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How the Tech Exodus Affects VCs

How the Tech Exodus Affects VCs
By Adam Sharp
Date August 25, 2020

Last week I wrote about the current trend of businesses fleeing California. I believe this will be one of the defining issues of our time.

California’s tech exodus can be traced to many deep and complex societal issues. California has taxes that are far too high, housing that is far too expensive and massive wealth inequality. These issues aren’t unique to California. But they are especially pronounced there. So it will be fascinating to see how this all plays out — and how other states handle the influx of new businesses and new wealth. 

As I mentioned in last week’s piece, it’s likely that high-tax states like California will continue to lose businesses to low-tax places like Texas for the foreseeable future. 

This will be especially interesting because California — and specifically the San Francisco Bay Area — is home to a huge portion of the venture capital industry. But not for much longer.

I believe that over the next 10 years VC and angel investors will spread out across the country. Ultimately, it’s going to be a great thing for America. 

For those of us who don’t live in California, it means even more opportunities to invest in startups locally — and more opportunities to get involved in the local scene. So although the next decade is going to be challenging, I’m also very excited about it. A lot of things are going to change. And ultimately, that’s a good thing for startup investors like you and me. 

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