Funding Silicon Valley On Just $400M A Year?
An interesting comment by Michael Moritz of Sequoia Capital yesterday, claiming that all of the innovation in Silicon Valley can be funded to the tune of just $400 million a year.
To put that into perspective, we recently tallied Q3 investments in Southern California at about $1 billion. $400 million is a fraction of the total venture capital invested here in Southern California (which itself is but a fraction of the vast amounts of venture capital invested in Silicon Valley).
Admittedly, the talk was mostly about Internet and software startups, which now are regularly being funded and build with investments of $500,000 or $1M (a far cry from those $40-50M funding rounds for semiconductor startups a decade ago).
That said, if you had perfect early-investment picking skills, I suspect the amount of actual investment in single companies who later went on to be successful would be a far smaller amount than the total invested in companies in an industry, in general. There’s generally a lot of spent money on losers, could-have-beens, second place winners, etc. in an industry–so if you believed you could pick things perfectly (or mostly perfectly) you can make the winning bets with lots less than the mass of capital which does go into startups during a year.
Given a theoretical number of $400M, does that mean we here in Southern California (which has been able to attract far more than that on a regular basis) could build an equivalent center of innovation on less?
