bay Area has also grown.

Over the last five years, over $151 billion of fundraising has happened in the Bay Area which exceeds the rest of the US combined. Bay Area VCs have funded 17 of the 22 US companies to ever receive a private valuation of $10 billion or more. Los Angeles had 3, New York had 1, and North Carolina had 1. Over the past five years, 23.6% of completed VC deals in the US, and 40.9% of the capital invested, have gone to Bay Area-based companies.

In the Bay Area, Stanford University and the University of California, Berkeley, have graduated roughly 2,900 students who have gone on to found roughly 2,500 companies. These two universities attract some of the best minds to the Bay Area from around the world.

In 2020, 38 companies, that were outside of the Bay Area, exited the VC stage with valuations of $500 million or more. The capital from these exits will likely help fund new ventures nearby. Whether the areas will become VC centers remains to be seen.

Although real estate prices can move quickly, any changes in Silicon Valley real estate trends due to the venture capital industry growing in other areas, are probably quite a few years away.

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