Bay Area, Silicon Valley Investor Interest in Startups Cools

Silicon Valley and Bay Area investors are less likely to back a startup than in the past, according to a new survey by Morgan Stanley Wealth Management

About 38 percent of investors in the region said they put money into a startup in the past. But only 23 percent said they are interested in doing that now.

Despite that sentiment, technology is the most interesting investment for locals who took the survey, with 78 percent saying that is where they would put their money. That compares to 68 percent who like biotech and 66 percent who like the pharmaceutical sector. Bay Area respondents were far more enthusiastic in all of those areas than those from the U.S. as a whole.

Bay Area residents were less inclined to invest in energy (55 percent), though, than investors from the rest of the country (67 percent).

Many reasons were given by investors for their reluctance to invest in a start-up. The biggest reason was the most obvious, fear of losing money, which 73 percent cited. About a third (34 percent) cited potential legal difficulties. Another reason cited was hurting personal or family relationships (17 percent) and fear of personal failure (16 percent).

More than half (58 percent) said they prefer to invest as part of a group rather than going solo (16 percent).

The biggest investment concerns cited by locals were increased foreign conflicts (90 percent), the U.S. economy (87 percent), government deficits (86 percent) and the financial well-being of the state of California (84 percent).

The survey involved 1,000 investors across the country and about 305 from the Bay Area were interviewed. They were all over 25 and had more than $100,000 in investable assets. About a third had more than $1 million they could invest.

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Brussels Sprouts' Renaissance Alive in Bay Area

It's like a scene from a childhood nightmare. There are vast fields of Brussels sprouts, with workers tossing plants bearing dozens of them onto a harvesting machine. Little green balls pile up in bins by the thousands.

November is peak harvest season from Half Moon Bay to Watsonville, and the sprouts are in high demand. A remarkable transformation has occurred on this stretch of coast, considered ground zero for U.S. production of the vegetable: The sulfurous orbs that were once the bane of children's dinner plates have evolved into a prized fall treat.

The value of the local crop has skyrocketed in the past decade based in part, growers and distributors say, on a steady rise in the appetite for fresh Brussels sprouts. The pungent little cabbage is riding a wave of popularity thanks to culinary creativity, changing consumer habits and scientific research.

Scientific breeding

Half Moon Bay farmers John Giusti and David Lea once sold about 80 percent of their sprouts to the frozen market. But in the past decade the ratio has flipped, and they now sell that much or more of their crop fresh. Most of the sprouts are packed in Salinas and trucked east. The rest make their way to Bay Area grocery stores, farmers markets and restaurants.

"It's almost like a designer vegetable now, where they're very desirable," said Lea, who farms about 150 acres of sprouts. "Years ago, when we told people we were growing Brussels sprouts, people would say, 'Oh, no, they're so bitter!' "

Local farmers say the Brussels sprouts renaissance began about 20 years ago and more than 5,000 miles away. Scientists at agribusiness giant Syngenta's labs in the Netherlands began breeding different varieties in an attempt to mellow out the sprouts' acrid taste.

The program focused on compounds known as glucosinolates, said Peter van der Toorn, Syngenta's director of vegetable breeding. The substance is responsible for the bitterness of the sprouts but has also been studied for its possible role in preventing certain types of cancer.

"We have tried to design combinations of glucosinolates that give the health benefits of eating these vegetables while improving the taste," said Van der Toorn, adding the new varieties also have higher sugar levels.

Chefs picked up on the milder flavor and began experimenting with new preparations. Diners who had recoiled from the stench of mushy, overboiled sprouts as children were pleasantly surprised. TV food shows and culinary magazines began featuring innovative recipes.

Ideal conditions

Brussels sprouts farmers have also benefited from the culinary movement toward local, seasonal food. The vegetable has become a fall and winter staple in Bay Area restaurants.

