In recent years, entrepreneurship has spread outside hotbeds such as the Bay Area, with vibrant startup communities emerging in unexpected cities like St. Louis, Atlanta, and Denver.
Still, former AOL CEO Steve Case argues that Silicon Valley is still the strongest player in the startup world.
“It was and will continue to be the leader in the pack. The most vibrant startup ecosystem in the world will continue to be,” Case recently told Yahoo Finance. “We are not talking about the collapse of Silicon Valley, we are talking about the rise of dozens of other cities to create this more decentralized innovation economy.”
Silicon Valley’s startup scene dates back to the late 1930s. That’s when Frederick Turman, dean of Stanford University, began encouraging the university’s faculty and alumni to start their own companies, including Hewlett and his Packard. Physicist William Shockley also played a key role, establishing the Shockley Semiconductor Laboratory in Mountain View, California. In the late 1950s, eight of Shockley’s top researchers retired to found Fairchild Semiconductor. Fairchild Semiconductor was the first company to build the integrated circuit, a key component of modern electronic devices that helped establish the Bay Area as an innovation hub.
As a result, some of the world’s largest venture capital firms, such as Kleiner-Perkins and Sequoia Capital, were founded in the early ’70s, and venture capital money flowed into Silicon Valley.
“Silicon Valley has risen and things have come together. Sure, great universities like Stanford, a sense of possibility. Because even the gold rush was a mentality that inspired people,” Case said. “But that’s also where venture capital was really based. It started a little bit in New York, but the center of gravity was actually in San Francisco. We created this dynamic of increasing returns.”
Despite Silicon Valley’s rich history of business innovation, 2021 saw an increase in venture capital funding outside the Bay Area. For the first time in his decade, less than 30% of all US venture capital has flowed to Silicon Valley, according to a report produced by Rise of the Rest Seed Fund and PitchBook.
For the past decade, Case, who co-founded AOL in 1985, has traveled the United States by bus in search of promising entrepreneurs and startups outside of Silicon Valley. His Washington, DC Ventures His capital firm, Revolution LLC, has invested in nearly 200 of his companies in over 100 cities. He argues that companies outside of his hub of traditional startups need more attention from investors.
“I think it’s changed from what people thought was a little marginal to now recognizing some really important companies that are being built in different parts of the country.”And San Francisco, New York. , it makes sense to broaden your horizons beyond where you happen to be, such as Boston, and look for opportunities elsewhere.”
In his September book, The Rise of the Rest: How Entrepreneurs in Surprising Places are Building the New American Dream, Case profiles 30 innovative new companies born from unexpected places. For example, he writes about his Catalyte, a Baltimore-based software company that uses AI to find and train his engineers in software. He’s also spotlighting his Appharvest, a Kentucky sustainable food company.
“It’s really amazing what’s coming out of it, and I really believe it’s going to accelerate over the next decade,” said Case. “And 10 years from now, we will recognize that Silicon Valley is still the leader, but will bring more diverse innovation economies, much more inclusive innovation economies, which is good for those communities. And I think it’s good for the country, frankly.”
Case oversaw the merger of AOL and Time Warner in 2001 and became chairman of the board. He resigned from that position in his 2003. Both Yahoo and AOL are privately owned by his equity firm Apollo Global Management.
Dylan Croll is a reporter and researcher at Yahoo Finance. Follow him on Twitter. @CrollonPatrol.
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