Saturday, May 26, 2012

Saturday Stats: Start-up Funding

Start-ups are the lifeblood of Silicon Valley, but historically start-up companies have not really flocked to San Jose. Usually they "graduate" to San Jose when they start needing substantial amounts of office space and resources. However, it looks like that is starting to change based on where the VC money is going.

In terms of Venture Capital invested in start-up companies regionally, San Jose did miserably in 2009. In the bay area they ranked 11th, behind Palo Alto and even San Carlos (!).

In 2011, San Jose clawed its way to 4th place with three quarters of a billion dollars invested between 43 companies:

1.) San Francisco - $2.87 billion
2.) Palo Alto - $1.3 billion
3.) Mountain View - $1.03 billion
4.) San Jose - $784.2 million

This is a trend that I think will continue for multiple reasons, but I think the top one is start-ups looking more for urbanized locations. That's why they are flocking to downtown Palo Alto, Mountain View, Campbell, SF, etc. Start-ups require a high-energy environment and employees working 80+ hour weeks expect instant access to the conveniences urban areas offer.

The good news is San Jose is urbanizing faster than any other city in Silicon Valley right now, and has ambitions plans to build future urban villages pretty much everywhere. Downtown is becoming a legitimate destination for incubators and startups, North First is going to explode over the next 2 decades, midtown is being built up, the area around the HP Pavilion is slated to become an "innovation district," and Santana Row is building mass amounts of office space. All of these areas have the potential to attract hot start-ups, especially as the perception of San Jose only being suburban dies off. To boot, we have the lowest housing costs (besides Gilroy) and best transportation infrastructure in the South Bay. I think we have a winning recipe and I'm really looking forward to seeing how the 2012 funding number stack up.

Source: SiliconBeat

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