United States

Silicon Valley - Bay Area #1

Despite rising real estate prices and increased scrutiny, Silicon Valley remains a vibrant place for startups. In fact, the external forces acting on Silicon Valley are changing how companies develop products and manage teams.

Robert Siegel
Partner at XSeed Capital and Lecturer in Management, Stanford Graduate School of Business
#1 Global Ecosystem: Performance
#1 Global Ecosystem: Funding
#1 Global Ecosystem: Talent & Experience

Highlights

Despite an outflux of some talent thanks to the cluster’s sky-high costs and pandemic-related remote work, Silicon Valley is still home to an estimated 40,000 startups and 1,000 VC firms, as well as many iconic tech companies. A third of total venture funding in the U.S. — more than $25 billion — flowed into the Valley in the first quarter of 2021. It is indisputably the world’s top startup ecosystem. Stanford University is the seed that spawned the Valley and it continues to play a major role in the ecosystem. Stanford alumni generate nearly $3 trillion in economic impact each year, which amounts to approximately 4% of the world’s total GDP. Other local universities like University of California at Berkeley, San Jose State, and several community colleges contribute to the ecosystem's dominance and staff its startups. Silicon Valley offers some of the world’s best networking. It’s successful startups, when they grow up to become corporate giants, often continue to be based in the area. This attracts not only plentiful talent but other entities as well, from corporations like Walmart to the incubators of foreign governments. This concentration of people and ideas results in an incredibly vibrant ecosystem. The area’s energy is reflected in its many startup focused events, such as TECHSPO Silicon Valley, Palo Alto meetup 106 Miles, and Startup Grind, which describes itself as a “global community for entrepreneurs” and organizes monthly events for ecosystem players.

Ecosystem by the numbers

TOTAL EARLY STAGE FUNDING
$22 bn
GLOBAL AVG.
$548 m
ECOSYSTEM VALUE
$1029 bn
GLOBAL AVG.
$13.68 bn
MEDIAN SEED ROUND
$1000 k
GLOBAL AVG.
$480 k
MEDIAN SERIES A ROUND
$8.8 m
GLOBAL AVG.
$3 m
SOFT. ENGINEER SALARY
$119 k
GLOBAL AVG.
$44 k

Sub-sector Strengths

AI, Big Data & Analytics

VCs continue to pour money into Silicon Valley AI companies. SambaNova Systems, a maker of software and hardware to run AI applications, raised a $676 million Series D round led by SoftBank Vision Fund 2 in April. The company is now worth more than $5 billion. Threat detection and response company Vectra AI recently raised a $130 million round, while Placer.ai raised a $50 million Series B, also in April.

Fintech

Both Silicon Valley behemoths and upstarts are innovating in the subsector. Google, for instance, has partnered with more than a half a dozen banks for its Cache project and is set to launch checking accounts for consumers next year. Tribal Credit, which handles payments for SMBs in emerging markets, closed a $34.3 million round in April, while teen banking startup Step raised a $100 million Series C also in April and boasts celebrity backers including Jared Leto and Will Smith.

Life Sciences

Life Sciences startups continue to attract large funding rounds in Silicon Valley. Following its latest raise in July 2020, ALX Oncology has raised a total of $166 million over 4 rounds. Drug discovery and development company Eikon Therapeutics closed a $148 million Series A in May, and Biomea Fusion, which develops precision drugs to treat cancer, closed a $56 million Series A round in January before raising $153 million with its Apri IPO.

Reasons to move your startup to Silicon Valley - Bay Area

Legal Support

Silicon Valley has efficient laws, policies, and regulations to safeguard business interests, trade secrets, and ownership of ideas. These act as a necessary shield for tech businesses, especially the ones that are starting small.

Easy Financing Opportunities

Silicon Valley may be a legendarily high-cost ecosystem, requiring large amounts of capital to get a startup off the ground, but it is also the worldwide epicenter of startup financing. U.S. VC funds invested $69 billion in startups in the first quarter of 2021. Fully a third of that went to companies based in Silicon Valley or nearby San Francisco. The area also boasts the highest concentration of billionaires per capita in the world, which means startups have access to a huge range of experienced angel investors willing to bet on unique and innovative ideas.

Startup Community

Startup Genome
Partners

Engine
GSV
Manos Accelerator
Parisoma
Rocketspace

Get connected

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