by Julius WiedemannJan 12, 2022
Since the 60s, the United States, especially California, has become the centre for developing not only new technologies, but entire new industries which have the potential to change the world. From video-conferencing and the internet, from chips to software, the country has become a powerhouse for several reasons. It congregated several characteristics that made viable the application of technologies in our daily lives. It united a middle class that was hungry for new experiences, and was being educated with a different vision for the future. It attracted the most brilliant scientists from all over the country and the world, for not only academic work but also to transform them into profitable ideas. They fostered a complex and ambitious educational program with technology at its core. The result is the prevalence of American companies globally when we come to almost everything we have come to use on our mobile phones in the last 20 years. But things are changing, and they are changing fast. Models can be learned, copied, and eventually, centres of excellence catch up and begin to attract people from other places to foster the visions that once belonged elsewhere. Before the world started to recreate the meaning of technology in our lives, those centres of excellence were concentrated in very few places. These have now spread the world over.
With the title Forget San Francisco — these 6 global cities have thriving tech hubs that could make them the next Silicon Valley, the magazine Business Insider has investigated the new scene of start-ups worldwide. Tel Aviv, Berlin, Shenzhen, Stockholm, Lisbon, and Bengaluru are only few of the many start-up centres around the world. Each with a different twist - sometimes education, sometimes geographical position, sometimes a good cost benefit for real estate, and sometimes the access to work power - all united in materialising great insights. There now exist hundreds of cities which are start-up hubs. Every major city has identified that the technology sector is a great job creator and potentially also a place where these companies will be listed, and where investment will flow in from elsewhere.
These statistics around new technology businesses around the world are a lot of fun to see and good to draw some conclusions from, about their globality and robustness. There are about 12,000 start-ups all over the world, only in Fintech, with about half of those in the United States. Start-ups usually have three rounds of investment before they reach Series A with a larger investor. The average time between funding rounds from Seed to Series A is 22 months, Series A to B 24 months, and Series B to Series C in 27 months. India alone now has over 50,000 start-ups. Four states in Germany concentrate about 50 percent of all start-up companies in the country, with Berlin coming in second with about 17 percent. If we jump to South Korea, they have, according to some data, around 1.7 million start-ups - an astounding number. This indicates how important this market is and gives us a clue about how deep the culture of technology and tech-led activities have infiltrated modern living.
Before you start a technology company today, there are a few things you should do if you want to get investments. The procedures established on how to do it were created almost exclusively in the United States. For a long time, apart from being the territory where most technologies were created, Americans also advanced the framework of developing technology companies. These procedures were so effective, that mini entrepreneurs worldwide simply started to imitate the companies that started to arise in the US. The models of cash-burn, combined with company evaluation, with good, scalable ideas, and an insurmountable amount of money to finance growth, are typically from the Silicon Valley. It is more complex than that, but this model has been made possible by the human infrastructure built around it, with thousands of people with great ideas existing close to each other, and an avid consumer market that is clearly hungry for novelty.
Maybe, more than spreading a new type of business model, the US has sold to the world a new lifestyle, which included technology-embedded 'things'. It also exported the language at a much larger scale, even though it originally started with colonial Britain. English has become the Esperanto of the 21st-century, and is the common language for economic development as well as entrepreneurship. It has also created an infrastructure of education that would support their model around the world. But some pieces of this developmental puzzle are not exclusively American anymore. The critical mass necessary to develop viable ideas is in many places, as well as the education and technology needed to thrive. The US has exported back professionals to go all over the world, who arrived in their homelands, eager to change their realities. MBAs have become standard literally everywhere, so business processes have become standardised, creating a new common business language.
To conclude, it is important to note that new companies and a new intrapreneurship in the digital domain are prevalent and here to stay. Both companies and investors will have to make much less effort to find opportunities all around the globe. Since Silicon Valley thrived in California, this global movement is probably becoming the engine for the next big digital revolution.
Read more from the series Digital Legacies where our columnist Julius Wiedemann investigates the many aspects of digital life.