R.I.P. Silicon Valley (1956 – 2021)

By Wayne Mulligan, on Thursday, April 29, 2021

Ever since 1956, when Shockley Transistor Corporation first opened up shop in Mountain View, California, Silicon Valley has been the epicenter of early-stage tech startups…

And in turn, the epicenter for ultra-profitable startup investments.

Thousands of companies have set up shop in this tiny corner of the country — and they’ve delivered enormous returns to their earliest investors.

But as we’ve been telling you for the past few years, that won’t be the case much longer.

In fact, as I’ll show you today, the Silicon Valley of yesterday is no more…

And while that might be bad news for some, it’s amazing news for investors like you!

Let me explain…

The Most Profitable Asset Class of All Time

As I hinted at earlier, Silicon Valley startup investments have made many of their earliest investors fabulously wealthy.

For example, Silicon Valley-based Facebook’s first investor turned every $1,000 he invested into $2 million once the company went public.

Furthermore, a recent study showed that, on average, for the past 25 years, early-stage startup investments have returned 55% per year.

That’s nearly 10x higher than the stock market average.

Which is why it’s no surprise that investors have flocked to this asset class…

And why it’s no surprise that most of that money has flowed to Silicon Valley.

It’s become a self-fulfilling prophecy of sorts:

Entrepreneurs flock to Silicon Valley because that’s where the investors are…

And investors flock to Silicon Valley because that’s where the entrepreneurs are.

But here’s the thing: that’s all begun to change.

Why Silicon Valley is “Dead” to Savvy Investors

You see, some of the largest and savviest institutional investors have begun looking outside of Silicon Valley for their latest startup investments.

For instance, in 2019, the private equity giant KKR announced it was looking for “opportunities in geographies that haven't historically been the most obvious tech hubs.”

There are three main reasons firms like KKR have decided to look for opportunities outside of traditional tech hubs like Silicon Valley — and three main reasons you should look elsewhere, too.

First and foremost, deals in tech hubs have become too expensive. And if you’re paying too much to get into a deal, your potential profits will be severely limited.

Secondly, nowadays, more startups exist outside of these hubs. The reason for this is simple: cities like San Francisco have become extraordinarily expensive. Living in an apartment the size of a closet might be fine if you just graduated college. But as tech entrepreneurs get older, they’re moving to areas with less expensive (and more spacious) housing to raise their families.

And third, more universities across the U.S. are producing graduates with the type of tech skills that are crucial for fast-growing startups. As KKR said, "Any city that has a major university or two around it can have good tech talent." So more cities can now spawn tech startups.

Show me the Money!

As I mentioned earlier, this trend of investing outside of Silicon Valley has been taking shape for several years now.

But truth be told, it was a bit of an experiment.

In other words, investors could put money into startups outside of the Valley — but would they actually be able to profit from those investments?

Well, thanks to a recent report from TechCrunch, we finally have an answer to that question:

According to the report, since 2014, investors have earned 10% more money by investing in deals outside of Silicon Valley than they have from their Silicon Valley-based deals.

This is exciting news:

It’s exciting for entrepreneurs, because they’ll no longer need to feel pressure to run off to Silicon Valley to build their businesses…

It’s exciting for investors, because it gives them the chance to support new businesses all around the country — and make more money while they’re doing so…

And as I’m about to explain, it’s exciting news for you, too!

Profit from Your Living Room

If you’re a longtime Crowdability reader, then you know we focus on a particular type of startup investing — something known as “equity crowdfunding.”

Equity crowdfunding allows individual investors like you to put small amounts of money into fast-growing startups via special websites known as “funding platforms.”

In other words, from the comfort of your living room sofa, you can evaluate and invest in startups that are based anywhere.

As long as you have an Internet connection, you can begin investing in this ultra-profitable asset class.

And as it turns out, this actually gives you an advantage over traditional Silicon Valley-based startup investors.

You see, because more and more startups are launching in cities outside of Silicon Valley — and many of them are using equity crowdfunding to raise capital — you won’t be limited to investment opportunities in “your own backyard.”

You now have the chance to invest in startups from all around the country — from around the world, in fact — from the comfort of your home.

In order to stay on top of all of these new deals, you can either:

  1. Check out our “Deals” page on the Crowdability website — This is where we feature startup investment opportunities from several funding platforms all in one place.
  2. Check your email inbox every Monday morning at 11:00 AM — That’s when we send our readers a digest of all the new startup opportunities we find each week.

This way, you won’t have to spend hours scouring the web looking for new opportunities.

As a Crowdability reader, these investment opportunities get delivered right to your inbox.

And as you learned today, this could give you the chance to earn bigger returns than “the pros”!

Happy investing.

Best Regards,
Wayne Mulligan
Wayne Mulligan


If you enjoyed this article, subscribe to updates:

Sign-up today and you'll receive our daily insights on early-stage investing, as well as our FREE "Equity Crowdfunding Action Kit" – where you'll learn:

  • The Ins & Outs of Equity Crowdfunding
  • A step-by-step path to get started
  • Tips from dozens of Venture Capitalists
subscribe to updates

Thank you for subscribing!

Tags: Startups Silicon Valley

Share This:
comments powered by Disqus