Unlike Many Top Innovation Regions, Silicon Valley’s Early Stage Investment is Up Since the End of 2015

By John Melville and Janine Kaiser

Boston, New York City, Seattle, Southern California—all experienced drops in early-stage investment (Angel, Seed, Seed VC, and Series A) in the first half of 2016.  Austin’s numbers rose modestly, but Silicon Valley’s rose faster.  And, the Valley’s overall level of early-stage investment remains well above all these comparison regions.

Q2 2016 did produce a quarterly drop in early-stage investment across all these innovation regions, including Silicon Valley, so we will have to see if this continues or reverses in the coming quarters, if it is a general trend or applicable to some regions and not others.

Regardless, even with this Q/Q dip, early stage investment into Silicon Valley companies remained above the historical average for the region.

Early State Investment

 

Initial Public Offerings is a measure on which Silicon Valley is not doing as well compared to some innovation regions.  The region’s number of IPOs and their total valuation dipped below that of New York City and Boston during the first half of 2016.

How significant is this trend?  The reality is that while valuations in each of these regions rose in the second quarter, they all remain below—or well below—their peaks of the last three years.  In fact, Renaissance Capital has reported that the U.S. IPO market in the first quarter of 2016 was its weakest since the 2008-2009 recession.

IPO Valuations

 

John Melville and Janine Kaiser are Co-CEO and Senior Consultant, respectively, at Collaborative Economics, a Silicon Valley-based consulting and research firm.