If anyone asks, I always tell them, “if Boston had the same weather and career opportunities for me as Silicon Valley, I’d move there in a heartbeat.”
But the sad fact is that Boston isn’t in Silicon Valley’s league as a startup hub.
Professor Vivek Wadhwa, who does a lot of great research into the realities behind startups, was speaking at MIT’s Sloan School of Management, when he explained the policy and environmental reasons why Silicon Valley has done a better job of generating startups than Boston. Several members of the Boston startup community took offense, and demanded that Wadhwa produce data to prove his point.
Wadhwa did so in a recent TechCrunch post, where he points out that Silicon Valley has greater per-capita GDP, per-capita education, and a greater proportion of members of the “creative class” than Boston.
Not being an academic, I’m less concerned with these kind of population statistics, and more concerned with the things that really count in the startup world: Financing and exits.
On the financing side, the dominance of Silicon Valley is well-known. In the most recent PriceWaterhouseCoopers MoneyTree report (Q4 2010), Silicon Valley accounted for nearly 40% of all venture investment dollars in the United States, with New England a distant second at just under 11%. (To be fair, Silicon Valley has 2.5x the people as the Boston metro area, but the intensity of investment is still much higher)
The following story is anecdotal but telling. A month ago, I met with Brian Krejcarek of GreenGoose. He had been doing great things, but was somewhat discouraged by the pace of fundraising in Boston. I advised him to get out the Valley ASAP, and promised to help him raise money. As it turned out all he needed to do was get out to the Valley.
GreenGoose was the hit of the Launch conference, and actually raised $100K from investors while Brian was on stage.
It might be that the folks in Silicon Valley are just less selective, but as an entrepreneur, why should you care? If you want money, follow Horace Greeley’s advice, and “Go West, young man [or woman]!”
But the kicker is that the data strongly suggests that not only is Silicon Valley better for financing, it’s also better for exits.
Let’s look at the historical performance. I went to this list of the 25 most valuable publicly traded companies in America.
Of the companies on this list, I consider the following technology companies:
By my count, that’s five Silicon Valley companies, one Seattle company, and one New York company.
Even if you go to the next 25, the results are pretty similar:
Now the totals are six for Silicon Valley, two for Seattle, and one for Boston and San Diego.
You have to go all the way down to #49 on the list before you reach a Boston company. And even at an impressive $56 Billion, EMC is less than 1/5th the value of Apple. And don’t forget, EMC was founded in 1979, so it had quite a headstart on companies like Google and Amazon.
I love Boston, but the data have spoken, and it’s not even close. Silicon Valley is the better place to start a company.
(Cross-posted @ Adventures in Capitalism)