Welcome to the 2013 Silicon Valley Index website!

Entrepreneurship

Angel investment, small business loans and IPOs have all increased in the last year, although entrepreneurship has been constrained by limited access to financing.

The percent of the population starting a business has dropped slightly in Silicon Valley since the early 2000s, while growing in California, other parts of the San Francisco Bay Area and the U.S. as a whole. However, since this is a measure by place of residence, the geographic distribution does not indicate necessarily where the business is located.

The total number of U.S. IPO pricings edged up from 2011 levels, and the distribution has shifted. Silicon Valley reached a five-year high of 17 pricings in 2012, representing 52 percent of IPOs statewide and 15 percent nationally. The number of U.S. pricings from global companies has been cut in half, while gains have been seen in IPOs throughout the rest of the state and nationally.

Between Q3 2011 and Q3 2012, the number of M&As decreased in both the region and the state. M&As dropped by eight percent in Silicon Valley and eleven percent in the state, boosting Silicon Valley’s share of all California M&A deals. In 2012, Silicon Valley accounted for 54 percent of all California M&A deals, and 11 percent of all U.S. deals.

Disclosed angel investment has expanded in the region in recent years, totaling more than $34 million in Silicon Valley and more than $21 million in San Francisco in Q3 2012. Silicon Valley angel investment has increased dramatically, rising 90 percent in the past year alone. Silicon Valley and San Francisco together capture nearly half (45%) of the total angel investment in the state, though this share has decreased in recent years given the increase in total California angel investment, which has more than quadrupled since 2007.

Following a year of decline, Silicon Valley reported robust establishment growth in the last observable period (January 2010-11). The region added a total of 46,400 new establishments, up 146 percent over the prior years. Business closings declined 72 percent over the same period.

The number of businesses without employees continues to grow in the region (relative rates up ten percent), albeit at a slower rate than California (+12%) and the U.S. (+13%). This suggests that a greater number of entrepreneurs are starting businesses without employees. Most nonemployer firms are self-employed individuals whose businesses are not necessarily their primary source of income. Therefore, firms without employees create notably less economic impact than businesses with employees. Twenty-six percent of the region’s nonemployer firms were in the Professional, Scientific, & Technical Services sector in 2010. Nationally, this sector encompasses only 14 percent of firms without employees and 18 percent statewide, suggesting that Silicon Valley is specialized in the sector.

Access to small business loans has improved. Following a precipitous drop in 2009 that continued into 2010, the number and total value of small business loans increased in 2011. Small business loans in Silicon Valley rebounded 16 percent in 2011 compared to 2010, totaling 68,975 loans. Over the same year, total loan values loans jumped five percent in the region and seven percent in the nation as a whole. Since 1996, the number of small business loans has increased 237 percent in the region and total value has grown from $1.88 to $2.01 billion.