In 2014, Bay Area businesses received more than 40% of all seed and early-stage venture capital money in the United States. That was, however, a long time ago. According to “Beyond Silicon Valley,” new research co-produced by venture firm Revolution and PitchBook, Bay Area companies have accounted for a decreasing share of US VC funding in recent years. Only around 27% of US VC money has gone to Bay Area businesses so far in 2021.
Despite the fact that the US is on course to witness record levels of venture capital this year, it has been more than a decade since that number went below 30%, according to the report. We looked into the research and discussed the results with Revolution CEO and Chairman Steve Case.
Case is the founder of the Revolution fund family (which includes the Rise of the Rest Seed Fund), which invests solely outside of Silicon Valley. Case and his colleagues have invested in 194 firms in 89 cities since founding the platform in 2014.
Not only will 2021 be a record year for dollars raised, but it will also be a record year for VCs headquartered in the Bay Area and New York City who invest in businesses outside of their areas. Bay Area firms earned more than half of early-stage Bay Area cash as recently as 2017. According to the Revolution/PitchBook research, that number is now at 37%.
At least $11 billion of Bay Area capital has been invested outside the three primary ecosystems in each of the last two years. That sum was under $3 billion a decade ago.
“When we look at the industries of the future, and the companies of the future, they’re going to be dispersed across the country and around the world,” Case told TechCrunch. “If all you’re doing is investing in your own backyard, you’re going to miss out on all the opportunities to invest in some of the iconic companies of the future.”
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