California has always been a magnet for venture capital, attracting 50% to 60% of all venture capital invested annually. But, does this mean California is where the most successful tech companies are? After all, raising capital is not synonymous with success.
To answer the question, we looked at the headquarters of 139 publicly traded tech companies we follow in SaaS (83), social media (4), marketplaces (17), content distribution (9), gaming (4), ecommerce (14), payments (2), and new hardware (7). These are some of the most prominent names in tech so needless to say if you’re in this group of public companies, you’ve been a success. Below is the raw data to the left and summary data to the right.
Key observations are below:
California dominates. Of the 139 companies, 63 of them are in California (45%). The next largest concentration is in New York City (14 companies for 10%), followed by Texas and Massachusetts (5% each). California is definitely where a majority of the most successful tech companies are, and is almost 4x larger than the #2.
With some exceptions. Interestingly, the marketplaces and ecommerce segments of our dataset do not show a concentration to California or any other state. Only 2 of the 17 marketplace companies are in California. Only 3 of the 14 ecommerce companies is in California. It’s not clear to us why these two segments been as concentrated to California.
In conclusion, VC money has been flowing to California for decades and almost half of the successful tech companies we follow are based there. Whether it’s the capital, the culture of the Valley, the preponderance of developers/engineers, or there’s just something in the water, it’s easy to believe that being in California does improve the odds of success. Get there if you can.