Remote Working Increases VC Investments in Other Areas Besides Silicon Valley
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Silicon Valley had $74.9 billion in venture-capital investments just in 2022, reports the Washington Post (citing data from PitchBook). With 3,206 deals, “that’s about $45.36 billion and 1,058 deals more than New York, the second highest region for VC fundraising.” And in addition, the Silicon Valley region “was also the home of 86% of start-ups, up from 53% last year, funded by famed start-up accelerator Y Combinator.”
And yet Silicon Valley’s share of U.S. venture capital investments last year was its lowest since 2012, “as lenient remote work policies and a spate of layoffs have fueled the departures of workers and cleared the way for rising investment in other tech hubs across the United States, notably Austin and Miami…. [N]early 250,000 people left the Silicon Valley region during the pandemic, according to census data from April 1, 2020, to July 1, 2022.”
Funding for companies in Miami has nearly quadrupled in the past three years, totaling $5.39 billion in 2022, while deal volume jumped 81 percent. Austin venture capital investments rose 77 percent to $4.95 billion with the number of deals jumping 23 percent. New York, Seattle, Philadelphia, Chicago, Denver and Houston also saw relatively large increases in investment and deals, data shows….
“There’s no doubt that [Silicon Valley’s] sort of exemplary, center-of-the-universe status has really absorbed some blows,” said Mark Muro, senior fellow at Brookings Institution. Miami and Austin both benefited from fewer restrictions during the coronavirus pandemic. Early on, cryptocurrency and Web3 — a broad term for the next generation of the internet that would give people more control and ownership — were major drivers of Miami’s growth. Seattle benefited from having Amazon and Microsoft in its backyard, attracting more enterprise technology and also biotech, said Kyle Stanford, lead venture capital analyst at PitchBook. “A redistribution [of funding] has definitely started. The pandemic, the fleeing of start-ups and remote work helped catalyze growth in those smaller markets,” he said.
Brianne Kimmel, founder of investment firm Worklife Ventures, has noticed a change in identity for the Silicon Valley region as many tech workers have moved out of San Francisco to other places like Austin or Seattle. “That’s really created room for young, very technical, traditional hacker types to come to San Francisco,” she said. “It’s giving the city a personality it may have lost in years prior.”
The Post got this assessment from a VC company partner focused on investing in AI and software infrastructure. “Five years ago, 90 percent of companies would’ve been founded in San Francisco. Now it might be more like 70 percent, with others starting in places like Seattle and New York.”