Earlier Tri-Valley companies attracted an exceptional amount of venture capital (VC) investments in 2018. In 2019, the region continued to be highly attractive to VCs, based on two recent reports. Last year saw the second highest amount of venture capital raised in the region for any year on record, according to East Bay Economic Outlook 2020, an annual report issued by the East Bay Economic Development Alliance (EDA) with the assistance of Beacon Economics LLC.
"The median level of VC investment in East Bay companies for biotechnology, medical devices, clean tech, and software was higher than the levels raised in all but three states," notes the report. "While the Bay Area as a whole has been incredibly successful in attracting venture capital, it is easy to overlook the fact that over the past several years the East Bay alone has attracted more VC funding than most states. Aside from California overall, New York, and Massachusetts, the East Bay's median investment deal of $2.4 million outranks all other states."
The fifth annual Mirador View report from Mirador Capital Partners, in Pleasanton, also notes the region's appeal to investors. "For five years now, we have been studying the economies of Danville, Dublin, Livermore, Pleasanton, and San Ramon," according to the Mirador View 2020. "During that time the Tri-Valley has seen over $2.2 billion of venture funding pour into local companies, startups grow to unicorns then IPO, the formation of regional venture funds launched, and local incubators expand to support the thriving innovation ecosystem."
According to the East Bay Economic Outlook, nearly 40% of total venture capital activity was concentrated in five areas last year. Financial software, food products, and energy storage companies received the highest amount of investments at 9% each. Business/productivity software firms attracted 7%, and biotechnology companies were given 5%. "As far back as 2000, the East Bay has received more venture capital funding than five of the top 10 states," according to the report.
Based on Mirador's research, more than $375 million of venture capital was raised by Tri-Valley companies in 2019. Tri-Valley life sciences companies attracted the most investment last year, followed by high technology engineering firms, software companies, other science companies, and non-science ventures. Last year saw a total of 58 venture deals involving Tri-Valley companies, according to Mirador. That was an increase from 55 deals in 2018 and 52 in 2017. "This indicates a growing number of smaller, early-stage deals," according to the Mirador View, which also tracked several early stage venture deals and large private equity growth deals in early 2020.
"While we would have expected 2020 to follow the same upward trend as seen in the prior years, we are witnessing an unprecedented global slowdown which could depress venture activity over the next couple of years," notes the report. "Despite this, we continue to find an abundance of innovative and game-changing startups in the Tri-Valley. As the financial markets stabilize, we can expect to see a strong rebound in venture activity in the upcoming years."
Some locals believe that the difficulties faced by area businesses this year will end up highlighting the advantages of a Tri-Valley location. Ellie Mae Senior Vice President of Marketing Jonas Moe, for example, recently said that the Hacienda-based software company has been productive despite the pandemic.
"Our company is performing well because of our strong online capacity," Moe told an Innovation Tri-Valley Leadership business discussion group. "Success with people working from home means that the tech sector is now thinking differently about the need for corporate travel, major conferences, and big events. In the future, if people can work from anywhere it makes it even more attractive to live in a region with great schools, safety, and quality of life."
Don Garman agrees with that perspective. "I am super bullish on the Tri-Valley," says the Founder and Chief Investment Officer of Mirador Capital Partners, who is also Cofounder and Managing Partner of venture capital firm Tri-Valley Ventures as well as a Pleasanton resident. "Twitter has already said you can work from home forever if you want. There is a place between working from home and not having any culture and getting work done but feeling somewhat resentful of going on BART and being crammed into a tiny three-foot-wide space in San Francisco around a hundred other people. There is a middle ground; put forty-five people in a nice big space out here."
As Garman sees it, a Tri-Valley location offers clear benefits to both employers and their staff. It is the just-right solution between asking many employees to work at home and forcing many employees to commute to places like San Francisco, a commute that makes the health requirement for social distancing nearly impossible. Garman notes that in the Tri-Valley, an employer can easily, affordably, and safely locate 50 employees in a 20,000-square-foot space. A Tri-Valley office gives employers an ideal middle ground for responding to the new normal, especially when it comes to highly skilled workers.
If you open an office in the Tri-Valley, you do not need to give employees "a ping pong table and foosball or even snacks," Garman says. "They're just happy to be within twenty minutes of their kids. If this is a world where I can blend in a Zoom meeting or once a week schlep into San Francisco and the rest of the time be within twenty minutes of my kids, then you have made my life better. And that makes me want to do better and higher quality work for you for longer because you understand what's important."
The current shift away from business as usual may be an opportunity for talented Tri-Valley employees as well as employers. "For those people who are working from home and have a pit in their stomach about getting on that bus to go back to Sunnyvale, this is the time to be looking at companies around here and choosing your next decade-long ride," Garman says. "There are really interesting companies that are founded and growing and hiring here. This is the time to make a great change."
The Mirador View 2020 suggests that whatever struggles the Tri-Valley faces today, the future remains promising. "We believe the fundamental qualities that have driven this region's growth over the past decade have built resilience into our local economy and will sustain us during this time of broader market volatility and general uncertainty," according to the report.
Garman is more direct. "There are persistent, decade-long trends that are tailwinds for us in this community," he says. A lot of people believe the current crisis is going to last forever, Garman says. "Of course it is not. Of course, there will be tomorrow, and it will be brighter than today."
For more information about East Bay Economic Development Alliance, please visit www.eastbayeda.org.
For more information about Beacon Economics LLC, please visit www.beaconecon.com.
For more information about Mirador Capital Partners, please visit www.miradorcp.com.
For more information about Innovation Tri-Valley Leadership, please visit www.innovationtrivalley.com.
For more information about Tri-Valley Ventures, please visit www.trivalleyventures.com.