In recent years, entrepreneurship has spread outside hotbeds like the Bay Area, with vibrant startups emerging in unlikely cities like St. Louis, Atlanta and Chattanooga.
Still, Steve Case, the former CEO of AOL, insists that Silicon Valley remains the most powerful player in the startup world.
“He’s the leader of the pack and he’s going to continue to be the leader of the pack, the most vibrant startup ecosystem in the world that’s going to continue,” Case recently told Yahoo Finance. “We’re not talking about the fall of Silicon Valley, we’re talking about the rise of dozens of other cities to create this more dispersed innovation economy.”
The startup scene in Silicon Valley dates back to the 1940s, when Frederick Terman, the dean of the Stanford University School of Engineering, began encouraging faculty and alumni to start companies. In 1951, he created Stanford Industrial Park, which served as headquarters for companies such as Hewlett-Packard (HP) and Varian Associates.
The late 1950s saw further innovation when eight of Nobel Prize winner William Shockley’s top researchers resigned from his lab and founded Fairchild Semiconductor. The company would go on to build the first integrated circuit, a key component of modern electronic devices that helped establish the Bay Area as a hub of technological innovation.
In the early 1970s large amounts of venture capital began flowing into Silicon Valley with the founding of venture capital firms such as Kleiner-Perkins and Sequoia Capital.
As a result, venture capital money flows into Silicon Valley with the founding of some of the largest venture capital firms in the world such as Kleiner-Perkins and Sequoia Capital in the early 1970s.
“Silicon Valley was born, a number of things came together. Certainly, big universities like Stanford, a sense of possibility. A lot of people moved to California because it was kind of a pioneering spirit, also the gold rush and that mentality to help inspire, you know, people,” Case said. “But that’s also where the capital was really based. risk. It started a little bit in New York, but the center of gravity was really in San Francisco. And then you created this dynamic of increasing returns where there was more and more money.”
Despite Silicon Valley’s rich history of corporate innovation, 2021 has seen an increase in venture capital funding outside the Bay Area. For the first time in a decade, less than 30% of total US venture capital has gone to Silicon Valley, according to a report produced by Rise of the Rest Seed Fund and PitchBook.
Over the past decade, Case, who co-founded AOL in 1985, has bused around the United States looking for promising entrepreneurs and startups outside of the Valley. His Washington, DC-based venture capital firm, Revolution LLC, has invested in nearly 200 companies in more than 100 cities. He argues that companies outside of traditional startup centers should attract more investor attention.
“I think it’s gone from something where people thought it was a little marginal to now recognizing some really significant businesses that are being built in different parts of the country,” Case said. “And it makes sense to broaden your reach beyond where you are, whether it’s San Francisco or New York or Boston, and look for opportunities in other places.”
In his book, “The Rise of the Rest: How Entrepreneurs in Surprising Places are Building the New American Dream,” released in September, Case details 30 innovative new companies from unexpected places. For example, he writes about Catalyte, a Baltimore-based software company that uses artificial intelligence to find and train software engineers. He also points out Appharvest, a Kentucky sustainable food company that offers a more efficient alternative to traditional farms.
“It’s really remarkable what’s boiling out there. And I really believe that over the next decade it will accelerate,” Case said. “And, in 10 years, we will recognize that Silicon Valley is still the leader, but it will have a much more diverse innovation economy, a much more innovation economy. inclusive, which I think will be good for those communities and frankly good for the country.”
Case oversaw the merger of AOL and Time Warner in 2001 and became chairman of the board. He stepped down from the position in 2003. Yahoo and AOL are both owned by private equity firm Apollo Global Management.
Dylan Croll is a reporter and researcher at Yahoo Finance. Follow him on Twitter at @CrollonPatrol.
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