Tech start-ups: Innovation hubs all over world seek to follow Silicon Valley lead

When Peter Alfred-Adekeye founded cloud-computing business Multiven in 2005, he was in the obvious place to do it – Silicon Valley. Five years later, however, he relocated his operation to Zurich, one of the least likely cities for start-ups.

Some might imagine the move away from the global entrepreneurship capital would be shocking to a serial entrepreneur such as Mr Alfred-Adekeye. Admittedly the relocation was partly forced after his US work visa was rescinded.

But Nigeria-born Mr Alfred-Adekeye claims his Swiss base has many advantages over California, and even Europe’s largest start-up clusters, London and Berlin, in access to talent, finance and customers.

“There is no life or death need to be in Silicon Valley,” he says, noting that most of his 800-strong workforce of developers are spread across the globe.

Those programmers he does employ are far easier to find – and cheaper – in Zurich than California because there are many fewer technology companies competing for them.

Zurich is not the only attractive location. Cities across the world are lining up as start-up hotspots, from Helsinki to Santiago.

A worldwide survey of these locations, the Startup Genome, found that Silicon Valley maintains a considerable lead over all its rivals, with 20 per cent more mentors and 35 per cent more serial entrepreneurs than the global average of the sites analysed.

The average capital fundraising in Silicon Valley was also 32 per cent higher across all stages of a start-up’s development.

The only country to pose a serious threat to the US is Israel, which has the largest concentration of start-ups outside Silicon Valley. Saul Singer, a former journalist on the Jerusalem Post, charted that success in Start-Up Nation, written with Dan Senor, a former US foreign ­policy official.

Israel has become a start-up hotspot despite, rather than because of, its situation in the world, Mr Singer says. It is a tiny nation with no resources and unfriendly neighbours.

What Israel does as a nation is what start-ups do as companies, Mr Singer adds. Its population is largely immigrant, like the staff of many Silicon Valley businesses, and its culture of national service in the army means Israelis learn together and bond through similar life experiences.

“Israel shows that the key is what you add to ideas to turn them into innovations,” Mr Singer says. “Great ideas are not enough, you need to add a lot of drive and willingness to take risks or the ideas won’t become start-ups.”

He adds, however, that even a start-up nation cannot act alone. “Israel’s biggest opportunity going forward is to become a hub for rising innovation sectors around the world. There’s a lot of mutual benefit in combining the strengths of different countries and innovating together.”

One of the more unlikely cities in Startup Genome’s list is Santiago, which has been helped by the government’s Start-up Chile programme. It seeks to attract early phase, high-potential entrepreneurs to bootstrap start-ups using the South American nation as a platform to go global.

Participants must establish themselves in Chile for the six months the programme lasts and, in return, they receive a one-year work visa and $40,000 seed funding. The objective, besides developing a local start-up cluster, is to create and foster networks with the local entrepreneurship ecosystem, according to Sebastián Vidal, assistant director at Start-up Chile.

“Entrepreneurs are the ones who know better than anyone where the best opportunities are,” he says. “They will know whether Silicon Valley, São Paulo, Tel Aviv or Santiago offers what they need at a specific moment, or maybe they’ll decide to work in one hub first, and then move to another one. We see that a lot.”

It is not about Chile competing to be the next global start-up capital, according to Mr Vidal. “The question about rivalry between different innovation hubs forgets that start-ups go through many phases, and need different things during each of those phases,” he says, adding that many of the programme participants come from vibrant start-up cities such as Austin, Tel Aviv and São Paulo, and return to these cities after their time on Start-up Chile.

Brad Feld, co-founder of the Techstars programme that has helped dozens of new businesses find seed funding, has more experience than most in developing start-up communities.

Two decades ago he moved from the Boston area to Boulder, Colorado, on the edge of the Rocky Mountain National Park and started helping local companies to grow and increase in number.

Despite what may seem an unlikely place for a start-up cluster to develop, there are now more technology businesses per square mile in Boulder than anywhere else in the US, says Mr Feld, who has written a book, Startup Communities, on his experiences.

“Every city of 100,000 people or more can have a long-term, thriving start-up community,” he says. “In fact, I’ve come to believe that every city of 100,000 people or more needs a thriving start-up community to be healthy.

“The start-up community is a small part of the overall economy of a city, but has a disproportionately large impact on its health, innovativeness, attractiveness, and economic wellbeing.”

The notion that there is one best start-up community is “absurd”, Mr Feld claims. He adds that each city has unique characteristics and should focus on taking advantage of its “natural resources”, whether that is physical, intellectual, cultural or geographical.

So what about the king of the start-up communities?

“Silicon Valley is an amazing place that has been a work in progress for over 60 years,” he says.

“Hopefully 60 years from now it will be amazing. But it’ll have to keep refreshing and renewing itself, just like everywhere else.”