The next Silicon Valley? It could be here

Foto: Summer Solstice Silicon Valley Panorama, Anthony Avalos / flickr.com (CC-BY-SA-4.0)

Startup founders and estate agents alike dream of booming technology centres. Tech firms profit from shared know-how and the local economy profits from their growth. Worldwide, 16 cities are in the starting blocks in the race to become the next Silicon Valley.

Silicon Valley: The Californian Original

California’s Silicon Valley is synonymous worldwide with successful business in the age of digital transformation. Companies like Google, Apple, Facebook and Tesla are the crown jewels of the Californian economy. They in turn build on the achievements of companies like Hewlett-Packard, Cisco, Dell and AMD, which already help shape the 20th century and continue to do so today. But the original Silicon Valley did not not appear overnight—something that investors often overlook. Its origins go back to 1951, to the Stanford Industrial Park (today Stanford Research Park), built near Stanford University. A research and industry enclave is not enough on its own, it can only be the first step. It takes time to change the world.

Boston: The East Coast of the USA catches up

What Stanford University is to the West Coast of the USA, Harvard University and the Massachusetts Institute of Technology (MIT) are to the East Coast—two elite universities which have nurtured countless talents. It is no surprise, then, that Boston is referred to as America’s second Silicon Valley. Hardware startups in particular benefit from their proximity to the world’s leading research sites. Proximity to the financial district of New York City and the federal capital in Washington are factors that the West Coast cannot offer. Furthermore, Boston has an attractive inner city and is well-organized, boasting a quality of life that is the equal of San Francisco’s.

Chilecon Valley: ¡Bienvenidos a Santiago de Chile!

It makes no sense to just copy Silicon Valley. Santiago de Chile, for example, is taking its own promising approach. Chilecon Valley aims to be a more diverse Silicon Valley, shaped by immigrants from across the world. Chile makes it easy for startups and businesses from other countries to develop and prosper, while providing generous support in the form of government subsidies. But if Chile wants to become the centre of the South American startup scene, the country must also move quickly to achieve political stability. Nevertheless, the startup program can be considered a success. So far entrepreneurs from over 40 countries have come to Chile and set up businesses there.

Sankt Oberholz instead of San Francisco: Berlin, Berlin!

If there is one place in Berlin that feels a little like Silicon Valley, it must be the corner of Torstraße and Rosenthaler Platz. Since the summer of 2005, this has been home of St. Oberholz, a popular café and co-working space. Over the last 12 years, Berlin has seen the birth of hundreds of startups, all of them contributing to its reputation as the “Silicon Spree” (the Spree river runs through central Berlin). Attempts by the city and the German government to support this development in recent years should not obscure the fact that the success of the Berlin startup scene has often been in spite of, rather than thanks to, their help. In the age of Brexit, this open and (still) affordable city could manage to shape the global economy—as a potential global metropolis and major research hub.

Tahrir Alley Technology Park: Cairo’s answer to Silicon Valley

Tahrir Alley Technology Park (TATP) or “The GrEEK Campus” has the potential to be a showcase project for Egypt. It is situated in the heart of Cairo, just off Tahrir Square. On the site of the former premises of the American University in Cairo (AUC), a venture-capital business specialising in North Africa and the Near East has created a startup space covering over 23,000 square metres. The country’s political instability has thus far prevented TATP from taking full advantage of resources and developments which could have supported new startups. But then, neither Rome nor Silicon Valley were built in a day.

Konza Techno City: Kenya has potential
With the Konza Techno City economic project, the Kenyan government is trying to conjure up their own Silicon Valley in East Africa with an investment of around 15 billion US-Dollars, equipped with universities, hotels, schools, hospitals and research institutes. That is a start, but what is more important is the attitude of entrepreneurs in Kenya: they are not copying innovations, but rather looking for solutions for local problems. Developments like the mobile payment system M-Pesa show the innovative power of the Kenyan startup community. The capital Nairobi in particular shows technological potential which is unrivalled in Africa. Just like Silicon Valley, they need more than just money; they will need people with ideas if they are to change the world.

Bangalore: Silicon Valley’s Indian Doppelgänger

India’s Bangalore exemplifies the understanding that developing a technology centre takes time. As far back as in the 1970s the foundations were being laid here for India’s IT industry. This development was boosted by the Indian education system, which offered computer courses and produced experts who in turn attracted the attention of foreign tech firms. This first generation of expertise can still be found there today, fluent in English and skilled at training new talent. They have worked to help to transform Bangalore over the last 40 years into one of the few IT sites that can really be considered a local version of Silicon Valley.

Shenzhen: The home of Chinese capitalism

That Shenzhen is being treated as the Chinese Silicon Valley should come as no surprise. This is where the communist government made its first steps in the 1980s to introduce and experiment with elements of capitalism by creating so-called special economic zones. The next logical step was to develop digital business. Shenzhen is now the wealthiest city in the whole country. The infrastructure is more modern than in most Western metropolises. Here, people earn around 40 percent above the Chinese average. Understandably, the best of the best make their way to Shenzhen to work in the IT sector. Lenovo and Huawei are just two of the many companies from Shenzhen enjoying global success.

Beijing: The city of superlatives in innovation

Tech giants and universities in China spend billions of US Dollars on research and development. That helps to promote local talent and projects that benefit the Chinese economy as a whole. Today, the country with its 1.4 billion inhabitants leads the way in registered patents across almost all technological sectors. Moreover, China owns most of the world’s 500 highest-performing computers, an importantt indicator of technological leadership. Huawei and Xiaomi are now well-known in the west. A company like the Chinese drone manufacturer DJI is just one of Beijing’s little-known “unicorns” with major potential: it already controls a 75 percent share of the American market.

