There’s a prevailing narrative that the well being of the Bay Space startup ecosystem faces challenges. San Francisco’s share of startup rounds by depend has fallen from its perch ten years in the past. However that’s not the complete story.
In 2021, San Francisco Bay Space startups raised $126b. In 2019, US startups raised $126.4b. Within the span of two years, a area’s startups raised as a lot capital as all the US.
Throughout this identical interval, the US enterprise trade grew 41x from $8.8b to $360b invested per yr.
It’s true that throughout all phases, SF’s share of enterprise rounds has fallen 15%. In Sequence Seed, A, & B rounds, the deficit measures 30%. One may conclude different geographies have siphoned San Francisco’s {dollars}.
In greenback phrases, San Francisco’s stake of the early US enterprise market eked 5% decrease than 10 years in the past.
However, 2022 noticed a swing upwards, reversing a three-year decline. Bay Space startups claimed of 55% complete {dollars} up from 45% in 2012.
The problem with relative share is we see just one leg of the elephant.
Whereas SF primarily based corporations’ spherical share might have declined, the combination {dollars} infused into the Bay Space ecosystem grew from $1.4b per yr to $30b-$36b per yr.
Extra financings happen exterior San Francisco, however Bay Space corporations now elevate 2000 to 2500 rounds per yr, up from 404. Plus, SF startups elevate 26x extra capital to develop than a decade in the past.
To color one geography’s success as a loss for one more manifests a false causality.
It’s not that VC {dollars} have left San Francisco to gas different geographies. Slightly, the massively exothermic enterprise market has expanded inside & past San Francisco. Regardless of the correction in VC this yr, $284b of recent enterprise {dollars} will bolster American startup steadiness sheets – the second largest yr ever, eclipsed solely by 2021.
That’s one thing we will all toast to : the well being of Startupland broadly.
