Throughout its history, Silicon Valley has dominated the spotlight for promoting and financing the growth of emerging tech companies. Today Silicon Valley continues to remain the center of tech innovation, in large part, because the startup hotbed now spills well into the San Francisco Peninsula. Among the hundreds of emerging tech companies now headquartered in San Francisco are Pinterest, Square and Uber.
And when we look at data across the entire San Francisco Bay Area, it is clear that the Silicon Valley tech hub is the 800 lb. gorilla when it comes to both venture-backed tech financing and exit activity. Since the start of 2009, venture capital firms have deployed $31.5 billion across 3,308 deals into Silicon Valley-based tech startups. In fact, Silicon Valley has consistently taken over 40% of venture capital deals and over 50% of funding to tech startups across seven major U.S. venture hubs including New York and Massachusetts.
Looking at exit activity across those same tech hubs, Silicon Valley companies make up over 1/2 of the top 50 largest venture-backed tech exits and the lion’s share of value as measured by exit valuation since 2012. Clearly, Silicon Valley continues to dominate the attention of hungry tech entrepreneurs striving to build the next big thing and the venture capital tech investors hoping to back them.
The 155-page Silicon Valley Tech Venture Capital Almanac offers the most detailed view of the Silicon Valley venture capital ecosystem, and the notable investors within it, ever. Specifically, the full report covers:
Below is a high-level summary of some of the report’s highlights. For all of the findings, download the entire 155-page report free of charge.
VC Financing Trends in Silicon Valley Tech
Silicon Valley venture capital investments in tech continue to grow unabated. Since the start of 2009, Silicon Valley tech startups have raised over $31 billion across 3,308 deals. And VC financing is not slowing down anytime soon. 2013 is on pace for a five-year high in venture capital and funding activity, as the first three quarters of 2013 saw nearly 5% more dollars and 8% more deals as compared to the first three quarters of 2012. Of note, Q3 2013 was the strongest quarter in Silicon Valley tech in the past five years, buoyed by mega-deals to Uber, Palantir and Pure Storage.
Peeling back Silicon Valley tech deal activity since 2009 reveals that seed investments have seen a massive increase over time. In fact, seed deal share in Silicon Valley has jumped from 7% in 2009 to 29% in 2013 year-to-date. In 2012, Silicon Valley tech deals at the Seed and Series A stage combined to take 23% of funding share in 2012, a four year high. Despite the early-stage boom, late-stage funding to Silicon Vallay remains strong. After dipping in 2010, late-stage funding share (Series D+) has grown consecutively for the past two years and takes nearly 40% of funding share in 2013 to-date.
The lion’s share of deal activity in Silicon Valley tech has gone to the Internet sector. Specifically, the Internet sector claimed 1/2 of Silicon Valley deal share in 2012 and 2013 year-to-date. But on the funding front, the mobile sector is seeing incredible growth from Silicon Valley tech investors. Funding share to Silicon Valley mobile companies has grown from 7% in 2010 to 15% in 2013 YTD.
Exit Trends in Silicon Valley Tech
Since 2010, Silicon Valley has seen a consistently strong number of venture-backed tech exits. Buoyed by an uptick in talent acquisitions of nascent seed-stage companies unable to raise Series A funding, 2013 looks to be on pace for a record-level of VC-backed tech exits in the Valley. Despite the growth in talent acquisitions, receptivity for venture-backed tech IPOs also appears to be increasing. Compared to just 4% in 2009, venture-backed IPOs have taken 12% of all Silicon Valley tech exits in 2013 year-to-date, including Twitter, FireEye, Rocket Fuel, and Marketo.
Facebook’s IPO was the largest Silicon Valley tech exit since 2009 and one of the largest Internet IPOs ever. In fact, public offerings including Twitter, LinkedIn and Palo Alto Networks take 15 of the top 20 largest venture-backed tech exits since 2009. Silicon Valley’s five largest venture-backed exits since 2009, based on company valuation at time of IPO, are listed below (Note: A list of the 20 largest exits is available in the 155-page report).
Veeva Systems (IPO)
With Silicon Valley exit activity growing, there are several venture investors who are seeing more success than others. Storied Silicon Valley fund Sequoia Capital leads the list of investors who have seen the most Silicon Valley-based tech exits over the time period covered in the report, followed by micro VC fund Felicis Ventures. Sequoia’s Silicon Valley tech exits include Jive Software, FireEye and Meraki while Felicis counts Climate Corp, Wildfire and Meraki as well. The top five investors based on their SV tech exits are below (A list of the top 20 investors can be found in the full report.)
New Enterprise Associates
Silicon Valley Tech Investor League Tables
SV Angel, the investment firm founded by Ron Conway and David Lee, is the most active investor in Silicon Valley-based startups since 2009. Two other Silicon Valley investors, Andreessen Horowitz and 500 Startups, round out the top 3 most active Silicon Valley tech investors. Interestingly, both were founded since the start of 2009. Note: Seed accelerator programs including Y Combinator and TechStars were not included in the investor league tables. Only 500 Startups non-accelerator/VC rounds were included in the rankings.
New Enterprise Associates
Given the importance of network centrality in driving venture capital performance, it is perhaps unsurprising that the most active Silicon Valley venture capital firms frequently share deal flow with each other and have strong syndicate relationships with their peers. SV Angel, for example, has completed nearly 50 deals with Andreessen Horowitz. (Note: Investor syndicate dashboards for the top 30 most active VC investors in SV tech can be found in the report.)
Fueling the record highs in Silicon Valley seed investments are over 20 highly active venture firms at the seed stage. In fact, there are 24 different venture capital firms who seeded 10 or more unique Silicon Valley-based tech companies between 2009 and May 2012. Of the 24 most active SV tech seed investors, General Catalyst Partners leads the list of investors in terms of its Silicon Valley tech seed investments having the highest rate of receiving follow-on investment. Two micro VCs First Round Capital and Floodgate Fund round out the top three. (Note: A full ranking of the 24 firms can be found in the report.)
General Catalyst Partners
First Round Capital
Quest Venture Partners
With corporate venture capital firms now playing an increasingly important role in the overall venture ecosystem, there are several corporate venture arms helping to fuel the growth of Silicon Valley’s tech scene. In fact, Google Ventures and Intel Capital have each invested in over 80 Silicon Valley tech startups since the start of 2009. Interestingly, six of the top 10 most active CVCs in Silicon Valley tech startups are investment arms of internationally headquartered companies. (Note: A full ranking of the most active CVCs in Silicon Valley tech can be found in the report.)
Motorola Solutions Venture Capital
The Most Well-Funded Silicon Valley Tech Startups
When Palo Alto-based payments firm PayPal was acquired by eBay for $1.5 billion, a group of PayPal employees now known as “PayPal Mafia” subsequently went on found and grow some of the biggest tech companies to since emerge in the Valley including LinkedIn, Yammer and Yelp to name a few. And in Silicon Valley’s tech scene today, there are several firms that have raised massive amounts of funding and may eventually go on to provide a similar momentum to the ecosystem with a future IPO. To date, the top 5 most well-funded Silicon Valley private tech companies have collectively raised over $2.2 billion (Note: A list of the top 20 most well-funded Silicon Valley based tech startups can be found in the report).
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Photo credit: Jamie Beverly