Bay Area slips as a locale for startups
Fewer entrepreneurs are flocking to the Bay Area to start companies; instead, more are heading to metropolitan areas like Miami, Austin and Los Angeles, a new report shows.
Startup activity — which refers to the number of companies started within the past year — is near a record high in the U.S., according to a report released Thursday by the Kauffman Foundation. But the Bay Area, a hub of innovation and entrepreneurship, has seemingly lost some of its luster over the past year.
“While the Bay Area still dominates venture capital dollars and IPOs, that's not the whole picture,” said Arnobio Morelix a senior research analyst for Kauffman, a nonprofit that promotes entrepreneurship.
The report tracked startup activity across the top 40 U.S. metropolitan areas by population. San Francisco fell 10 spots in the rankings, to 14th, while San Jose dropped seven spots, to 16th. The metro areas with the biggest jump in activity from 2016 to 2017 were St. Louis, Cincinnati and San Antonio.
Technology startups, the Bay Area’s specialty, are only one component of the rankings, which also count activity in
everything from restaurants to yoga studios.
In the Bay Area, frustrations about housing prices and traffic have become so pronounced that confidence in the local economy has sunk to its lowest level in four years, according to a survey released by the Bay Area Council last month. The Bay Area also failed to create more jobs than it lost for the first time in four years, according to analysis of state jobs data by the Bay Area Council Economic Institute.
Still, the region is home to thousands of startups and the country’s most valuable companies, including Apple, Alphabet and Facebook — some of them only a decade or two removed from being startups themselves.
The Kauffman Foundation found that 30 percent of entrepreneurs who started a business in the U.S. over the past year were immigrants, the highest percentage in two decades. This comes as President Trump promises to clamp down on foreign work visas.