Startup Cities, Other Than Silicon Valley

http://www.citylab.com/tech/2015/07/the-worlds-leading-startup-cities/399623/

Aerial view of Silicon Valley
San Jose, California
aerialarchives.com

Hello Everyone:

Yesterday we spoke about why it is so expensive to live in San Francisco.  The surreal progressive logic of land-use policies, the cumbersome building permit process, building and zoning ordinances make it incredibly pointless to create new housing developments to accommodate its growing population. Today we are going to talk about "The World's Leading Startup Cities," by Richard Florida, for CityLab.  Mr. Florida survey cities around the United States and the world, strong enough to challenge the home of Facebook, Twitter, and Google for supremacy.  As Mr. Florida explains it, "...recent years have seen the rise of an increasingly potent group of cities around the world that are generating new startups in creative and unique ways.

Venture Village
Tel Aviv, Israel
venturevillage.eu

The 2015 edition of the Startup Genome Project from compass.co presents the new rankings for the world's premier startup cities. The reported uses information from 11,000 global startups, interviews with over 200 entrepreneurs, and data from Crunchbase and other sources.  The placings gauges "the world's leading startup ecosystems-the broad infrastructure of talent, knowledge, entrepreneurs, venture capital, and companies that make up a startup community."  The report measured the ecosystems using benchmarks: talent, pool of venture capital resources, experience and mentorship by startups founders, market reach, the ultimate performance and exit value of the companies.  Mr. Florida notes, "One omission of the report due to language barriers, it was not able to collect sufficient data to evaluate cities in China, Taiwan, Japan, or South Korea."

Chart of world's leading startup cities
citylab.com

 The chart on the left-hand side shows the world's top 20 startup ecosystems, according to the study.  Naturally, Silicon Valley sit at the very top of the list as it did in 2012, when Mr. Florida wrote in the previous edition of Startup Genome Project.  Blogger is happy to report that your truly's hometown, Los Angeles, came in third followed by Boston's surprise fourth place finish.  Surprise because of the much lauded Route 128 high-tech cluster, long thought of as "Silicon Valley East."  Overall, American cities are well represented: Chicago ranked seventh followed by Seattle at number eight (I know) and Austin, Texas came in at number fourteen.

Charting the rankings of startup ecosystems
citylab.com

 However, if you look at the chart on the left-hand side, we can see the rise of major startup ecosystems around the world.  Tel Aviv, Israel is fifth on the list, London is right behind at number six, Berlin is ninth, and the nation-state of Singapore is tenth.  Our neighbor to the north, Canada, is represented: Toronto is number 17, Vancouver clocks in at 18, and Montreal rounds out the list at number twenty.

If you notice, half of the world's top startup ecosystems are in the United States and Canada; 16 out of the 20 span North American and Europe.  Be that as it may, the fact that Tel Aviv, Singapore, São Paulo, and Bangalore indicate that startups are taking form in so-called emerging economies.  Richard Florida notes, "And it is likely that cities in China and other Asian nations would scored highly if data were available."

Singapore Singtel
Singapore
innovationiseverywhere.com

The report also followed the paths of the world's top startup cities, with Silicon Valley far ahead of the pack.  Even though other global startup cities are quickly developing, the report observed that Silicon Valley will continue to hold on to the number position for the foreseeable future.  The report also noted that New York, austin, Bangalore, Singapore, and Chicago were the fastest moving startup cities.  New York, along with Toronto, Seattle, and Boston "...as startup ecosystems that are nearing their peak or 'financial equilibrium.'" However, the report also observed that Amsterdam, Paris, Chicago, and Berlin "...as developing startup ecosystems that have considerable room to grow and develop."

Austin, Texas skyline
sparefoot.com

Richard Florida poses this question, "What can policy-makers and urban leaders do to better facilitate world-class startups ecosystems?" The business, entrepreneurial, and technological sectors remain the startups's main driver-although, on the whole, startups develop more organically.  Mr. Florida cites a recent report by the British think tank Nesta (http://www.nesta.org.uk/) that listed three important things government can do to enhance startups:

...take a cross-disciplinary approach to champion innovation and entrepreneurship across functional areas and departments; work with other outside governments to identify address, and solve key problems; and think like a startup, not a government agency.

The Einstein Kaffee in front of Project A incubator
Berlin, Germany
venturevillage.eu

The most important thing that cities and civic leaders can and should do is work together to strengthen their startup ecosystems.  Quoting Andrew Collinge, Assistant Director of Intelligence and Analysis at Greater London Authority, Mr. Florida writes,

Cities don't need to compete against each other always...Indeed, they should seek to compete together whenever they can.  It is through friendly competition and collaboration that will make progress.

Richard Florida describes the new rankings as, "...the world of startups remains spiky, with many of the most powerful global cities like New York (known more as financial centers than high-tech locations) coming to the fore as centers for startups and innovation."  The interesting aspect of startups is that they tend to gravitate towards denser, more diverse, more vibrant urban centers, and away from the traditional suburban office parks.  This is true not just in New York, Berlin, London, and Paris, but also, as we mentioned in yesterday's post on housing in San Francisco, in the Bay Area.  Case in point, Richard Florida's own continuing research suggests a shift in startup activity from suburban Silicon Valley to the more urban San Francisco.  Blogger would say that this is not real news because this trend has been going on over the last few years.  Perhaps Mr. Florida's research can present data on how this was made possible and why urban San Francisco as opposed to remaining in the South San Francisco Bay Area.

Regardless, the startup activity shift away from the suburban office park to the urban environment is both a good and bad thing.  The good thing is that startups can act as a catalyst for urban revitalization, however the bad thing is that they can create tension between tech workers, long-time residents, and local governments.  Yet, it is pointless to temper the startups, innovation, and entrepreneurial efforts, all which are the mechanisms for urban growth and revenue sources for transit and housing improvements.  The real trick is to find a balance between the two.  Perhaps, this is something that the City of San Francisco might consider to help make housing affordable again.