Investment in technology companies in Silicon Valley is not just on the rise; it’s increasingly taking funding away from other sectors, according to research from CB Insights.
Technology is dominating funding in Silicon Valley, claiming 45 percent of investment dollars so far this year, compared to 43 percent last year and 36 percent in 2011, research in CB Insight’s Silicon Valley Venture Capital Almanac states.
“Historically, the allure of the Valley has been that it is the epicenter of innovation across multiple sectors,” Anand Sanwal, CEO and Co-Founder of CB Insights said in a phone interview. “Tech investments in the Valley are stealing share from other areas, i.e. healthcare and energy. I think that’s going to be a trend we’re going to watch.”
In the past week there has been a raft of big money investment rounds in the technology sector. Database builder Foundation DB, raised $17 million in investment from Hill Ventures. Meanwhile, Bill.com, which automates manual payment processes, secured $38 million in funding from a Scale Venture Partners-led group on investors. And Quirky, a crowdsourcing platform, raised $79 million in Series D funding from GE and a number of investors including Andreessen Horowitz, Norwest and RRE.
Mr. Sanwal says he does not believe the rise in investment is due to a seasonal effect. But he says increasing amounts of cash being ploughed into these companies could be due to the rising involvement of corporations, such as GE, in technology investment.
Around $31.5 billion has been invested in Silicon Valley technology companies since 2009, according to the research. CB Insights projects there will have been $8.91 billion worth of deals by the end of 2013, the most in five years.
“I’m optimistic in general and technology is creeping into industries that weren’t historically particularly technology driven, so we’re seeing things in agriculture and consumer packaged goods and industrial for example. We’re seeing technology make inroads into all these other spaces that go way beyond traditional tech,” Mr. Sanwal says.
The research also showed SV Angel is the most active investor in Silicon Valley tech companies, 500 Startups concluded the most seed investor deals and Google was the most active acquirer of Silicon Valley startups.