Venture Capital’s impact on SoCal: $48 billion
This morning, we published the results of an extensive study of the impact of venture capital companies on Southern California in terms of exit values, finding that exits from VC-backed firms between 1995 and 2009 generated an astounding $48 billion (billion with a capital B) in value.
The study, which was conducted by Jon Funk of Ocean Road Partners (also of Allegis Capital), used data from our own venture capital database, additional data from Dow Jones/VentureSource, as well as private data collected by Redpoint Venturs’ Greg Martin.
The exits have been written about before (ie., MySpace, Shopzilla, Rent.com, Lowermybills, etc.) but this is probably the first time anyone has tallied up exactly how much value has been generated from venture investments here, at least in terms of investment value. The related impact — in terms of jobs and employment, additional economic value, etc.–hasn’t been calculated, but is bound to be a multiple of that $48 billion. Small wonder then, that there are so many states/counties/cities eager to attract high tech companies. Southern California has been lucky in that it has developed a number of clusters where there are now self-sustaining groups of technology companies, helping to bolster the region’s employment and wealth.
It also points to, in my personal opinion, the reason why, as a nation, we should be encouraging venture capital and similar investments in startups — the multiplier effect. It’s clear that even just a few very successful companies here can have an out sized effect on the region and its future. In the coming weeks, we’re planning on having Jon Funk further detail the insights he’s gained out of his extensive look into the exits here in Southern California.