Dublin: Even the Vikings liked it

The European counterpart of Silicon Valley is not to be found in Germany or France: Dublin is often viewed as Europe’s technological hotspot. The Irish capital is the fourth-richest city in the world and home to over one million workers. The offices of Microsoft, Google, Amazon, Twitter and others are to be found in the greater Dublin area, to name but a few of the giants of California’s Silicon Valley. This makes the city the focal point for Europe’s information and technology businesses. With a range of outstanding colleges and universities, Dublin is also an paradise for education. The city owes its current boom since the 1990s to the IT scene.

Tel Aviv’s Silicon Wadi: Homeland of innovations

Today, the “Silicon Wadi” (wadi = valley) in Tel Aviv is the second-largest startup ecosystem in the world. Over 60 of its companies are already represented on the Nasdaq Stock Exchange—more than all companies from Europe, Japan, South Korea and China taken together. Tel Aviv has the innovative power of San Francisco and the nightlife of Berlin. Little wonder that business is booming. A good education system and military investment in new technologies are also key positive factors, alongside the facts that Israelis are enthusiastic networkers and compulsory national military service helps create a disciplined workforce. The country is making good use of its geographical location and political situation in its quest to create a new Silicon Valley.

Hsinchu: Innovation island

The Hsinchu Science Park (HSP) is just a 30-minute drive from Taiwan’s capital Tapei. Founded in 1980, it is today home to 470 companies with more than 150,000 employees. From Sony to Apple, top international players in electronics produce key components here. The National Chiao Tung University (NCTU) was opened in 1958 in the coastal city Hsinchu and is responsible for much of the growth of the HSP. Research centres looking at nanoelectronics, biomedical electronics or brain research are driving progress, thanks in large part to interdisciplinary research. To name just one example: the NTHU has developed the world’s first 3D drosophila brain database. Taiwan seems to be on the path to becoming a power in technological innovation—not just an economic achiever.

Lagos: Rising out of the developing world

In the course of the last 30 years, Lagos has seen poverty along with the birth rate slowly fall and health standards rise. The developing world is changing and more than perhaps any other African city Lagos is set to profit from this. Nigeria leads Africa in its population and economy. In Lagos one can find a wealth of successful tech startups like the Netflix counterpart Iroko TV or the online food dealer Supermart. Lagos is beginning to become visible in the world’s newsfeed, and the African startup scene is becoming extremely interesting for venture capital investors. Lagos has still a long way to go before entering the realm of Silicon Valley, but the region is laying the foundations for a prosperous future.

Cape Town: South Africa’s “Silicon Cape Initiative”

Around ten years ago, few people even in Cape Town would have been familiar with the term “startup”. It was seen as more important to fight against racism and apartheid than to make risky investments in new businesses. But even then entrepreneurs like Justin Stanford and Vinny Lingham were starting to invest in new technologies. Both took trips to Silicon Valley to study the successful model being implemented there and managed to lay the foundations for the a startup ecosystem in Cape Town. In 2009 the Silicon Cape Initiative came together: a non-profit network made up of tech companies, developers, creatives and angel investors. Alongside Lagos, Cape Town is the biggest claimant to the title of Africa’s next Silicon Valley.

Jakarta: At the peak of innovation and progress

The sprawling capital city Jakarta is Indonesia’s heart and soul. Little wonder that more and more creative businesses are calling Jakarta their home. A technology-oriented government, the prevailing innovation culture, the creation of stronger tech startup ecosystems and the large number of trained and qualified young people are opening the way for Jakarta to become another Asian Silicon Valley. Today, Indonesia is a global leader in technological innovation and progress, as the “Mobil Arina” compact car and the unmanned air vehicle “Smart Eagle” demonstrate.

Sydney’s Silicon Beach: Doing business where others holiday

In order to create another Silicon Valley, you need engaged people. Sydney has plenty such residents, but because Australians like to travel they often set up shop in far away places (including California). However, Australia’s biggest city has similar qualities to the original Silicon Valley and the the domestic startup scene is slowly waking up to this fact. Silicon Beach is still comparatively small but its prospects are big and growing. In an economic world that never sleeps, Sydney is a particularly good location for European companies with 24-hour systems. Well-trained native speakers of English are the ideal complement to networked teams and the challenges of the modern business world.

Singapore: The world bank’s tip

Singapore, next to Hong Kong, is the most important financial centre in Asia and one of the most-visited places in the world—so there is more than enough money floating around. Ironically Singapore’s biggest advantage is its limited population. In a market with a little more than six million people, new developments don’t make a lot of money. So it is necessary from day one to turn outwards and look to the whole world as your market. This attitude brings the island state one step closer to its goal of becoming the Silicon Valley of Asia. Singapore has a lively startup scene. Many of its entrepreneurs have train in California before returning home to work. Even the World Bank considers Singapore one of the best global locations for entrepreneurs, hardly an insider tip any longer.

Tobias Schwarz

Tobias Schwarz

Tobias Schwarz is co-founder of the Institute of New Work and Coworking Manager of St. Oberholz in Berlin. As Editor-at-Large he writes for the blog netzpiloten.de. He is a member of the founding committee of the German Coworking Foundation.
Tobias Schwarz

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