Will Silicon Valley Remain the Venture Capital Job Mecca?

May 17, 2010

It’s been 40 years since high tech pioneers like Hewlett-Packard and Intel burst onto the scene and put Silicon Valley on the map as the global center of innovation and entrepreneurship. Today, the 60-mile long stretch from San Francisco to San Jose still attracts one-third of all venture capital invested in new businesses in the United States. A new start-up launches every working day, according to an article in City Journal, an urban policy magazine.

But while California’s high-tech firms keep churning out tech breakthroughs and wealth, the state’s sorry finances may just drive them elsewhere. High taxes and stifling regulations give companies an incentive to move much of their business elsewhere. The trend started in the 1980s, with Valley firms such as semi-conductor maker AMD moving most of its manufacturing to China, India and Taiwan. Increasing demands for safety and health regulations and skyrocketing energy costs, have pushed many other companies to make the move to outsourcing, too. Many simply keep a streamlined team of engineers, designers and marketers in the Valley, and farm out everything else.

Nevertheless, venture capital leaders in the Valley still feel that the area is a “vast, informal club” and hub of networking and creativity. For example, while the latest hot area for tech development, digital “apps” for mobile devices and the iPad, could be created anywhere in the world, most of them are still conceived in Silicon Valley.

The area is also home to 20 or so elite venture capital firms on Sand Hill Road, surrounded by as many as 500 smaller VC firms that support smaller but potentially explosive new start-ups.

How did Silicon Valley’s get its entrepreneurial mojo? And will it hang onto it?  It’s worth reading the full City Journal article to find out.

What’s your take? Do you think Silicon Valley will hold onto its status as the number one location for tech innovation and venture investment? Or is the pendulum gradually swinging overseas? Add your comments below.

{ 1 comment }

Manager Careers July 7, 2010 at 8:19 am

Hi, great post. Michael.

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