David Blumberg, founder and managing partner of early-stage venture firm Blumberg Capital, has left the Bay Area for Miami.
“Big news, bittersweet news, but for the best. As of last night, we have moved out of California, and are now happier residents of southern Florida,” Blumberg shared in a Facebook post on Nov. 28, apparently only to friends. The post was reviewed by the San Francisco Business Times. “Poor governance at the local level in San Francisco and statewide in California has driven us away.
“We recognize the amazing and unique natural gifts that G-d and geology bestowed on California, but enough is enough," the VC said.
Blumberg founded Blumberg Capital in the early 1990s and the firm created its first venture capital fund in 2001. Blumberg Capital’s investments include San Francisco fintech Fundbox. Prior investments include Check Point Software Technologies, Electronics for Imaging and Teva, according to the firm’s website.
Blumberg did not respond to requests for further comment on his decision to move, whether the headquarters of Blumberg Capital is moving with him, or what spurred him to choose Miami, an increasingly popular destination for venture capitalists, hedge fund managers and other financiers. Many of them are moving for the reasons offered up by Barry Sternlicht, Starwood Capital Group chairman and CEO in a 2017 visit to San Francisco.
“The blue states will have to pay more taxes to support their social network and immigrant populations. It will be a death spiral,” Sternlicht said in discussing his move from Connecticut to South Florida. “There’s a point where you move, and you bring your friends with you.”
Blumberg leaves California amid an acceleration of wealthy people leaving the state, likely eager to avoid a possible state income tax increase in 2021 that could be retroactive. Lawmakers this year considered boosting California's top income tax rate from 13.3% — the highest in the nation — to 16.8%. No action was taken, but tax hikes are expected to be on California lawmakers’ agenda in 2021.
Ron Suber, a prolific fintech investor, left San Francisco in September, moving to Boulder, Colorado. His departure fueled worries that more wealthy California residents will vote with their feet and leave the Golden State. Other recent departures include venture capitalist Keith Rabois, a veteran of PayPal, LinkedIn and Square, who said in November that he’s also moving to Miami.
Others that have recently left California include Dropbox CEO Drew Houston and Splunk CEO Douglas Merritt, who both recently purchased homes in Austin, with plans to make the Texas capital their permanent home. Palantir co-founder Joe Lonsdale is also moving from San Francisco to Austin and taking the headquarters of his venture firm, 8VC, with him. Texas and Florida, with no state personal income taxes, are popular destinations for Californians moving out of state.
“It seems the very high current state taxes … and the proven ease through Covid-19 of remote working — particularly in the technology sector — have created a tipping point for higher earners and higher-net-worth California residents,” Bay Area investor Alison Davis told me in September. “I have never had more conversations about the topic of moving out of state than in the last two months and expect the exodus to pick up significantly in the next 24 months."
When I asked Davis in September whether she and her husband Matthew Le Merle were considering a move out of California, she said, “Personally, I love living here and am probably committed to stay in the state.
“But I am not optimistic about the California budget challenges, given the high pension costs,” said Davis, who is a board member of Silicon Valley Bank’s parent and co-founder of investment firm Fifth Era, with her husband. “I am very concerned that as more and more higher taxpayers leave, the burden on those of us staying will become untenable.”
Blumberg echoed Davis’ sentiment on the need for the Golden State to address what ails it.
“We certainly hope and pray that California will take action to remedy the disastrous self-inflicted political situation and restore its former luster and quality of life, but for now we are voting with our feet,” Blumberg said, urging his friends to come visit his family in South Florida — or join them in moving there.
These companies moved or are about to move their headquarters out of the Bay Area.
