Freestyle went looking for deals elsewhere because of the expensive San Francisco from an investment perspective. Felser said he was "world-wide" with technological dominance & # 39; whether it is Finland for mobile gaming or Estonia for cryptocurrencies.

"The valuations are as high as they have ever been," he said. "That's a bit of a unique Bay Area problem, you invest in the same company with the same kind of statistics and they become 30 percent cheaper outside the Bay Area."

chatter

Felser is not the only one. According to a survey released Thursday by venture capitalists from Silicon Valley, the trust of start-up investors is the lowest in nearly a decade, with a number of investors citing the sky-high cost of living and doing business in the San Francisco region. Smaller start-ups are struggling to compete.

"There's just an out-of-whack supply and demand, because these companies that are growing public are growing so fast that they're bragging every available employee on the market," Felser said. Those who become public will have this "influx of cash and so they can accept more and faster, and perhaps there is more pressure to grow faster."

Investors find more hidden gems outside the Bay Area because the risk-taking ethos that is often associated with San Francisco is spreading, said Eric Byunn, partner at Centana Growth Partners, an investment firm with offices in Silicon Valley and New York.

But Byunn does not expect to see a massive exodus of capital. Silicon Valley goes through cycles and busts, but always reinvests itself. There is no reason why that will not continue.

"There is definitely a certain density and concentration of interest and talent and resources to build a business here," said Byunn. "You enter a trendy restaurant and three quarters of the conversations in the restaurant are about technology and startups."

-CNBC & # 39; s Ari Levy contributed to this report.

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