Despite the challenges wrought by the pandemic, Tri-Valley entrepreneurs had a remarkable 2020. Last year the region's private companies produced three initial public offerings plus a new unicorn, which is how venture capitalists define a privately held startup company with a value of $1 billion or more. Local entrepreneurs also received a record $642 million in funding from VCs, according to the Mirador View: 2021 Perspectives on the Tri-Valley. The recent report from Mirador Capital Partners notes that VC funding of Tri-Valley companies grew by 82% last year compared to 2019, bucking a Bay Area trend.
"Tri-Valley SaaS startups raised more funding in 2020 than they did in 2018 and 2019 combined," according to the report. "The resiliency of venture activity in the Tri-Valley was a testament to the quality of startups in the region, and continues to solidify our thesis in the Tri-Valley's economic outlook. We believe this trend will continue, especially given the strong inflow of new people and talent from San Francisco this past year. While VC in the rest of the U.S. went through a consolidation, we believe that 2020 for the Tri-Valley will turn out to be a year of inflection."
Several companies at Hacienda are among the Tri-Valley businesses that received VC funding in 2020 or the first quarter of 2021. They include AI startup Adapdix, which raised $10 million; AI company Cognizer; Degreed, an online learning platform that raised $183 million and is valued at $1.4 billion; Purigen Biosystems, a genomics diagnostic platform that raised $34 million; ServiceMax, a field service management SaaS company that raised $80 million; and Tekion, an automotive retail customer service SaaS company that raised $150 million and is valued at $1 billion. Last year Ellie Mae, which is headquartered at Hacienda and is the leading cloud-based platform provider for the mortgage finance industry, was acquired by Intercontinental Exchange in a deal valued at $11 billion.
Several companies have recently moved to the region, companies that would probably have opted to locate in San Francisco or Silicon Valley before last year, according to Don Garman, Founder and Chief Investment Officer of Mirador Capital Partners and Co-Founder of Tri-Valley Ventures. Why move a company to the Tri-Valley? "This is a genius place to live," he says, pointing to lower costs, a broad mix of available commercial real estate, and access to great employees as reasons why the Tri-Valley has become an ever more attractive location for new and growing companies.
Moreover, "the type of companies that are being started here are not generally two-kids-with-an-idea-in-a-garage-type companies. These are generally second- or third-company executives that have launched a product or gone to market. Now they're on to their next company, or they want to move out of operating and into being a founder. When you're looking at the recent trends in venture capital, those ideas have been pretty bankable. They are good ideas that are being led by credible management teams with well-thought-through, nuanced business plans."
In 2015, Science magazine published an article by two professors affiliated with MIT's Sloan School of Management called Where Is Silicon Valley? The article was an attempt to forecast and map entrepreneurial quality. "Intriguingly, across regions, entrepreneurial quality is centered around research institutions, such as universities and national laboratories," wrote the professors. They noted that while Stanford was at the heart of Silicon Valley, other institutions such as Lawrence Livermore hosted "a region of distinctive entrepreneurial quality."
The Tri-Valley business environment has only grown as an innovation hub since that article's publication. Many agree that the region's roots in innovation can be traced to Lawrence Livermore National Lab and Sandia National Labs. Over many years thousands of highly educated individuals have been concentrated in a small location and charged with solving difficult scientific and technological problems. That pool of expertise has helped draw entrepreneurs and other educated talent to the area. Local business leaders and public officials have also worked to make the regional, and the City of Pleasanton, supportive of innovation. As Pleasanton Economic Development Manager Lisa Adamos told the San Francisco Business Times, "We have developed actions and goals to brand Pleasanton as a center of innovation-driven businesses and entrepreneurship."
Garman has long been bullish on the City of Pleasanton and the Tri-Valley as a whole. The pandemic has only reinforced his belief in the region's future. "The real estate's cheap and we have plenty of room to expand and an infinite amount of market opportunity ahead," he notes. "What makes the Tri-Valley a little bit unique is generally someone's thirty-five, with a couple of kids, and they can't afford to take a flyer on some brave new idea when they have got a great idea for how to build a big business–and they'll be able to see their kids."
That may seem like a dream to many who work in Silicon Valley. But it has been true for many founders who started out or moved to the Tri-Valley. Veeva Systems, for example, is headquartered at Hacienda. The company pioneered cloud-based software solutions for the global life sciences industry. More than 700 companies, ranging from the world's largest pharmaceutical companies to emerging biotechs, are Veeva customers thanks to a host of innovative products. As former CFO Tim Cabral told Hacienda Pulse, when he was still with Veeva, "the greatest benefit of being in Hacienda is that many Veeva employees live within the Tri-Valley, so they are close to home and can work within their community.
Tri-Valley business leaders agree that a Tri-Valley location offers many benefits to entrepreneurs and their employees. In an opinion piece in a local publication, Garman and two colleagues recently made the case for entrepreneurs to move their companies to the Tri-Valley rather than leave the state. "We do not promise you will find a carbon copy of Silicon Valley when you come here, but we do promise affordable real estate prices, talent, and a quality of life that are unrivaled in the Bay Area," they wrote. "Take the next decade's ride in the Tri-Valley instead of forcing your employees out of California. Watch the benefits of happier, healthier employees and families hit your bottom line."
For more information about the Mirador View: 2021 Perspectives on the Tri-Valley, please visit www.miradorcp.com/tri-valley-research-report.
For more information about Mirador Capital Partners, please visit www.miradorcp.com.
For more information about the City of Pleasanton Economic Development Department, please visit www.cityofpleasantonca.gov/gov/depts/ed/default.asp.