From orchards to chips: Silicon Valley’s evolving entrepreneurial ecosystem

The initial development of Silicon Valley and its indigenous start-ups relied on various endowments, including abundant resources and a set of institutions and know-how inherited from previous industrial activity. This article identifies the entrepreneurial ecosystem that supported key tech start-ups on the San Francisco Peninsula prior to the 1960s, shows how the ecosystem developed and how it evolved. By 1940, a far-flung ecosystem—from Santa Clara County to San Francisco to Washington, DC – was in place, well before the arrival of the Valley’s first venture capitalists in 1959 and the establishment of the region’s first high-tech law firm in 1961. Federal agencies and laws provided revenue and risk reduction. Local universities provided brainpower. San Francisco-based banks and their Peninsula branches provided financing. San Francisco law firms drafted organizational agreements and protected intellectual property. Without such institutional support, there would be no Silicon Valley as we know it. Silicon Valley’s early high-tech start-ups were supported by an ecosystem that was developed for the agriculture, extractive, and transportation industries. That ecosystem was repurposed for defence-based electronics and telecommunications, and then transformed for the consumer world of calculators, video games and personal computers. The “master cluster” benefitted from being in the right place at the right time, and by inheriting the right ecosystem.