Written by Philip Boigner, Assistant Professor, Department of International Management at MODUL University Dubai
Originally published by on LinkedIn on 19 February 2018
Silicon Valley draws massive amounts of capital from US national and international investors. Somehow the belief persists that “all the great entrepreneurs are in Silicon Valley and that all breakthrough companies are going to be based there. The reality is that's not true.” as Steve Case, billionaire and co-founder AOL puts it. He also sites data that indicates that three-quarters of US venture capital is being deployed in just three US states: California, New York, and Massachusetts and concludes that his new fund will be investing outside these states, in recent Forbes magazine article.
Originally Internet technology companies did not cluster - Microsoft was founded in New Mexico, IBM in Florida, Dell in Texas, not to mention Skype of northern Europe or SAP of Germany. Only recently, Silicon Valley became the mecca of technology innovation, partially driven by the Fairchild semiconductor legacy and California’s favourable labor laws. There are commentators that are already seeing the decline of The Valley as many start-ups simply cannot afford to operate in the Bay Area.
Current innovation trends, such as in the Life Sciences, Agricultural Technology (AgTech) and Cryptocurrencies are driven in places far beyond Silicon Valley in locations where domain expertise and favourable regulation exists. Cleveland and Baltimore, but also Geneva and London are hotbeds of healthcare innovation and AgTech is happening from Montana to Kentucky as well as Down Under. London is a natural place for financial innovation, but Singapore and even Belarus are vying to attract start-ups in the crypto-currency space, while the region between Zug and Zurich in Switzerland has been named “Crypto-Valley”.
Innovation has always been a global phenomenon, Samsung, Nintendo, Sony, LG, Dyson, Panasonic, Pioneer, Bang & Olufson are all non-American companies and even in the IT space Spotify, Shazam, DeepMind, Softbank, Tencent, Alibaba and others are standing strong. M-PESA was launched in East Africa and is now also used in Afghanistan, South Africa, India, Romania and Albania. Argentinian OLX is operating in 45 countries around the globe, Waze started off under the name FreeMap Israel and now has 65 million monthly users around the globe. The best smart cards come from Estonia, security equipment from Israel, vacuum cleaners from the UK, artificial heart valves from Switzerland and many business incubators and seed investors have recognized that they would be neglecting innovation outside of The Valley or the US if they would not consider supporting international start-ups.
500 Start-Ups is a global organization, Start-Up Boot Camp runs 21 accelerator programs in different countries, MIT Global Start-Up Labs is active in 14 countries, while the world's largest start up a campus in the world, Station F, was recently opened in Paris. Innovation is truly global - shouldn't innovation and VC investing also be?