The San Francisco metro area was the top location for venture capital investment in the country, hauling in $23.4 billion—more than triple the VC investment in Silicon Valley proper in 2016. New York had virtually zero VC-backed startups in the 1980s, but last year it took in $7.6 billion, eclipsing Silicon Valley as well. Boston and Cambridge were close, with $6 billion. Los Angeles drew $5.5 billion. The likes of Google, Apple, Microsoft, and Facebook continue to maintain suburban campuses, but more than half of venture-capital-financed startups are now in dense urban neighborhoods. Amazon’s headquarters are located in downtown Seattle, and Google has now taken over the old Port Authority building in Manhattan.
Researchers say The migration of high-tech startups to cities is less of a reversal and more of a historical correction.
For years, economists, mayors, and urbanists believed that high-tech development was an unalloyed good thing and that more high-tech startups and more venture capital investment would “lift all boats.” However, the reality is that high-tech development has caused in a new phase of what’s called winner-take-all urbanism, where a relatively small number of metro areas, and a small number of neighborhoods within them, capture most of the benefits. Middle-class neighborhoods have been hollowed out in the process. In 1970, about two-thirds of Americans lived in middle-class neighborhoods; today less than 40 percent of us do. The middle-class share of the population shrank in a whopping 203 out of 229 U.S. metro areas between 2000 and 2014. And places, where the middle class is the least include such superstar cities and tech hubs as New York, San Francisco, Boston, Los Angeles, Houston, and Washington, D.C.
The high-tech industry remains a major driver of economic progress jobs and much-needed tax revenues that cities can use to address and mitigate the problems that come with financial success.
Researchers suggest that they can work with cities to help build more housing, which would reduce housing prices.