Central California’s Emerging Tech Frontier: HawkTower’s Vision for a New Startup Hub
Catalyzing AI-driven startups in Central California, leveraging local talent and institutional synergies to reshape the region’s economic landscape.
HawkTower is bullish on Central California.
Later this year, HawkTower will launch a VC fund that backs AI-enabled companies in the region. We see this as an impact opportunity that also pencils out highly competitive returns over the fund’s life. In Central California, institutional forces across academia, industry, and government are increasingly incentivized to foster local startups — driven by commercial, environmental, economic, and societal needs. These forces will outweigh the macro challenges facing VC.
From 2015 to 2025, this trend boosted secondary startup centers like Miami, Detroit, Columbus, and Charlotte. From 2025 to 2035, new hubs are expected to arise, propelled by underleveraged institutions, a backlash to poaching practices (of talent and companies), YIMBYism, a rising workforce, and a myriad of untapped opportunities.
This is the first of a series of posts to make the argument for Central California, both with data and anecdotes.
California exhibits a strong retention rate for its graduates, with over 75% of students from its higher education institutions choosing to remain within the state post-graduation, the highest retention among all states. This reflects a strong alignment between the educational output and the job market, particularly in high-demand fields such as technology and engineering.
At a regional level, however, in particular counties and parts of the state, HawkTower research indicates a regular exodus of talent to other parts of the state and country, which raises concerns about sustaining local innovation ecosystems and maximizing economic growth. Central California’s challenge lies in crafting strategies to retain these skilled graduates to ensure that the investment in education translates into local workforce and economic benefits.
HawkTower analysis delves into the professional diaspora of technology sector employees from Monterey County, revealing a pronounced relocation trend — a review of LinkedIn profiles of 300 tech workers who graduated from local high schools and are currently engaged in the tech industry.
Findings indicate a striking disparity: 87% of these individuals have pursued job opportunities outside of Monterey County, with just 13% opting to remain within the region. Major tech companies — Apple, Tesla, Google, Microsoft, and Uber — are top employers. 4% of the 300 are founders and CEOs.
The fiscal implications of this migration are noteworthy, with a calculated loss of a bare minimum of $25 million in local wages, according to Salary.com figures for entry-level engineers. This outflow of talent suggests that while Monterey County effectively nurtures highly capable tech professionals who are attractive to premier firms, there is a missed opportunity in retaining this talent to bolster local businesses and startups, thus impacting the local economy.
In the context of Monterey County and Central California, if job opportunities similar to those in the tech sector are available locally, data implies that many tech workers who left would be inclined to return. The USDA Economic Research Service indicates that people are drawn back to their roots, seeking proximity to family and community. The highest net migration rates are among adults aged 30–34 (returning with several years of professional experience) and children aged 5–9. In addition, returnees enrich their origins, bringing higher education and practical skills honed from wider experiences, countering the intellectual exodus often seen in these communities. For example, my friend Nicollette returned to Monterey and now serves on the Monterey State Historic Park Association (MSHPA) board, recently helping revitalize and reopen California’s First Theatre.
More to come. This is the first entry of many in the case for Central California as an emergent startup hub — the potential for the return of an exceptionally accomplished and successful workforce. Similar to California becoming vigilant about companies being recruited by other states, Central California can exercise proactive measures to retain talent against interstate competition. This is a critical requirement, but certainly not the only one — Central California must also leverage world-class research, industrial partnership and R&D, governmental partnership, and much more.
