In the third quarter of this year, the proportion of Silicon Valley in the US startup company financing transactions fell below 20% for the first time. Silicon Valley’s grip on startups and venture capital is eroding as startups pop up across the U.S.
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Silicon Valley has long been regarded as the startup capital of the world. As recently as the mid-2000s, Silicon Valley accounted for nearly a third of U.S. financing deals, according to analytics firm PitchBook data and industry group the National Venture Capital Association (NVCA).
But a surge in interest from non-traditional startup investors, such as hedge funds, in using startups as an asset class has helped drive startup creation everywhere. A growing number of entrepreneurs and investors are also opening companies outside California’s tech corridors, driven in part by the rise of remote trading.
“Before, you absolutely had to start a business in Silicon Valley,” said Arizona-based venture investor Jack Selby. He is a managing director at Thiel Capital and recently launched his own venture fund targeting Arizona startups.
Selby also said that in the past few years, the venture capital industry outside of Silicon Valley has not been developed enough to support startups that are not in tech hubs.
But when it comes to startup funding, Silicon Valley still dominates. Data from PitchBook and NVCA show that in the first three quarters of this year, Silicon Valley companies accounted for 34% of all venture capital in the United States, more than double the amount raised by the second-ranked New York-area startups.
