For California small businesses, the news these days seems bleak. State and local governments have shut down most of the state, legislators in Sacramento have proposed increasing the top state income tax rate to 16.8% and the costs of doing business remain high.  Litigious parties and opportunistic lawyers have been using California’s Private Attorney General Act (PAGFA) to wage class action warfare against small business across the state. Faced with such factors, states such as Texas, Arizona and Nevada are attempting to lure California businesses to their states with promises of lower taxes and friendlier business climates. Several business might be tempted to take that deal.

But I am here to praise California, not bury it. Despite the negative factors listed above, enterprising individuals from around the world nevertheless flock to California. Entertainment entrepreneurs will always come to Hollywood for opportunity, industry will always find agricultural markets in the Central Valley,  and startup entrepreneurs will always yearn for the Silicon Valley for its access to capital, talent and customers.

The largest technology companies in the world reside in the Silicon Valley, which headquarters companies such as Apple Inc. (#4 in the Fortune 500 – Cupertino), Alphabet (#11 – Mountain View) Intel (#45 – Santa Clara), Facebook (#46 – Menlo Park) Cisco Systems (#63 – San Jose), and Oracle (#82 – Redwood City), to name only a few.[1] between 6 and 7 trillion dollars of market capitalization live between San Jose and San Francisco.[2] That is very attractive to any company, but compelling to a startup, which is one reason the Silicon Valley is home to the US venture capital industry. A quarter to half of the more than $100 billion that VCs invest annually originating in California and most of that sits along a 1.5 mile stretch of Sand Hill Road in west Menlo Park. And if you are not sold yet, there are few places in the world that can match the abundance of talent in the Silicon Valley. You may thank the excellent University system, or the rainforest of techies that congregate here, or perhaps the cooperative spirit (or coopetition) that allows permits engineers to cooperate with competitors when they run into a problem. Can you imagine that happening in New York? Me neither.

Business presence has translated into prosperity. California ranks #6 in the country for per capital income.[3] With almost 40 million residents, that makes California a huge and prosperous consumer market. Few multi nationals can ignore that large market.

It should also not be overlooked that the Silicon Valley lies within a two hour drive from the most productive agricultural areas in the world – the Salinas Valley and the Central Valley. California’s agricultural industries generate almost $50 billion of revenue annually, making California the largest producer in the country by far. Over 400 commodity crops are grown in California, and fuel the state’s strong export markets. As an example, California grows 90% of the nation’s avocados, 90% of the nation’s wine production, 90% of the nation’s leafy greens, 95% of the nation’s processed tomatoes (and 1/3 of the world’s crop), 80% of the nation’s raspberries and strawberries and most of the nation’s almonds (80% of the world supply). Due to the proximity of the Silicon Valley to the Central and Salinas Valleys, the large and fast growing agtech investment sector has a dominant presence in California, taking in billions each year in venture capital investment.

There are few places in the world that can match California for its accomplishments.  Given the abundance of resources in this state and the Silicon Valley there are good, and even compelling reasons, for betting on California.

-Roger Royse

 

[1]Fortune 500” Fortune, 18 Sept. 2020

[2] Joint Venture Silicon Valley, April 28, 2020.

[3] World Population Review.