Archive for November 3rd, 2013


Brain Drain

Companies around the world are mining for mind power in Silicon Valley.

Putting it all in perspective (in the US):

  • 462: approximate number of currently active US venture capital firms (investing at least $5 million in companies)
  • 1,022: number of venture firms in year 2000, firms at the height of the tech bubble.
  • $149 million: average venture fund size.
  • $176.7 billion: dollar amount spent by venture firms from 2000-2010
  • $3.1 trillion: According to the 2011 Venture Impact study, originally venture-backed companies accounted for 11.87 million jobs and over $3.1 trillion in revenue in the United States (based on 2010 data). Those totals compare to 21% of GDP and 11% of private sector employment.

FACT: In 2010, venture capitalists invested approximately $22 billion into nearly 2,749 companies. Of these, 1,001 companies received funding for the first time.

Why so many startups in Silicon Valley?

Is there something in the water? Is it Silicon Valley’s water or air that makes its people more creative, innovative or entrepreneurial than others? Silicon Valley’s entrepreneurial mindset has been 170 years in the making.

In the 1840’s it was the northern California gold rush that brought people west. Now it’s Silicon Valley entrepreneurship funded by venture capital.

A timeline of entrepreneurial activity in Silicon Valley

  • 1909: Stanford University’s president David Starr Jordan invests $500 in Lee DeForest’s audion tube, the first major venture-capital investment in the region
  • 1911: Hollerith’s Tabulating Machine Company is acquired by a new company that will change name to International Bussiness Machines or IBM in 1924
  • 1925: Frederick Terman joins Stanford University to teach electronics electrical engineering and encourages students to start businesses in California
  • 1939: The USA government establishes the Ames Aeronautical Laboratory (later renamed Ames Research Center) at Moffett Field (a Naval base)
  • 1946: The first venture capital firms are founded in the USA, American Research and Development Corporation (ARDC) by former Harvard Business School’s dean Georges Doriot, J.H. Whitney & Company by John Hay Whitney, Rockefeller Brothers by Laurance Rockefeller (later renamed Venrock)
  • 1955: Private investors or “angels” (including John Bryan, Bill Edwards and Reid Dennis) establish “The Group” to invest together in promising companies
  • 1957: Dean Watkins of Stanford’s ERL founds Watkins-Johnson, one of the first venture-capital funded companies in the Santa Clara Valley
  • 1958: Draper, Gaither and Anderson is founded, the first professional venture-capital firm in California
  • 1972: At least 60 semiconductor companies have been founded in Silicon Valley between 1961 and 1972, mostly by former Fairchild engineers and managers
  • 1975: Bill Gates and Paul Allen found Microsoft
  • 1976: Steve Wozniak and Steve Jobs form Apple Computer and build the first microcomputer in Jobs’ garage in Cupertino.
  • 1994: The “Band of Angels” is founded by “angels” to fund Silicon Valley startups
  • 1998: Two Stanford students, Larry Page and Russian-born Sergey Brin, launch the search engine Google
  • 1999: Between 1998 to 1999 venture capital investments in Silicon Valley firms increases more than 90% from $3.2 billion to $6.1 billion
  • 2013: 92% of smartphones in the world use an operating system made in Silicon Valley (Android 75%, iOS 17%, Windows 3%, Blackberry 3%, Symbian less than 1%)

Top Silicon Valley (and nearby S.F.) Incubators

  • AngelPad (San Francisco) … specializes in technology startups(2010)
  • Y Combinator (Mountain View, Ca.) … technology, founded 2005
  • Kicklabs (San Francisco)
  • 500 Startups (Mountain View, Calif) 2010

The Department of Defense (the Pentagon)

In 2012, more than $1 billion in venture financing poured into security start-ups, more than double the amount in 2010, according to the National Venture Capital Association.

  • Former Department of Defense and intelligence agency operatives have headed to Silicon Valley to create technology start-ups specializing in tools aimed at thwarting online threats.
  • Cyberattacks have expanded demand for security tools.

The car industry, catching the entrepreneurial spirit, is moving west, trying to shake off years of insularity:

  1. General motors: established GM Ventures, in 2010. Now it is providing critical early-stage funding to entrepreneurs and offering to be the first customer to startups in a wide variety of sectors, from advanced materials to alternate fuels.
  2. GM Ventures has funded nearly 20 startups from a $200 million war chest, including investments in solar energy systems maker Sunlogics, advanced battery developers Sakti3 and Envia Systems, biofuel developers Coskata and Mascoma, and electric bus maker Proterra.
  3. Ford: set up research operation in Palo Alto in 2012. Focused primarily on mobile devices, connectivity and other unspecified transportation-related applications, the lab has concentrated on partnering with local entrepreneurs.
  4. Bill Ford’s Fontinalis Partners has invested in such near-term ventures as mobile apps and peer-to-peer car sharing. Among its portfolio companies:
    • Everyday Solutions, which makes GPS systems for school buses
    • Parkmobile, which makes mobile parking-payment systems
    • Streetline, which uses sensors to track urban parking spaces

Other companies that have set up offices in Silicon Valley include:

  • Target Corp (Technology Lab in San Francisco)
  • G.E. (Global Software Center)
  • Johnson & Johnson
  • BMW (BMW Group Technology Office)
  • Walmart (@WalmartLabs)
  • Motorola Advanced Technologies and Products Group (owned by Google)
  • Dwolla, a payments network (based in Des Moines)




  1. http://www.nytimes.com/2013/08/23/technology/the-pentagon-as-start-up-incubator.html?hp&_r=0
  2. http://carlosbaradello.com/2013/06/24/mining-the-silicon-valley-mind-part-ii-a-perspective-for-foreign-entrepreneurs/
  3. http://news.yahoo.com/analysis-detroit-carmakers-rassle-silicon-valley-vc-model-213036394.html
  4. http://online.wsj.com/article/SB10001424127887323610704578626123357642626.html
  5. http://digiday.com/brands/why-target-set-up-shop-in-silicon-valley/
  6. http://tech.slashdot.org/story/13/08/23/0346203/the-pentagon-as-silicon-valleys-incubator
  7. http://www.nvca.org/index.php?option=com_content&view=article&id=119&Itemid=621
  8. http://www.nvca.org/index.php?option=com_content&view=article&id=344&Itemid=103
  9. http://www.scaruffi.com/politics/silicon.html
  10. http://blogs.desmoinesregister.com/dmr/index.php/2013/04/30/dwolla-raises-16-5-million-will-open-silicon-valley-office/article

Read Full Post »