Silicon Valley Is Losing Dominance

Silicon Valley has dominated startup investing for decades, but that's beginning to change. Here's what it means for everyday startup investors like us.

You are receiving this email because you signed up to receive our free e-letter, or you purchased a product or service from its publisher, Early Investing. If you are having trouble viewing this email, click here to view it in your browser. Everyday Investors Should Get Ready for Their Moment By Adam Sharp, February 19, 2021 Dear Early Investor, For the past few decades, Silicon Valley has dominated the world of venture capital. According to Pitchbook, Silicon Valley accounted for a whopping 26% of all VC dealmaking in 2014. Even more impressive, more than 39% of all dollars invested into VC-backed startups happened in the Silicon Valley area. However, Silicon Valley's dominance has been declining for a while. According to Pitchbook data, via CNBC, Silicon Valley's share of venture capital has been declining since 2014. But since the pandemic began last year, the trend has accelerated dramatically. Pitchbook now predicts that Silicon Valley's share of VC deals will soon drop below 20% for the first time in history. Prominent venture capitalist Jason Lemkin recently summed the situation up in a tweet. Lemkin knows what he's talking about. He's deeply entrenched in California's tech scene as one of the world's top Software-as-a-Service investors. The Tech Diaspora The world of tech investing is changing. Soon, Silicon Valley will no longer be such a dominant force in the world of startup investing. Back in August of last year, I wrote a piece titled "Tech Companies Flee California (Finally)." Here's a relevant excerpt. For California and the SFBA, this trend should be quite disturbing in the short-term. But for the rest of us, things are looking up. Companies are spreading out across the country, and the benefits — especially to business-friendly states like Texas — will be significant. Ultimately, this will be good for California too. They'll be forced to make the state more attractive to businesses. Maybe even lower taxes and slim down their bloated budgets (California is looking at a $54 billion budget deficit this year). I believe the groups that will benefit most of all are entrepreneurs and startup investors. As big technology companies spread out across the U.S., more innovative startups will also sprout up all over the country. Wealth, skills and experience will become more evenly distributed. Venture capitalists will be forced to invest much more outside the SFBA. Angel investor communities will sprout up everywhere in response. And equity crowdfunding will play an increasingly important role in funding early-stage companies. This is going to be an incredibly powerful trend. The primary effect will be a more even distribution of wealth across the country (and the world). And the timing couldn't be better for startup investors. On March 15th, new regulations will go into effect that increase the limit on most equity crowdfunding deals from $1.07 million to $5 million. This will attract far more mature and established startups, which anyone will be able to invest in. My advice: start saving up cash if you have the means. There will be some truly impressive opportunities for retail startup investors in the very near future. Keep a close eye on startup funding portals, because I suspect some of these new $5M deals will sell out very quickly. Equity crowdfunding is on the verge of a revolutionary change. If you're looking for some guidance, check out our First Stage Investor service. We can help you build a startup portfolio with high potential upside. And if you're interested in crypto, we've got you covered there too. We recommended our members buy bitcoin at around $3,400 in 2017 -- they'd be up nearly 16x today -- and still hold it in the First Stage Investor portfolio today (click here to sign up). Good investing, Adam Sharp Co-founder, Early Investing You are receiving this email because you subscribed to Early Investing. To unsubscribe from Early Investing, click here. Need help with your account? Click here. Have a question or comment for the editor? Click here. Please do not reply to this email as it goes to an unmonitored inbox. © 2021 Early Investing LLC All Rights Reserved Privacy Policy | Whitelist Early Investing Nothing published by Early Investing LLC should be considered personalized financial advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular financial situation. No communication by our employees to you should be deemed as personalized financial advice. We expressly forbid our writers from having a financial interest in their own securities recommendations to readers. All of our employees and agents must wait 24 hours after online publication or 72 hours after the mailing of printed-only publications prior to following an initial recommendation. Any investments recommended by Early Investing LLC should be made only after consulting with your financial advisor and only after reviewing the prospectus or financial statements of the company. Protected by copyright laws of the United States and international treaties. The information found on this website may only be used pursuant to the membership or subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), in whole or in part, is strictly prohibited without the express written permission of Early Investing LLC, Early Investing, 50 California St. , Suite 1503 , San Francisco, CA 94111, United States