Southern California Tech Market Lives in Shadow of Silicon Valley

Silicon Valley

Although Silicon Valley, which is located in the Bay Area of San Francisco, unquestionably dominates global technology, counties in Southern California are beginning to make progress in attracting technology-related funds and employment. While inroads are being made, technology market statistics show that these counties have some challenges to overcome.

CBRE, a real estate firm who locates office space in Southern California for tech firms, has compiled a report that shows Southern California is not taking full advantage of the high number of tech graduates from its own local colleges. Between 2011 and 2016, colleges located in Orange and Los Angeles counties produced 45,968 tech-related graduates. Only Washington D.C. and New York produced more graduates. Even the Bay Area was further down the list with 28,800 graduates.

The bad news is that Southern California only created 33,080 new technology jobs in the same time period. This new jobs figure is well below the 109,280 new tech jobs created in San Francisco. The lack of enough new job possibilities in Southern California has created a net drain of tech talent away from the region.

Wages are another problem in attracting and keeping technology talent in Southern California. The average salary of a tech employee in San Diego is $100,200. The average in Los Angeles is $95,600, and it's $99,200 in Orange County. Unfortunately, these salary levels are far behind the average of $123,000 in the Bay Area.

The hipster vibes of downtown San Francisco is more attractive to the mindsets of new technology graduates. Newport seems a little too sleepy young graduates seeking a more fun-loving environment. Los Angles has a little more appeal with its proximity to Hollywood.

Attracting new investment funds is absolutely critical to support the growth of new technology companies. In the first half of 2017, venture capitalists made 193 deals and put up $2.4 billion. The number of deals is up by 12 versus last year, but the total dollars raised fell 40 percent. Investors are willing to take the risks, but they are putting up less money.

Silicon Valley still dominates the funding race. Venture capitalists put up $14.9 billion in the first half of 2017. This amount was an increase of $1.85 billion over the same period last year and represented the Bay Area's second highest share, 45 percent, of the nation's total venture funding since 2010.