There Is No &#39;Next Silicon Valley&#39;

What's This?

Google Inc. employees gather for lunch in the main courtyard of Google Inc. headquarters in Mountain View, California on Wednesday, May 16, 2007.

Image: Erin Lubin/Bloomberg

Joshua Brustein for Businessweek 2014-04-11 14:15:32 -0400

It seems as though most every place that isn't actually Silicon Valley lays some claim to being the next Silicon Valley. Fair enough: Tech companies are the future, and it doesn't seem to be getting any harder to raise money to run new ones. Venture capital firms passed out more money at the beginning of this year than they have at any time since 2001, according to data released April 10, 2014 by investment researcher CB Insights. The CB data show that companies raised just under $10 billion in 880 separate deals over the first three months of this year.

But that doesn't mean a thousand silicon cities are blooming. California actually gained a greater share of total venture funding during the past year, both in terms of deals made and money raised. (Sorry, Silicon Prairie.) Here's the breakdown:

Zero venture funding went to nine states: Alabama, Alaska, Idaho, Maine, Mississippi, Montana, North Dakota, and West Virginia. Only 15 states accounted for more than 1% of California's $5.7 billion total. And even being in California isn't enough. Los Angeles's Silicon Beach isn't gaining much traction as it tries to lure companies away from the Bay Area:

Silicon Valley's dominance is less pronounced in areas such as health care and clean tech than in Internet deals, but the Valley is the clear leader in every venture field. The dynamic at play here is that the region's success is self-perpetuating, as described here and here. It's nice for Chattanooga or Cleveland to imagine being the next Silicon Valley, but by this measure, at least, none of the up-and-comers is threatening to overtake the original.