Yes, period, if you want to raise significant sums.
I’m only Bay Area-centric because I work here. Qualtrics, Atlassian, and many others prove you can crush it in SaaS without being based in SF.
But notice the non-Bay Area ones generally had to get further to raise a ton of venture money. In fact, Qualtrics and Atlassian only took money in secondaries, i.e., they never even raised traditional VC.
The Bay Area has a unique combination of two factors:
- More VCs, by far, than anywhere else in U.S. + Europe.
- More VCs “going for it” — i.e., optimizing around Billion+ outcomes.
The combination of the two means there is a ton of capital available to Bay Area, and Bay Area-ish, start-ups. It also means Bay Area VCs “pay up”, i.e. they pay higher valuations and prices.
The downside is these VCs are going for billion+ outcomes. So if that isn’t you — and it isn’t most of us — you may not like the bargain you get for all those millions. These VCs that “pay up” aren’t stupid.