Below is a list of the US metro areas that saw a billion dollars or more in venture capital investment last year (2017). It is taken from a recent CityLab article by Richard Florida where he talks about the “geographic inequality of high-tech venture capital.”

It’s worth noting that San Francisco – not San Jose (Silicon Valley) – is at the top of the list with nearly 1/3 of the US total last year. It’s also interesting to note that when you look at each metro’s share of the total change from 2006-2017 (the chart below), you get Los Angeles now punching above San Jose. 

Florida also gets into which economic and demographic variables seem to be associated with higher levels of venture capital investment. For the rest of the article, click here. 

I was out for drinks recently with a friend of mine who is a developer in California and she mentioned a few things to me that I thought were really interesting. 

First, she talked about how virtually nothing gets built in the Bay Area “as of right.” And so the market is hugely supply constrained. She said, you’re lucky if you can get your entitlements in 2 years. It’s starting to take longer. I immediately said: “That’s Toronto.”

Second, we talked about Proposition 13, which was timely given this recent post. One of the consequences of Prop 13, beyond helping golf clubs survive, is that longtime homeowners seem to be highly incentivized not to move. 

Their property taxes are so below market that it can be more cost effective for them to stay put as opposed to downsize – even if they have too much house. This means far less turnover in the housing market.

Third, there really does seem to be a feeling in the Bay Area that it’s at a breaking point in terms of affordability. When a successful software engineer making $200,000 a year can’t afford housing, people naturally start to look to other cities.

We hear this refrain all the time in the media, but because I’m not active in that market, it was far more impactful hearing it from a friend.

Below is a list of the US metro areas that saw a billion dollars or more in venture capital investment last year (2017). It is taken from a recent CityLab article by Richard Florida where he talks about the “geographic inequality of high-tech venture capital.”

It’s worth noting that San Francisco – not San Jose (Silicon Valley) – is at the top of the list with nearly 1/3 of the US total last year. It’s also interesting to note that when you look at each metro’s share of the total change from 2006-2017 (the chart below), you get Los Angeles now punching above San Jose. 

Florida also gets into which economic and demographic variables seem to be associated with higher levels of venture capital investment. For the rest of the article, click here. 

I was out for drinks recently with a friend of mine who is a developer in California and she mentioned a few things to me that I thought were really interesting. 

First, she talked about how virtually nothing gets built in the Bay Area “as of right.” And so the market is hugely supply constrained. She said, you’re lucky if you can get your entitlements in 2 years. It’s starting to take longer. I immediately said: “That’s Toronto.”

Second, we talked about Proposition 13, which was timely given this recent post. One of the consequences of Prop 13, beyond helping golf clubs survive, is that longtime homeowners seem to be highly incentivized not to move. 

Their property taxes are so below market that it can be more cost effective for them to stay put as opposed to downsize – even if they have too much house. This means far less turnover in the housing market.

Third, there really does seem to be a feeling in the Bay Area that it’s at a breaking point in terms of affordability. When a successful software engineer making $200,000 a year can’t afford housing, people naturally start to look to other cities.

We hear this refrain all the time in the media, but because I’m not active in that market, it was far more impactful hearing it from a friend.