Silicon Valley and Venture Capital

Highway Signpost Venture Capital

Apple, Google, Facebook. All of these household names needed funding early on in their  lifetime.
There is a belief that if you want to start a tech company, you need to go to Silicon Valley. But one question that I never hear asked is why? Why is it that this became the go-to place and how did it even come to exist?

In the 1960’s Silicon Valley came into existence as a result of many technology related companies being started. One of the big companies, Fairchild Semiconductors, began branching off into multiple companies when employees came up with ideas while working there.

There have been attempts to bring the stream of venture capital funding to other parts of the country and build other “Silicon Valley’s” but as time passes, things become more and more centered in this area of California instead of growing in other areas of the country.

Since the companies that they funded were all in the same area and the workers to supply to the companies were as well, there was no need to move to other parts of the country.
Fast forward some decades and investment in this area is continuing to grow.
43 percent of Venture Capital money goes to Silicon Valley today which is an increase from 28 percent in the late 1980s.

There are firms that are located on the east coast, but it may take a lot of successes and continued investment in them to help them build a reputation like the west coast.



Information: Silicon Valley movie,

5 thoughts on “Silicon Valley and Venture Capital

  1. I never knew the history of Silicon Valley, I just knew it was the place for start-up companies to be. After reading this article, I decided to look up more about Silicon Valley and found this article about two business owners who went to Silicon Valley after finding themselves one million dollars in debt. The article is very interesting, often repeating that the people in Silicon Valley are constantly “killing it”. I think that this is important to note, because that contributes to Silicon Valley’s success. Since it has gained such a good reputation, people only go there with their very best ideas, which increases the overall success of Silicon Valley.

    On a different note, I wonder how online venture capital resources, such as gofundme, will change the nature and success of Silicon Valley. Will people continue to make the move to California in order to pitch their ideas to investors living in Silicon Valley, or will they decide to start a gofundme page and live at home with their parents for another year?

    Overall, this was a really interesting article! Thank you for sharing it.

  2. This is fascinating and reminds me of an article that I read about markets in South Korea. The article talks about spacial competition between stores and how instead of diversification of shops in an area, nearly all shops in a particular area sell the same product. It stresses that physical location can be a dominant fact in particular markets. It may seem strange that this would factor into the competition of the tech market being its intrinsic nature of shattering our reliance on real world interactions. However, I feel that Silicon Valley may have this situation due to the overwhelming influx of technology savvy people. The initial climb that the area had may be due to thousands of factors, but I believe that as time went on the compression of the area has created a more powerful spacial pull. The expertise in the area helps all people living there, creating a hothouse of people that are perfect for the industry.

  3. One of the answers to this question could be the idea of economies of agglomeration. This basically states that companies gain an economic benefit by locating near each other. There are many reasons for this. Some of the simplest include bouncing ideas off of each other, and change of employment. It could also include the cost of production or construction. These benefits could occur because the suppliers or vendors can send similar supplies to the same place in bulk.

    From a technology stand point I’m not sure how there is a physical benefit of locating near each other that there would be for a production company. That being said, I still think there could be some benefits of locating near each other. I think a lot of people in the area are like minded. Even things as simple as coffee shop conversation in the region could be beneficial.

    This is not something that is unique to Silicon Valley. This has been happening all throughout history in the US and across the world. For example, the financial world revolves around New York, London, and Tokyo. The steel industry revolved around Pennsylvania for a long time. Now the tech industry is located heavily in California. These things go in cycles and benefit the companies involved.

  4. I think this blog asks a very important question, which is also a very interesting topic as well. After doing some research, it seems that many others have also tried to ask and answer this question. According to Harvard Business Review, it appears that the tech industry outside Boston actually started out stronger than Silicon Valley but faded in the 1980s and 1990s.

    The article also includes an interview with AnnaLee Saxenian, who wrote a book on this exact topic. Saxenian explains that she believes Silicon Valley is more successful due to a decentralized structure that allowed for rapid change. This was very different than Boston, which consisted of large companies that were vertically integrated.

    Saxenian goes on to say that she is surprised by the continual cycle of growth as well as decline in Silicon Valley. Lastly, her only worry for the future of Silicon Valley is if the region becomes too legal, and if the startup companies begin to decline. In my opinion, I think this is a very innovative, motivated region which will continue to grow in the future.

  5. Great article! Coming from Massachusetts, I have definitely seen the start-up culture start to take hold in the Boston area, but most people know that if you have any kind of technology idea, Silicon Valley is the best place to go. As you mentioned, hubs of technology are springing up everywhere. Whether it is in Atlanta, Austin, or Boston, many people are trying to cultivate a similar culture to the one that exists in Silicon Valley. I believe that once more technology companies start to get established in places outside of California, we will begin to see areas similar to Silicon Valley all over the country.

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