VC Funds: $100 billion of dry powder in the Bay Area.

I was using Preqin to understand office locations of firms (institutional, family offices, and corporates) that are doing direct venture capital investments and are still seeking actively for new investments (collectively called “VC firms” below). Tobias Lam from the Preqin NYC office was kind enough to pull some back-end data on office locations for firms that are headquartered either outside the US or outside the Silicon Valley. I did some minor data cleanup, but nothing major that caught my eye.

2,300+ Active VC Firms on the West Coast

According to Preqin, there are 2,303 active VC firms with an office on the West Coast of the US, 331 (~14%) of which are non-US firms.

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Active Venture Capital firms with an office on the U.S. West Coast (Source: Preqin, as of 04/03/2019)

Most Silicon Valley VCs are in San Francisco.

From the 903 VC firms in the Silicon Valley, 369 (41%) have their headquarter in or around San Francisco, and 281 (31%) have their headquarter around Menlo Park, Palo Alto, or Mountain View.

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Headquarters: Active Venture Capital firms with headquarters in the Bay Area, by ZIP code (Source: Preqin, as of 04/03/2019)

Most Non-Silicon Valley VCs chose San Francisco for their Silicon Valley office.

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Silicon Valley office locations for VC firms that are headquartered outside the Silicon Valley, including non-US (n=530. Source: Preqin, as of 04/03/2019)

264 non-US VC investors decided to have an office in Silicon Valley. 55% chose San Francisco, only 22% chose the Menlo Park / Palo Alto area.  Some of these firms are large corporates, and they decided to co-locate their venture office with their existing corporate offices. As a result, 21% are located somewhere else in the South Bay (versus Menlo Park).

266 US investors headquartered outside the Silicon Valley decided to add an office somewhere in the Bay Area. 65% of these chose San Francisco, only 26% chose the Menlo Park / Palo Alto area.

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Silicon Valley office locations for non-US firms and US-firms headquartered outside the Valley that invest in various venture capital stages (Source: Preqin, as of 03/04/2019)

Together, these firms reported about $804 billion raised, with an estimated $273 billion left of dry powder. Keep in mind that some of these firms traditionally had more of a late-stage private equity focus. This is especially true for the non-US institutions. As a rule of thumb, these PE firms raise significantly larger funds than early-stage venture capital funds. Additionally, we don’t know how they decide to deploy their money geographically and asset-class-wise. I’m trying to say here that total funds raised and dry powder might not be that meaningful here.

Silicon Valley VCs Raised Almost $250 billion in Past 10 Years.

Preqin has estimates of the total funds raised in the past ten years for 418 active firms, as well as “dry powder” estimates for 428 active firms — so about half of the 903 Silicon Valley VC firms.  428 Silicon Valley VC firms have raised an estimated $247,554 million (yes, almost $250 billion!) over the last ten years, and are estimated to have about $101,364 million (or about $100 billion!) of dry powder.

That’s a lot of money.

Distribution of Raised Capital in Past 10 Years

About half of the active Silicon Valley VC firms that Preqin has data for raised less than $100M funds raised over the past ten years. Together they hold less than 2.7% of all raised capital, while more than 61% of total funds raised over the past ten years is held by only 24 firms.

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Distribution of total funds raised by active Bay Area VC firms. n=418. total of $248,754M (Source: Preqin, as of 04/03/2019)

Distribution of Dry Powder

Dry powder of active Silicon Valley VC firms is even more concentrated: about 50% is in the hand of 12 firms. About a third of all firms have less than $20M of dry powder left, though together they could still deploy $1,096M into startups.

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Distribution of active Bay Area VC firm dry powder. n=428. total of $101,364M (Source: Preqin, as of 04/03/2019)

Thoughts? Opinions? Comments? Corrections?