It is no surprise that the Bay Area is home to tech billionaires such as Apple CEO Tim Cook, Facebook CEO Mark Zuckerberg and Tesla CEO Elon Musk.
But the local billionaires’ club is rapidly growing, especially compared to other metropolises around the world, according to the latest billionaires’ census from Wealth-X, a data company which tracks billionaires’ net worth. Fourteen new Bay Area-based billionaires joined the ranks in 2017 to lift the Bay Area total to 73, and the Bay Area leaped over Moscow and London to become the metro area with the third highest number of billionaires — behind New York and Hong Kong.
In total, there are 143 billionaires in the world whose wealth came from the technology sector, averaging nearly $6 billion in net worth, according to Wealth-X. While there were three times more billionaires from the banking and investment sector, technology billionaires’ average wealth was nearly double that of banking billionaires.
Two factors in Silicon Valley led to the rise in tech billionaires. First was the rising number of “unicorn” companies — privately held companies worth more than $1 billion, such as Airbnb and Uber. While CEOs of unicorn companies joined the billionaires, the fluidity of the companies’ net worth may make the new billionaires’ status “a transitory visit into the billionaire class,” according to the report.
Another — more unstable — class of tech billionaires came from cryptocurrency. One cryptocurrency company CEO, Chris Larsen of Ripple Labs, saw his net worth skyrocket during the explosive growth in bitcoin and other cryptocurrencies last year. At one point in January, Larsen’s net worth was around $59 billion thanks to his status as the largest holder of Ripple tokens.
However, Wealth-X noted that cryptocurrency has produced “a whole new level of elasticated volatility” where temporary billionaires are formed. One example: the Winklevoss brothers — made famous as Zuckerberg’s antagonists in the movie “The Social Network” — were temporary billionaires in 2017 thanks to their large bitcoin holdings.
Despite the meteoric rise in Bay Area billionaires, the region finished fourth in the fastest growth of billionaires behind three Chinese cities. Hong Kong, Beijing and Shenzhen reported 21, 19 and 16 new billionaires in 2017, respectively.
Moscow was the only city in the top 10 billionaire cities which saw a decline, from 71 to 69. London stayed flat at 62.
Wealth-X noted that the overall rise in billionaires may be a short run, noting the VIX index in 2018— a popular measure of the stock market’s volatility — soared as stock prices dropped.
It also questioned how the recent news from the tech sector may impact the Bay Area’s concentrated wealth.
“How will the technology sector react to the Facebook data privacy scandal or President Trump’s criticism of Amazon?” the report states. “One thing is clear. For now, at least, volatility has returned.”
