2017 SVCIP report warns that growth could slow in Silicon Valley

Silicon Valley is still the leader among the nation’s innovation capitals in terms of prevalence of technology jobs and worker productivity – but the region’s excellence is not without vulnerability. That is the message from a newly updated Silicon Valley Competitiveness and Innovation Project (SVCIP) report, published this month by SVCF and the Silicon Valley Leadership Group (SVLG). The study compares Silicon Valley to innovation hubs New York City, Seattle, Austin, Boston and Southern California, as well as to international regions for some key measures. 
 
Responding to this challenge, the Silicon Valley Leadership Group and Silicon Valley Community Foundation joined together three years ago to create the Silicon Valley Competitiveness and Innovation Project (SVCIP), a multi-year effort to assess the region’s economic health and create a data-driven economic strategy to reinforce the region’s competitive advantages in innovation and ensure continued job growth.

The 2017 SVCIP report warns that our region could be on a perilous journey to eroding post-recession growth if it doesn't address basic building blocks of a robust economy, starting with the education of its young people. 

The data reports that more than half of Silicon Valley 11th graders failed to meet state standards in math; this endangers these students’ ability to compete in a global economy and the region’s economic future. Also a growing concern is that venture capital investment dropped off significantly from 2015 to 2016, along with later-stage funding and valuations. The report points to another crucial area for concern: The worsening of the quality of life in Silicon Valley measured by the high cost of housing and rentals, and longer commute times. These factors add to the looming possibility that other regions will attract more of our residents.

“We must work with policymakers to improve STEM education for our region’s children, alleviate traffic congestion and make spiraling housing prices affordable again,” said Emmett Carson, Ph.D, CEO and president of SVCF, in SVCF’s joint press release with SVLG. “Those and other public policy efforts are imperative if we want Silicon Valley to stay at the top of the innovation field.”

Researchers found that Silicon Valley’s housing and traffic situations have worsened compared to those in other innovative regions. Commute times have lengthened by more than 15 percent since 2010, compared to increases in other regions of only 5-11 percent. And coming off its 2015 peak, venture capital dropped in four out of the five quarters up to third quarter 2016. Annual venture investment dropped in Silicon Valley in 2016 for the first time since 2012.

“Silicon Valley remains the earth’s epicenter of innovation,” said Carl Guardino, CEO and President of the Silicon Valley Leadership Group. “While we celebrate our strengths, we must also work on our weaknesses. Those weaknesses include a lack of affordable homes, challenging commutes and an education system with uneven results in reading and math.”

What you will learn from the 2017 report:

  • Silicon Valley has a much higher concentration of STEM talent than other innovation regions
  • For the first time, the report included a measure regarding women entrepreneurs in innovation regions
  • Between Q3 2015 and Q3 2016, total venture capital investment in Silicon Valley companies fell 46 percent
  • Median home values continued to increase quickly in the first half of 2016 
  • The average Silicon Valley worker spends an hour and 10 minutes commuting per day (both ways)

Guided by an advisory council and a series of discussions with legislators, business and civic leaders, the SVCIP team developed an Indicator Dashboard and public policy agenda to evaluate and promote the health of Silicon Valley’s innovation ecosystem. The SVCIP represents a first step in identifying key public policy issues to address in the near term.

To see an executive summary or read the full SVCIP 2017 report, visit SVCIP.com