Bay Area Helps State Capture Lion’s Share of Venture Capital. Again.

Bay Area, Venture Capital, Aduro BioTech, San Francisco, Bay Area, Colliers, Los Angeles, Orange County, Uber, Palo Alto, Mountain View, Redwood City, San Jose

2014VCReport6By Joe Gose

Unabated venture capital continued to pour into California companies in the first quarter of 2015 at a greater rate than any other state in the country, and San Francisco’s take ensured that the Bay Area’s robust commercial and residential real estate market will continue for the foreseeable future.

California businesses raised slightly more than $8 billion in 420 transactions in the first quarter, according to the MoneyTree Report from PricewaterhouseCoopers and the National Venture Capital Association. That was $1.1 billion more than 439 companies in the state attracted in the fourth quarter of 2014, said the report, which is based on data provided by Thomson Reuters. Silicon Valley captured 75 percent of the funding while 21 percent flowed into the Los Angeles/Orange County region.

All told, U.S. firms pocketed $13.4 billion in 1,020 deals in the quarter. While nationwide that dollar volume declined about $1.5 billion from the last quarter in 2014, the amount still marked the most invested in the first quarter since 2000, according to the report. Massachusetts and New York companies each received about 10 percent of the total in the first quarter this year, while Texas and Washington businesses secured 3 percent and 2 percent, respectively.

In San Francisco, ride-sharing companies Uber Technologies and Lyft ranked in the top 10 largest global venture capital deals in the first quarter, according to alternative asset data collector and researcher Preqin. Uber and SpaceX, an advanced rocket firm aiming to commercialize space travel based in the Los Angeles metro, each raised $1 billion and tied for the No. 1 spot. Lyft received $530 million and was ranked No. 9.

Additionally, Aduro BioTech in nearby Berkeley raised $750 million, which was the second largest global transaction in the quarter. Companies in China, Germany and India received the balance of the funding, which totaled nearly $3.6 billion, according to Preqin.

The first quarter fundraising success continued California’s longstanding dominance over the rest of the country, and San Francisco’s playing a critical role. Not only did California companies take 60 percent of the total $47.3 billion in U.S. venture capital funding in 2014, but firms in San Francisco also led markets nationwide by attracting nearly $11 billion, according to financial data researcher CB Insights.

New York City business captured the second highest amount of capital in 2014—nearly $4 billion—while companies in Cambridge, Mass., Palo Alto, Mountain View, Redwood City and San Jose followed, raising more than $8.6 billion between them, according to CB Insights.

The heady venture capital outlays that have created billion-dollar valuations among young companies have sparked debate over whether a technology bubble is about to burst. But commercial real estate professionals in San Francisco maintain that office lease drivers underpin the veracity of today’s growth story versus 15 years ago.

In the last boom, companies were locking down more space than they needed in anticipation of a hiring binge, said Tony Crossley, an executive vice president with Colliers International, who specializes in downtown San Francisco investment sales.

“We all knew it wasn’t quite real when a company was leasing 20,000 or 30,000 square feet for three workers,” he said. “It’s almost quite the reverse this time.”

West Coast Commercial Real Estate News