Venture Capital Growth in Southern California Presented by: Bree Nguyen Faculty Mentor: Dr. Tayyeb Shabbir Becoming Silicon Valley

Importance of Venture Capital Venture Capital Fuels: New businesses, especially high impact ones New industries Job creation Technological advancement International competitiveness InnovativeActivity Innovative Activity

Importance of Venture Capital “The single, most important component of long-term economic growth.” Rosenberg, Nathan (Stanford University) Innovation and Economic Growth. In Innovation and Growth in Tourism. OECD Publishing. InnovativeActivity Innovative Activity

Venture Capital Growth by Region Region2011 Silicon Valley$11,629,888, % Boston/New England $3,204,345, % Southern California$2,805,076,9009.9% Total$28,425,075,400 Source:

Southern California Venture Capital Source:

Acquisitions & IPO’s (Exits) Source:

Acquisitions & IPO’s (Exits) Source:

Nurture and Promote Southern California Venture Capital

What are the unique qualities Southern California possesses that support venture capital activity?

Determinants of Growth Supply-side o # of Venture Firms o Venture Flows ($) o Labor/Engineers Demand-side o University R&D o Corporate R&D o Entrepreneurs o Policy o IPOs/Acquisitions Mason, Colin (University of Strathclyde, Scotland). “Venture Capital: A Geographical Perspective.” Handbook of Research on Venture Capital Horvath, Michael (Dartmouth University). “Imitating Silicon Valley: Regional Comparisons of Innovation Activity Based on Venture Capital Flows.” Building High-Tech Clusters

The Data Source: CB Insights Investment Database Includes: o Investments across all stages of funding o Superior tracking and categorization o Detailed industry and sector data o Acquisition, IPO and failure data Source: Bureau of Labor Statistics

Determinants of Growth Journal of Urban Economics o Edward L. Glaeser, William R. Kerr, Giacomo A.M. Ponzetto (Harvard Business School) o “Clusters of Entrepreneurship” Introduced: “city-industry” determinants of growth

Engineering Labor Region# Of Engineers Southern California163,350 Source:

Engineering Labor Region# Of Engineers Southern California163,350 Silicon Valley164,200 Source:

Internet Industry Growth Source:

Internet Industry Growth Source:

Engineering Labor Region Engineers in Internet Industry Avg. Growth Time Southern California29, months Source:

Engineering Labor Region Engineers in Internet Industry Avg. Growth Time Southern California29, months Silicon Valley27, months Source:

Conclusions IPO/Exit activity as strong in Southern California as Silicon Valley Preliminary results show some correlation between growth of engineering labor and industry growth Possible correlations between firm growth and available labor These are Southern California qualities worth promoting to potential investors and entrepreneurs

Continued research In-depth analysis of each determinant o Confirm correlations o I.e. Test if Labor/Firm Growth holds over time and why o Test with additional variables Explore other “city-industry” determinants Build a complete model of “city-industry” determinants to understand the region as a whole

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