The San Francisco Bay is home to an idyllic location. Silicon Valley has become a goal for entrepreneurs, investors and technology geniuses. Large corporations and thousands of startups call this area their home, a space that is permanently in the world’s spotlight. Following behind are cities such as multicultural New York, controversial London or the always welcoming and stimulating Tokyo. The race to challenge Silicon Valley’s lead is on.
Dubai, Zhongguancun (China), Tel Aviv (also known as Silicon Wadi in Israel) or Bangalore (India) are home to the other Silicon Valleys that are rising to claim a spot among tomorrow’s tech leaders. These hubs’ aspirations are built on their strengths, but dragged by their own Achilles’ heels. Here we take a look at where each one of them stands right now.
Tel Aviv (Israel)
The Tel Aviv technology center, named Silicon Wadi, is located in the coastal plain of Israel, the same way as Silicon Valley is located in California, USA. Silicon Wadi’s figures speak loud and clear and explain why it is - undisputedly - one of today’s hottest tech hubs:
With over 4,000 startups and a population of 8 million, 140 out of every 10,000 inhabitants in this area are engineers and 90 of its technology companies are listed in the Nasdaq, including Waze, PrimeSense, Trusteer or Onavo, all of them sold to top-notch technology giants and all of them part of rich ecosystem that excels in fields such as medicine, biochemistry and geopositioning.
Silicon Wadi’s standing also owes to the Government’s determined support to R&D: 4.2% of the country’s annual GDP is devoted to fund research and development projects, (for scale, Spain’s investment is 1.3%). But there are other factors that contribute to Israel’s success: an education system that prioritizes technological innovation, a military culture that allows the country to roll out projects that pursue a technological goal and a focus on international markets as their ultimate target.
For all these reasons, the country now is considered the world’s second tech powerhouse, one that is constantly challenging the U.S. leadership.
Zhongguancun, located in the northwestern fringes of Beijing has managed to stand out in China’s crowded tech scene. Once was accused of “copying” everything coming out of Cupertino, as it created companies such as Baidu (its own Google) or Alibaba (its own Amazon). Today, China is now being hailed as a place of technological inspiration and creation.
In fact, large companies such as Facebook or Twitter, even Kik or Snapchat, have started testing their apps there before anywhere else.
Thus, bolstered by the presence of mobile giants (such as Huawei, Xiaomi or ZTE), Zhongguancun has become one of the places trends and advice.
Indeed, Zhongguancun understood better and earlier than any other tech hub in the world that a single app offering multiple functionalities – such as WeChat - would draw users to spend much more time on it.
Dubai (Arab Emirates)
Besides being considered the capital of the emerging markets, in the last few months Dubai has started drawing increasing attention from experts and has started popping up in their ‘next Silicon Valley’ lists. Even Forbes magazine devoted a recent article to analyze Dubai’s current standing, There are a number of reasons that explain Dubai’s rise to stardom:
On one hand, it is one of the five fastest-growing metropolitan areas in the world, according to a report from the Brookings Institute, and it already has a population of 3.3 million. Of these, 80% are immigrants, most of which arrive to start a business.
Dubai has a tremendous wealth of tech talent, and is home to AstroLabs, a vibrant tech hub that has attracted entrepreneurs from over 40 countries.
On the other hand, the Government is offering significant support in the shape of laws that encourage international investment, in contrast with other emerging markets. Also, it seems that the drop in oil prices has not affected the country as much as it has affected other countries in the Emirates, due to solid performance of other industries, such as the services sector.
Bangalore is the capital of the state of Kamakata, south of the India. It is the fifth most populated city in the country and is known as the Indian Silicon Valley. The city earned its nickname in the early 2000's, when some of its initiaties started drawing the attention of the local and international media.
It is home to over 1,200 foreign companies –such as Microsoft, IBM or Dell and local giants such as Wipro, Infosys or Satyam.
The reasons that have driven its technological growth are diverse. They range from a long push to stay up to date in technology, a first phase of migration of its brightest minds to the United States, to highly competitive prices that make it very appealing (at least until recently) to establish an office there.
Blessed a privileged geographic location, Singapur has become one of the hottest meeting points for fintech investors. With a population of just 5.4 million, it has experienced huge economic growth and has focused on industrial and technological innovation.
The fact that it has flourished as port of entry for the connection of the markets is a result of a combination of factors, including, support from the government, channeled through Infocomm Development Authority of Singapore (IDA), an organization created to boost technological development through measures to stimulate investment and strengthen the bridge between eastern and western economies.
Another factor has been consumption growth and the country’s inclination to adopt new technologies. According to a report by Google, for example, in late 2014, Singapur already had the highest connectivity rate in the world (85%) in terms of smartphone usage.
Smaller hubs: Berlin or Dublin
Without reaching the level of the centers mentioned above, tech hubs of cities such as Berlin or Dublin have carved their own space in the sector. For a number of years now, top technology companies have chosen the Irish capital to establish operating centers, driven by very favorable fiscal policies and lower taxes.
However, over the past few years, Berlin has risen as a direct competitor of the city of the shamrock and the harp, thanks to the arrival of tech giants such as Groupon, Soun or Zalando.
Spain, is also doing its best to grow significantly in the tech arena. Despite notable strides, right now the country’s prospects of coming anywhere near to the Californian tech mecca are not even remote. In the last few years, Google has landed in Madrid and Amazon has opened an European development center. Companies such as BBVA have set up important innovation centers to focus on fintech. Also, the commitment to entrepreneurship and youth talent is an essential factor in the roadmap that all major groups need to follow.