Twitter IPO will widen Silicon Valley's VC cashout lead

Bloomberg photo

More than half of the biggest IPOs in the past two years, and more than 80 percent of their value, was from Silicon Valley companies. Shown here is Times Square when Facebook did its record-breaking IPO last year.

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Cromwell Schubarth: Senior Technology Reporter- Silicon Valley Business Journal; Email | Twitter | Google+

In the big game world of venture investing, it makes sense to make tracks to the most fertile hunting ground — Silicon Valley.
That's the message in a report this week from New York research firm CB Insights which points out that that more than half of the biggest VC-backed exits in 2012 and 2013 have come from this region.
And that is before Twitter's $1 billion IPO, which is likely to be the largest of the year.
CB Insights examined the 50 biggest sales and IPOs by venture-backed companies.

"Silicon Valley is the 800-pound gorilla when it comes to exit activity, taking 52 percent of the largest exits since 2012," CB Insights writes.

New York, Massachusetts, Southern California and Illinois collectively accounted for 28 percent.
The disparity is even more stark when you compare what the companies were worth when they went public or were sold: Silicon Valley pulling in 86 percent of the total value of the top 50 exits.
The difference between the superstar investors and the rest of the venture pack is picking startups that provide mega-returns, like Facebook or Twitter.
The report shows the Valley leads in this regard, too.
The average ratio between dollars invested and dollars returned in Silicon Valley in the CB Insights report is around 29 to 1. That narrows to about 13 to 1 when you take Facebook's record-setting IPO last year.
But it still tops the other regions in the country: Southern California, 12.9 to 1; Massachusetts, 11 to 1; New York, 9.6 to 1; and Illinois, 4.2 to 1.
So it's clear that there is money to be made in other parts of the country.
And you will probably find a lot less VC hunters in those other places.