Silicon Valley is an area in Northern California known for its concentration of tech companies and startups. It began emerging in the 1950s when Stanford University leased land to technology companies. Major companies founded in Silicon Valley include Intel, Apple, Cisco, Oracle, Google, and Facebook. Biotech has also become a large industry, receiving billions in venture capital funding annually. Venture capital firms provide startups with funding in rounds from seed to later stages. While the tech industry experiences boom and bust cycles, Silicon Valley remains a global hub for innovation. Life at a startup is typically fast-paced and chaotic, but offers flexibility and potential for high rewards if the company succeeds.
2. Silicon Valley
Distance from
San Francisco
to San Jose is
80 km/50 miles
Sand Hill Road
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3. Silicon Valley – Brief History
• 1891 Stanford University founded by a former Governor of California
• 1939 HP founded by Stanford graduates Bill Hewlett and Dave Packard
• 1950’s Stanford University experienced financial difficulties - leased land to
technology companies
• 1951 Stanford Industrial Park established – considered Silicon Valley’s
starting point
• 1971 Intel created the world’s first microprocessor (the Intel 4004 Chip)
• 1976 Apple Computer creates the first Personal Computer (Apple – 1)
• 1977 Oracle Founded – IPO in 1986
• 1980 Apple Computer goes public - largest public offering since Ford went
public in 1956
• 1984 Cisco Founded - IPO in 1990
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4. Silicon Valley – Brief History cont.
• 1995 Netscape goes public one year after founding – at US$1.96
billion, the largest IPO in history
• 1995 Yahoo Founded - IPO in 1996
• 1995 eBay Founded - IPO in 1998 1995-2000: Venture capital boom
and the Internet/dot-com bubble.
• 1998 Google Founded - IPO in 2004
• 2000 Stock Market (NASDAQ) crashed
• 2001 Lohika Founded - Private
• 2003 LinkedIn – IPO in 2011
• 2004 Facebook – IPO expected in May, 2012
• 2006 Twitter Founded - IPO in 2013?
• 2011 HP now a global company with ~350,000 employees and
revenues of US$127 billion
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5. IT and BioTech Companies
Top Public IT Companies
Rank by Revenue (2010)
Largest VC-Funded Biotech
Company Revenue (US$ Employees Deals in Silicon Valley (2010)
millions) (total)
Hewlett Packard 127,158 324,600
Company VC Funding # of
Apple 76,283 46,000
Investors
Intel 43,624 82,500
Cisco Systems 42,361 63,465 Founded in last Relypsa Inc 70,000,000 6
Oracle 34,479 108,800 ~15 years and Solazyne, Inc 60,000,000 11
Google 29,321 32,467 employ ~75%
Pacific Biosciences 59,000,000 2
Applied Materials 10,386 13,900 of Silicon Valley
IT workers. Pacific Biosciences 50,000,000 2
Synnex 9,179 10,000
Incline Therapeutics 43,000,000 7
eBay 9,156 17,700
Pearl Therapeutics 37,500,000 4
Sanmina-SCI 6,503 48,000
AMD 6,494 11,000
Achaogen, Inc 35,360,900 8
Yahoo 6,325 13,700 CardioDx, Inc 34,565,000 4
Symantec 6,048 18,600 iPierian, Inc 28,470,400 9
Aglient 5,750 18,500 VeraCyte, Inc 28,000,000 4
SanDisk 4,827 3,469
NetApp 4,785 11,800
Juniper Networks 4,093 8,772
Adobe 3,969 9,117
Intuit 3,554 8,700
Nvidia 3,543 6,029
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6. VC Firms – Overview and Structure
• Venture capital (VC) firms typically finance early stage and growing
companies organized as partnerships:
• General Partners
• Limited Partners
• VC firms are very selective and look to fund growing companies that
have promising technology and high growth potential
• With their investment, the VC firm owns significant equity in the
company. Liquidity (IPO or acquisition) after 3 to 7 years .
• VC firms create funds with a specific investment focus – i.e. a
particular industry or stage of growth
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7. How does VC funding work?
VC funding is typically categorized as ‘venture rounds’ when certain
business milestones are met:
• Seed/Angel - $50K to $500K
• Series A (First Round) - $1M to $3M
• Series B (Second Round) - $3M to $10M
• Series C (Third Round) - Mezzanine financing - $10M to $100M
• Series D (Fourth Round) - $10M to $100M
• IPO: Initial public offering or Acquisition
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8. Top Silicon Valley VC’s
• The top 10 VC Firms based on probability of high performance and success:
• Total funding managed by each VC from $135 million to $3 billion.
• Kleiner Perkins (KPCB) was founded in 1972 - the first VC firm to set-up in Silicon
Valley.
• Andreessen Horowitz was founded in 2009
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9. Boom and Bust
• Last 15 years, Silicon Valley has experienced a cycle
of relative ‘boom and bust’
• Dot-com bubble started mid-90s and culminated in the
NASDAQ crash in early 2000.
• Silicon Valley still one of the top technology centers in
the world.
• From 2000 onwards, VC financing gradually revived,
diversification: pharma, energy, biotech, farming etc.
• Last year economy in Silicon Valley is improved. Still
not at 2000 height of ~1 million jobs
Lohika Confidential 9
10. Boom and Bust cont.
Job Market: VC investment:
$100.1 Billion
The number of jobs still at
1995 level.
Since 1995 population has
VC Investment:
grown by ~20% and the $29.1 Billion
number of unemployed
(~100,000 during the
recession) is the highest
since 1990.
VC Investment:
$21.8 Billion
VC Investment:
$21.2 Billion
VC Investment:
$7.3 Billion
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11. Life at a Start-up in Silicon Valley
• High tech start-ups range from two person founders raising seed money to VC-
backed firms with several hundred people – all have one thing in common, they
are always looking for MONEY!!!
Chaotic
Sleep
Creative under
your
desk
‘Company-First’
Beer mindset Flexible
and
Pizza
Long Hours
Potential for
big pay-off if
successful
Fun, open, unstructured work environment
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