The San Francisco Bay Area, which includes Silicon Valley, has for decades served as the world’s flagship hub for technology, innovation, and entrepreneurship. This status has been earned through a collaborative relationship among the region’s research universities, venture capital firms, and technology and life sciences companies, which combined have produced an unparalleled track record of revolutionary change and technology commercialization. Parallel with technology, companies are developing and executing innovative business models. Positive and interconnected networks and feedback loops have sustained this flourishing environment.
This report examines the scientific roots of the Bay Area’s innovation system and the contribution of public investment to the research on which much of the region’s technological success has been built.
This report was prepared for the Bay Area Science and Innovation Consortium (BASIC) by a team led by Dr. Sean Randolph, Senior Director at the Bay Area Council Economic Institute. BASIC is the science and technology affiliate of the Bay Area Council and the Bay Area Council Economic Institute.
The Bay Area’s already considerable impact on the national and global economies is continuing to grow. Over the last six years, since BASIC’s first mapping of the region’s innovation ecosystem, we have seen the rapid acceleration of emerging technologies and their applications, including machine learning, personalized medicine, autonomous vehicles, cleantech, and virtual reality, to name only a few. These technologies are profoundly impacting the future of business and how we live. As Silicon Valley’s reach expands to the farthest corners of the globe, hundreds of millions more people will use and benefit from the technology and services that Bay Area businesses generate.
While the key components identified in BASIC’s last report—universities, federal labs, independent labs, joint research facilities, corporate labs, incubators, accelerators, and venture investment—continue to provide the system’s base, new players such as industrial innovatiion centers have been added. This “innovation cloud” has proven its resilience, repurposing itself again and again with dynamic, non-linear developments across the technology sector.
While industry is responsible for the largest share of R&D expenditures, most of that funding is spent on product-related R&D. Basic research (scientific research without an immediate commercial objective) provides a critical and necessary foundation for technology breakthroughs that underlie the region’s and the nation’s economic leadership and may ultimately be commercialized. The largest share of basic research expenditures comes from government sources, and almost half of basic research is performed by the higher education sector (49.1 percent in 2015).
One of the Bay Area’s most significant competitive and collaborative assets is its deep scientific base, which enables basic scientific inquiry but also technology breakthroughs that generate new world-class companies—and often create or transform entire industries. Because the working parts of the region’s innovation system are so closely interconnected, any weakening of one can impact other elements and the system as a whole. A key theme of this report is that consistent, sustained public investment in science provides a critical foundation for the region’s and the nation’s scientific and economic leadership.