Silicon Valley start ups, step up

Silicon Valley

One minute America is about to emerge from recession, the next Wall Street and Main Street start to wobble and the message comes from Washington to tighten our belts once again as we try to avoid a second dip into crisis.

But there is one place that has started giving out some positive vibes - Silicon Valley.

On February 10, the AP reported that Silicon Valley's economy took a pretty big hit during the global economic meltdown and predicted that it could have some trouble climbing out of the crisis unscathed.

The 2010 Index of Silicon Valley said the region is entering a "new phase of uncertainty" where job losses, a shrinking foreign talent pool, a drop in investments and state legislative gridlock could put its standing as the center of technology at risk.

Returning to relative normality

However it appears that the new kids on the block (or should I say, in the Valley) are doing their best to drag it back to relative normality, as Silicon Valley's start-up economy stepped up a gear.

Mercury News reports that within just two-weeks, a diverse group of start-ups raised a staggering $600 million in investments, topped by $350 million for Better Place, a Palo Alto company with a global vision for a 21st-century electric car battery-charging network. Meanwhile Tesla Motors, widely seen as the poster child for the infant electric car industry, filed for an initial public stock offering.

As a whole venture investments experienced an uptick nationwide in the final months of 2009, albeit only modestly, but the yearly total of $17.7 billion was a steep drop from $28 billion in venture investments in 2008 and $30.5 billion in 2009.

This essentially means that the art of fund raising will be made difficult through most of 2010, but news of this has so far failed to reach companies like QuinStreet, an Internet marketing firm based in Foster City, who earlier this month became the valley's first Wall Street debut of the year, raising $140 million despite an initial lukewarm response from investors.

Pessimism reigned

Investments in Cleanteach remain a relatively safe bet and will benefit companies like Tesla and thin-film solar panel manufacturer, Solyndra.

The number of IPO candidates in Silicon Valley still remains relatively low at just six, but this is encouraging after such an IPO famine over the last 24 months.

Since the economic crisis hit analysts and experts have had to realign their view of "normality", not just with Silicon Valley, but across the whole of the United States. The new look normal may well include a slight IPO rebound but will likely see far more mergers and acquisitions. But as the AP points out, "there are still a lot of great opportunities available for tech giants such as Cisco Systems, Google, Microsoft, EMC, Oracle and HP", which have a history of growing through acquisition.

The new found optimism will help to breath new life into the Valley, where pessimism has reigned for far too long.

Related Articles:

US jobs on their way back | Economy grows but unemployment stays high | How recession remade manufacturing

Daniel Jones

Daniel is a Politics and Philosophy graduate from Cardiff University where he also worked as a section editor on the award winning student newspaper. After university he joined an IT support company where he was a B2B online writer. He loves anything to do with sport and joined GDS in July 2009.

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