Park Tavern in San Francisco serves Brussels sprout chips as an appetizer. Sam's Chowder House in Half Moon Bay roasts them with bacon and butter. The chefs at Hay Market in San Jose's Willow Glen neighborhood, where the menu changes daily, improvised several recipes last year.

"The big hit, oddly enough, was whipped potatoes with toasted Brussels sprouts," said executive chef Joe Cirone, who uses only California sprouts, eschewing the Mexican-grown sprouts that are available in the spring and summer.

Bocanova in Oakland's Jack London Square goes through as many as 20 to 30 pounds a day, according to executive chef John Ledbetter.

"I have about five side dishes on the menu," Ledbetter said, "and I sell Brussels sprouts more than anything else."

That appetite for fresh sprouts, along with the farmers' increased cost of doing business, helps explain crop reports showing the value of sprouts grown in San Mateo County has nearly doubled to $8.9 million since 2003 despite a slight drop in the number of acres being farmed.

The cool, foggy coast south of San Francisco provides ideal growing conditions. More than 90 percent of Brussels sprouts grown in the United States come from California, according to the U.S. Department of Agriculture, and most of the Golden State's sprouts are harvested in San Mateo, Santa Cruz and Monterey counties.

Half Moon Bay farmer Mike Iacopi, who sells Giuti and Lea's sprouts at local farmers markets, said the salt air gives the vegetables character.

"At night you get that salty dew," Iacopi said, "and it gets into the plant, it gets into the soil, it adds flavor."

Whether it's the salty air or her mother's persistence, 5-year-old Lorenne Langmade has bought into the Brussels sprouts phenomenon.

"I like it when my dad grills them," said Lorenne while shopping with her mother at Whole Foods Market in San Mateo.

Tera Langmade said her daughter's attitude is much better than her own as a child. She regarded them simply as gross. But when she came across sprouts in a grocery store a few years ago, she gave them another try.

"I'm still not fond of them if they're not cooked right," said Langmade, a vegetarian. "It's all about the cooking with a lot of vegetables."

Bay Area's Business Climate is Less Friendly to Startups than Other Parts of California, Says Study

Relatively expensive housing, coupled with the high cost of living and doing business in the Bay Area, has made the nine-county region less hospitable to new companies than other big urban centers in California, according to a study released Thursday that urges improvements in what it describes as this area's burdensome regulatory climate.

"You have to ease the regulations that people face when they want to launch a new venture," said Jon Haveman, chief economist with the Bay Area Council's Economic Institute, which produced the report. "If somebody is trying to start a small business and spend a small fortune on a new home, they will probably start that business elsewhere."

The Bay Area lags major rivals such as Los Angeles and San Diego in jobs created by startup companies, the study determined.

The strengths of the region are reflected in household income and other factors, the report stated. The region has increasingly specialized in high-value industries such as professional, scientific and technical services, along with information services and products.

"This not only supports new company formation locally, but also helps attract innovative young companies from elsewhere in the country and around the world to locate here," the report stated.

"Even though there are high costs in the Bay Area, this region still has a reputation for new business formations," added Scott Anderson, chief economist with San Francisco-based Bank of the West. "You have the visibility of the tech industry. A lot of venture capitalists. Silicon Valley is the heart of the U.S. technology sector."

The report also determined that the migration of businesses into -- or the defection from -- the Bay Area has relatively little impact on the region's job market.

On average, only 2.3 percent of new jobs created in the Bay Area in a given year is the result of companies that came from other parts of California, other states or other countries. Similarly, only 3.7 percent of the jobs that vanish in a year are the result of firms defecting from the Bay Area.

Instead, 55 percent of the new jobs created in the Bay Area every year result from companies that were already located in the Bay Area. And 66 percent of the job losses in a typical year come from companies that were already operating in the nine-county region.

"Instead of spending money on going to other states or countries, local leaders should spend that money to make the environment more hospitable to companies that are already here, to create a better atmosphere for the formation of startups and the survival and retention of new companies."