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Growth of wealthy tech entrepreneurs slowing in the US

16 Dec 2015

  • The number of millionaires in the US making their wealth from the tech and telecoms sectors has slowed in the past three years, from a year-on-year growth of 12.7% in 2012 to 2.7% to date
  • Despite this trend, tech and telecoms is currently the largest source of wealth for millionaires in the US (16% of them), having overtaken financial services in 2014
  • San Jose is the fastest growing city for millionaires in the country, having seen a 23% rise in their number since 2010

The tech and telecoms sector is now the largest source of wealth for millionaires or HNWIs (high-net-worth individuals) in the US, a new report from WealthInsight has revealed. There are currently 865,600 HNWIs who have earned their wealth from the sector, which amount to 16.1% of the 5.3 million millionaires currently in the US. Though in the past four years there has been an 11.1% increase in the number of HNWIs earning their wealth from this sector, it has slowed significantly since its peak in 2012.

Head of WealthInsight Oliver Williams comments: "It is no surprise that tech and telecoms is a powerful wealth generator, but news that it has outdone financial services as the country's largest millionaire-maker shows just how influential the sector has become. The knock-on effects of this growth are huge, though when it comes to the wealthy themselves, the surge is limited to the West Coast: both San Jose and San Francisco are among the five fastest growing cities for millionaires in the US."

However, data that those earning their wealth from tech and telecoms are decreasing adds to fears of a tech bubble. Just as the recent tech boom has created a wave of new entrepreneurs, the curbing of their ranks is reflective of the industry's slowing.

"While we hear talk of unicorns (private companies valued in excess of US$1 billion) and bubbles, the subsiding in HNW growth is largely caused by the industry's maturity. It is apparent that there is less room at the top for successful start-ups that are the key drivers of wealth," says Williams.

Furthermore, Williams explains that the model for wealth creation has also changed. "With venture capitalism at an all-time high we are seeing less founder-owned companies at the top. Entrepreneurs are sacrificing equity for investment and rocketing valuations so that, when a tech firm does make it, there are less billionaire beneficiaries."

But the slowing in new wealth does not check old wealth: "With few asset classes performing as well as tech start-ups in recent years, there has been pronounced interest from financial firms of all stripes," adds Williams. "This means that the wealthy financiers - the venture capitalists and alternative investors - have been the real winners of this boom. If the tech bubble bursts, the private wealth will just move elsewhere."

All information is based on the WealthInsight report entitled 'US Wealth Report 2015'.

Source: Company Press Release

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