Despite reports of an exodus, Silicon Valley remains the tech capital of the world, with new data showing continued record investment in the industry in 2020 and no overall declines in employment and population in the region, while the High-profile exits from wealthy executives and investors like Elon Musk and companies like Oracle Corp. ORCL, -1.51% and Hewlett Packard Enterprise Corp. HPE, + 1.36% have raised questions about the future of California‘s tech powerhouse , an annual report released this week found little evidence of a trend. Instead, the main effect of the COVID-19 pandemic in the San Francisco Bay Area in 2020 was the widening of the gap between the haves and the have-nots, thanks to all the money still flowing into some few pockets as the coronavirus ravages poor communities.
The Tech Story The market capitalization of Silicon Valley and San Francisco companies rose 37% to $ 10.5 trillion last year, according to the report, thanks to huge spikes from companies like Tesla Inc. TSLA, -0.77 %, which saw its market capitalization skyrocket further. 700% in 2020; Apple Inc. AAPL, + 0.12%, which experienced a 77% increase, while Facebook Inc. FB, -2.91% grew 30% and Google GOOGL, -0.81% experienced a 28% increase. Big Tech continued to grow in other ways as well. The top 15 technology employers in the area, which includes the above plus other large companies such as Intel Corp. INTC, + 2.27%, Salesforce Inc. CRM, -0.18% and Cisco Systems Inc. CSCO, -1.42% – finished the year with a 3.7% increase in jobs, even though in the region about 200,000 jobs disappeared in total. And despite lingering questions about the effects of a work-from-home shift on commercial real estate, the region’s largest companies continued to build on existing projects, such as Google‘s planned massive development in San Jose, California. investment totals. Snowflake Inc. SNOW, + 0.08%, DoorDash Inc. DASH, + 2.95%, and Airbnb Inc. ABNB, all based in the Bay Area, were the three largest US IPOs of 2020, without include special purpose procurement companies. And even in a boom year for IPOs, Silicon Valley outperformed the rest: 2020 valley IPOs grew 117% and SF issues grew 101%, while overall IPOs returned 80% last year. , according to the Silicon Valley Index. 2021 IPO: After a year of impressive pandemic deals, these tech companies hope to keep going. It was also a record year for venture capital, with funding for Silicon Valley and San Francisco companies growing 8% from 2019 , according to the report. Of the $ 123.6 billion in US venture capital funds in 2020, $ 26.4 billion went to Silicon Valley, $ 20 billion to San Francisco, and $ 67 billion to California. Much of that investment went to well-known startups, including Bay Area decacorns (private companies worth at least $ 10 billion) like Stripe, Instacart, and Robinhood.
The Other Less Positive Story While big tech flourished and money continued to pour into potential additions to that group, the gap between those who prospered from that performance and the poorest residents of Silicon Valley is wider than ever, shows the index. As of last Friday, 2,069 people in the region had died of COVID-19, Hancock said. Death rates were highest among Native Hawaiians / Pacific Islanders, Blacks / African Americans, and Hispanics / Latinos, respectively. A Mercury News report showed that death rates were much higher in poorer neighborhoods than in wealthier ones, such as in the predominantly Latino neighborhoods of eastern San Jose. Lower-paid workers lost their jobs or had to put their health at risk to keep their jobs. “The pandemic wiped out our service sector and our personal economy,” Hancock said. “There is a real carnage out there. People have lost their livelihoods. “The region’s infrastructure and community service jobs declined 54% in mid-2020. Hispanics were 1.5 times more likely to file unemployment claims than whites, Hancock said And in December, more than 626,000 homes in the Bay Area, including nearly 200,000 homes in Silicon Valley, were at risk of eviction or defaulting on their mortgage, according to the index. See: How Long Will Employees Continue to Pay? Silicon Valley unable to work from home? Transportation drivers who drove tech employees to various offices in the Bay Area for companies like Salesforce Inc. CRM, -0.18%, Twitter Inc. TWTR, + 0.03% and others – who have told their employees they can work remotely permanently or most of the time – they’ve been laid off or suspended, said Stacy Murphy, a business representative for Teamsters Local 853, who represents about 8 00 ferry drivers in the Bay Area. Some drivers are still on paid leave, but others are no longer receiving wages and most have no idea when they can return to work. “We are all waiting patiently,” said Murphy, who said the union is in constant discussions and advocates that drivers continue to collect. The bleak future Some index data shows that concerns about a threat to the region’s reign as a tech hub are not unfounded. Although Silicon Valley’s population did not decline in 2020, a one-year emigration trend continued. Still, the index shows that net emigration in 2020 was about half that of the region’s outflows in 2001, after the dot-com bubble burst. The index also shows that the job growth rate of the top 15 largest tech employers in Denver (14.7%) and Sacramento (14.5%) was nearly four times that of the Area’s 3.7%. the Bay. And the Bay Area’s share of the U.S. workforce for those same companies fell from 26.1% in January 2020 to 23.9% in December. While the percentage gains were lower, the Bay Area still added more tech jobs in total than the other metropolitan areas. Metropolitan areas of Florida, Texas, and elsewhere are being touted as the next big tech hubs as businesses and executives move to places like Texas, where Oracle and Hewlett Packard Enterprise Co. HPE, + 1.36% have moved their headquarters, even as many Oracle employees remain in the Bay Area, Hancock noted. As other companies move in or make decisions about whether their employees should return to the office, it will affect construction projects that have been suspended or office space rental rates that have mostly remained stable. The Bay Area Council, which includes businesses in the region as members and advocates for business-friendly policies, has launched a “business climate” initiative as it cares about companies leaving the region. “It won’t be an immediate change,” said Patrick Kallerman, research director for the Bay Area Council’s Economic Institute. “The Bay Area will not be a ghost town in six months. We wonder if this will be a significant change in the long term. “Those changes will affect the quality of life in the Bay Area as municipalities run into budget deficits. Silicon Valley city revenues are expected to decline by an average of 5% mainly due to the effects of the pandemic, according to the SV index. San Francisco experienced a 43% drop in sales tax revenue in the second quarter of 2020 compared to the previous year, according to the The San Francisco Chronicle, which analyzed the effects of the pandemic on the once-bustling downtown. What happens to large companies, whether they leave, stay, or change their work-from-home policies, will also affect small ones. Alicia Villanueva, owner of Alicia’s Tamales Los Mayas, a tamale factory in Hayward, California, and Lynna Martinez, owner of Cuban Kitchen, a restaurant in San Mateo, California, said that despite devastating drops in their income, they avoided layoffs due to the Paycheck Protection Program (PPP) and other loans. Both companies relied heavily on attention to technology and other Bay Area businesses. “We had hundreds of clients, including Oracle, Facebook, Google and Comcast CMCSA, -0.88%,” Martinez said. “We would place between 100 and 300 orders before opening our doors at 11 am. Then in March and April boom, 50% of our business was gone. The two women said they had to adjust and make up for lost business however they could. Martinez said his catering business is probably a tenth of what it was before. Villanueva’s son is delivering tamales in a school district more than 60 miles away. “He wakes up at 2 am to get ready and deliver Vacaville at 5 am,” said Villanueva, who has 21 employees. Martinez and his eight employees rely more on referrals and is now considering franchising. “The pandemic forced us to target a broader and more dispersed base,” he said. “In some ways, this was a good challenge for me as a business owner who wanted to pursue the idea of having a franchise.”