More and more paths of venture capital financing are leading to San Francisco, not Silicon Valley (photo: El Frito/Flickr)
Silicon Valley is known as the innovation capital of the world.
Many of the world’s top technology companies call the region home—like Google, Apple, Intel and Cisco to name a few.
But wait a minute. What’s this? Is the nucleus of the Silicon Valley shifting north to San Francisco?
According to tech incubator the Hatchery, San Francisco led the world in venture capital funding for the past three years and it has more than 4,000 startups just in the South Market area.
This trend is thanks in part to the rise of social media and companies like Twitter and Yelp who have set up shop in the city.
“Silicon Valley is starting to migrate to San Francisco,” Chris Farley, co-founder of real estate analysis firm Polaris Group, told the San Jose Mercury.
If you’ve ever been to Northern California, you know the two regions are very distinct, offering new businesses something different.
“In the Peninsula and South Bay, Silicon Valley’s traditional geography, you’re driving from one business park to the next. In San Francisco, everything’s happening in a 1-mile radius,” Foley said.
San Jose is trying to compete for those start-ups, but the city’s mayor told the San Jose Mercury that it’s getting harder.
“Courting startups get more challenging this year when the state killed redevelopment agenices,” said San Jose Mayor Chuck Reed.
But it’s not all bad news for the Silicon Valley city. “We have millions of square feet of space that’s been vacant since the dot com bust and that’s a huge asset,” Reed said.
From 2007 to 2011, dozens of companies have set up shop or relocated in those vacant spaces, adding nearly 9,000 jobs.
Not to be out beaten, San Francisco’s mayor Ed Lee is working on plans to keep the businesses coming to the city.
As mayor, he approved a deal with Twitter to avoid paying a 1.5 percent city payroll tax on new hires for the next six years—this will reportedly save the powerhouse company $22 million.
One might argue, San Francisco has the space, there isn’t a lot of it, but there’s some. Real estate brokerage group CBRE reported tech companies signed more than 2 million square feet of office space in the first five months of this year.
Real estate vacancies in Palo Alto and Mountain View are barely at 2 percent.