1. It's far easier to raise money from VCs if you are located in SV/SF vs anywhere else in the country.
2. Once you raise that money, the only thing you are going to spend it on is employees. Infrastructure costs, real estate costs, etc, are comparatively cheap.
3. People starting companies rarely look around and decide where they should strategically be located based on costs. A few do, including my last company which was located in baltimore, but not many. Most people want to start their companies where they already live, and have a network for hiring, etc.
These 3 things, and probably others, lead to a significant amount of new companies getting started in SF/SV.
1. It's far easier to raise money from VCs if you are located in SV/SF vs anywhere else in the country.
2. Once you raise that money, the only thing you are going to spend it on is employees. Infrastructure costs, real estate costs, etc, are comparatively cheap.
3. People starting companies rarely look around and decide where they should strategically be located based on costs. A few do, including my last company which was located in baltimore, but not many. Most people want to start their companies where they already live, and have a network for hiring, etc.
These 3 things, and probably others, lead to a significant amount of new companies getting started in SF/SV.