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Feb. 22, 2021, 8:19 a.m. EST

Silicon Valley is not suffering a tech exodus, and money is flowing in at record rate — for a fortunate few

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By Levi Sumagaysay

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 jobs and population in the region.

While the high-profile departures of rich executives and investors like Elon Musk and companies like Oracle Corp. /zigman2/quotes/202180826/composite ORCL +0.84% and Hewlett Packard Enterprise Corp. /zigman2/quotes/201998588/composite HPE +0.69% have raised questions about the future of California’s tech powerhouse, an annual report out this week found little evidence of a trend. Instead, the major effect of the COVID-19 pandemic on the San Francisco Bay Area in 2020 was the widening of the divide between the haves and have-nots, thanks to all the money still flowing into just a few pockets as the coronavirus ravages poorer communities.

“Today, we must frankly admit that the pandemic has made the rich richer while the poor are dying,” said Russell Hancock, chief executive of Joint Venture Silicon Valley, which published its annual Silicon Valley Index this week detailing what happened in the region last year.

The report showed record venture capital investment in Bay Area startups, along with booming market capitalizations for public tech companies and standard-setting initial public offerings. Amid fears of a tech-worker stampede out of the Golden State as companies allowed remote work, the population in Silicon Valley — defined as Santa Clara and San Mateo counties — was mostly flat for the year, rising 0.02%.

While an overall out-migration was tracked in San Francisco, the vast majority of those who left the most prominent city in the region last year remained in the state , according to U.S. Postal Service data crunched by the San Francisco Chronicle this week. That’s in line with what the Silicon Valley Index shows: 59% of the people who have left the valley in the past few years have stayed in California, moving up or down the state.

“I think we can all calm down,” said Rachel Massaro, Joint Venture’s director of research, during a news briefing about the index. “We’re a place of innovation. We’re a place that houses these impactful companies. We have not seen any significant losses among them.”

In short, the region’s biggest companies and highest-paid people fared drastically better and in many cases thrived — white-collar workers, who earn more than three times as those in service occupations, got to work remotely and protect themselves from a deadly virus — while low-wage workers lost jobs and fell ill, their lack of a safety net shining a harsher light on inequality.

“It’s a tale of two economies,” Hancock said. “There are two stories.”

The tech story

Silicon Valley and San Francisco companies’ market capitalization climbed 37% to $10.5 trillion last year, according to the report, thanks to huge spikes from companies such as Tesla Inc. /zigman2/quotes/203558040/composite TSLA +0.13% , which saw its market cap skyrocket more than 700% in 2020; Apple Inc. /zigman2/quotes/202934861/composite AAPL -0.25% , which saw a 77% increase, while Facebook Inc. /zigman2/quotes/205064656/composite FB -0.53% grew 30% and Google /zigman2/quotes/202490156/composite GOOGL -0.11% experienced a 28% boost.

Big Tech kept getting bigger in other ways as well. The top 15 tech employers in the area — which includes the above plus other large companies like Intel Corp. /zigman2/quotes/203649727/composite INTC -0.42% , Salesforce Inc. /zigman2/quotes/200515854/composite CRM -0.47% and Cisco Systems Inc. /zigman2/quotes/209509471/composite CSCO +2.25% — ended the year with a 3.7% increase in jobs even while the region saw a couple hundred thousand jobs disappear overall. And despite nagging questions about the effects of a work-from-home shift on commercial real estate, the largest companies in the region continued construction on existing projects, such as Google’s planned massive development in San Jose, Calif.

The next generation also received record investment totals. Snowflake Inc. /zigman2/quotes/220991541/composite SNOW -1.54% , DoorDash Inc. /zigman2/quotes/222973991/composite DASH -1.33% and Airbnb Inc. /zigman2/quotes/222990650/composite ABNB +1.90% , all based in the Bay Area, were the three biggest U.S. initial public offerings of 2020, not including special-purpose acquisition companies. And even in a booming year for IPOs, Silicon Valley outperformed the rest: 2020 IPOs from the valley grew 117% and S.F. issuances grew 101%, while IPOs in general returned 80% last year, according to the Silicon Valley Index.

