Q3 tech funding outlook: San Francisco

At $1.73 billion, SF leads national VC funding

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Dec 19, 2016, 6:37 PM

San Francisco posted the highest venture capital funding volume nationwide in Q3 at $1.73 billion. Funding dropped from the previous quarter and annually (down 68% and 21%, respectively), but total investment for the first three quarters topped $9.3 billion. That’s down just 10% compared to 2015 and up 14% compared to 2014 over the same time period.


VC firms are still raising funds, but growth will continue at a more controlled pace than in 2014 and 2015. Late- and expansion-stage companies received a higher percentage of investment dollars this quarter as investors favor companies with established business models and less inherent risk.

The softening in the early and seed stage investment will materialize in a few ways. Early stage companies will have to find turnkey buildouts or space with limited capital investments. Conversely, they may give space back to mitigate costs.


Growth from later- and expansion-stage companies will drive leasing activity and absorption into 2017. However, they’re also targeting plug-and-play space as well as pushing for increased tenant improvements or full buildouts—a potential obstacle to the profitability investors are looking for.

For more insight, see how third quarter venture capital funding fared nationwide.

Research: Jack Nelson | Editor: Lillian Veley