San Francisco Bay Area May Lose Tech Hub Status, Survey Says
If you’ve been in the chat rooms on social media sites, you’ve probably heard the rumor that Miami is set to replace the San Francisco Bay Area as the technology hub of the United States. Perhaps many Bay Area residents are already flocking to Miami, which has no income tax, better weather than California, and a lower cost of living.
San Francisco venture capital firm Initialized Capital asks dozens of their portfolio startups each year if they would choose to start a business in the Bay Area if the Time was now. This year, 42.1 percent of companies answered that spreading out the workforce would be the most beneficial way to start a business in terms of the long-term benefits to the company’s success. This result is a significant difference from last year, when only 6 percent of companies said they would start a company by working remotely. 41.6 percent of companies in 2020 said they would locate their headquarters in the Bay Area, and only 28.4 percent of companies this year are willing to do so.
Kim-Mai Cutler, a partner at Initialized Capital, said the results are not surprising because the number of companies they have invested in in the Bay Area has declined each year for the past seven years. In their portfolio, the Bay Area had the most companies headquartered in 2014, with three-quarters of their capital concentrated here.
I think there should be a sense of crisis in the San Francisco Bay Area in terms of income taxes and the economy, because the corporate exodus has been more talk than action in the last few years, but now we’re really seeing it happen,” Cutler said.
Just because some companies are considering these types of decisions doesn’t mean they will move their headquarters to other areas; instead, what will be affected is where their next batch of hires will work. San Francisco real estate rental site Zumper, for example, plans to hire 100 employees this year, and CEO Anthemos Georgiades said he’s not sure if he’s going to hire new employees locally, in other U.S. branches, or in a brand new location.
Hearing of Miami’s growing popularity with technology companies, Georgiades contacted Miami Mayor Francis Suarez via Twitter to ask him about his plans to transform Miami into a technology hub. Suarez quickly replied, discussing with George Ades the possibility of Zumper setting up a local branch.
Cutler believes the enthusiasm for Miami among businesses and entrepreneurs may be overstated. She points out that what Schwarz is doing now is essentially what the late former San Francisco Mayor Ed Lee did. Lee made big changes to San Francisco’s business tax system a decade ago in an effort to recruit more Silicon Valley tech companies to move north.
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