IPOs in 2021: After a year of impressive pandemic offerings, these tech companies expect to keep it rolling

It was also a record year for venture capital, with funding to Silicon Valley and San Francisco companies increasing 8% from 2019, the report said. Of the $123.6 billion in U.S. VC funding in 2020, $26.4 billion went to Silicon Valley, $20 billion to San Francisco and $67 billion to California. A lot of that investment went into 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 flourishing from that performance and Silicon Valley’s poorer residents is wider than ever, the index shows.

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, Black/African Americans and Hispanic or Latinos, respectively. A report by the Mercury News showed that death rates were far higher in poorer neighborhoods than wealthier ones, such as in the largely Latino neighborhoods of East San Jose.

Lower-wage workers lost their jobs or had to put their health at risk to hang onto their positions.

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$ 78.95
+0.66 +0.84%
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April 16, 2021 4:02p
P/E Ratio
18.85
Dividend Yield
1.62%
Market Cap
$225.75 billion
Rev. per Employee
$289,393
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/zigman2/quotes/201998588/composite
US : U.S.: NYSE
$ 15.95
+0.11 +0.69%
Volume: 9.28M
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N/A
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3.01%
Market Cap
$20.61 billion
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$453,603
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/zigman2/quotes/203558040/composite
US : U.S.: Nasdaq
$ 739.78
+0.93 +0.13%
Volume: 27.98M
April 16, 2021 4:00p
P/E Ratio
1,177
Dividend Yield
N/A
Market Cap
$709.19 billion
Rev. per Employee
$445,694
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/zigman2/quotes/202934861/composite
US : U.S.: Nasdaq
$ 134.16
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P/E Ratio
36.27
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0.61%
Market Cap
$2258.00 billion
Rev. per Employee
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/zigman2/quotes/205064656/composite
US : U.S.: Nasdaq
$ 306.18
-1.64 -0.53%
Volume: 13.06M
April 16, 2021 4:00p
P/E Ratio
30.30
Dividend Yield
N/A
Market Cap
$875.14 billion
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$1.47M
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/zigman2/quotes/202490156/composite
US : U.S.: Nasdaq
$ 2,282.75
-2.50 -0.11%
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April 16, 2021 4:00p
P/E Ratio
38.89
Dividend Yield
N/A
Market Cap
$1544.31 billion
Rev. per Employee
$1.35M
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/zigman2/quotes/203649727/composite
US : U.S.: Nasdaq
$ 64.75
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Volume: 24.63M
April 16, 2021 4:00p
P/E Ratio
13.10
Dividend Yield
2.15%
Market Cap
$264.78 billion
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$704,042
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/zigman2/quotes/200515854/composite
US : U.S.: NYSE
$ 231.91
-1.09 -0.47%
Volume: 5.09M
April 16, 2021 4:00p
P/E Ratio
52.81
Dividend Yield
N/A
Market Cap
$214.59 billion
Rev. per Employee
$375,437
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/zigman2/quotes/209509471/composite
US : U.S.: Nasdaq
$ 52.80
+1.16 +2.25%
Volume: 28.33M
April 16, 2021 4:00p
P/E Ratio
22.11
Dividend Yield
2.80%
Market Cap
$218.01 billion
Rev. per Employee
$636,155
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/zigman2/quotes/220991541/composite
US : U.S.: NYSE
$ 232.74
-3.64 -1.54%
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April 16, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$68.24 billion
Rev. per Employee
$237,294
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/zigman2/quotes/222973991/composite
US : U.S.: NYSE
$ 149.49
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Volume: 921,278
April 16, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$48.70 billion
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$742,666
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/zigman2/quotes/222990650/composite
US : U.S.: Nasdaq
$ 178.69
+3.34 +1.90%
Volume: 3.06M
April 16, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$106.69 billion
Rev. per Employee
$603,573
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