Regional Startup Ecosystems: The Next Tech Startup Hub Is Everywhere
Everyone wants to run a startup – even the big boys and girls. Given all of these converging strands, the experts at the Global Entrepreneurship Network and Bay Area consultancy Startup Genome are onto something. This spring they released their second annual Global Startup Ecosystem Report, ranking metro-area clusters or hubs within 12 sub-sectors with the help of data from Crunchbase, Tech Nation, Orb Intelligence and Dealroom. Here, with Startup Genome’s permission, we present an adapted section of the 252-pp. Global venture capital investments in startups hit a decade high in 2017, with over $140 billion invested.
Total value creation of the global startup economy from 2015 to 2017 reached $2.3 trillion – a 25.6-percent increase from the 2014 to 2016 period. The types of companies that fueled the first and second generation of global startup ecosystems – social media apps, digital media, and other pure internet companies – are declining. Top startup hubs like Silicon Valley, London, and New York continue to dominate top-level activity and maintain their status as the top performers for most sub-sectors. The shifts in the startup map, both geographic and economic, are signals that we are heading into a new era of tech. In this new era, successful startups will do one of two things: 1) Tackle specific Third Wave verticals – think Uber for mobility or Airbnb for hospitality – or 2) Rely on Deep Tech – i.e.
build businesses through technological breakthroughs, e.g. distributed ledgers, AI, or Life Sciences. In 2017, VC funding for startups in the United States and in the Asia-Pacific region was even, with each accounting for 42 percent of investment value. To build the entrepreneurship ecosystems of the future, the key takeaway in this new era of tech is that ecosystem builders need to not only look at tech as a whole, but pay attention to and invest in specific startup sub-sectors.
The Geography of America’s Tech Startups
Established tech hubs continue to lead, but startup hubs are emerging in new, smaller places. The catch: Startup financing overall is on the wane. As Silicon Valley and the San Francisco Bay Area in general have become increasingly expensive for both companies and talented people, some commentators have argued that high-tech startups are spreading to smaller cities and metropolitan areas, many of which are in the industrial heartland. New research by my colleague and collaborator Ian Hathaway of the Center for American Entrepreneurship, a Washington think tank, takes a detailed look at whether the geography of tech startups and startup hubs in America is changing. America’s startups remain highly concentrated in a small number of hubs.
The concentration of first financings among these leading hubs has risen since 2009. A number of Rust Belt and older industrial cities-Detroit, Cleveland, Cincinnati, Milwaukee, Allentown, Albany, Grand Rapids, and Buffalo-have seen declines in first financings, as have more industrial and resource-dependent Sunbelt cities like Tulsa, Oklahoma City, and Memphis. Startup financing is still massively concentrated, but some smaller places, mainly college towns and cities like Pittsburgh, are seeing some growth. Pittsburgh appears to be the one older industrial center that is maybe growing into a startup hub, along with the post-industrial cities of Columbus and Indianapolis and, of course, college towns. Hathaway stresses that it takes a long time for new startup hubs to develop, and city leaders and policy-makers need to be realistic about the scope, pace, and inevitability of the rise of the rest.
The most the disturbing finding in the report is the substantial overall decline in startup financings in recent years. This is in line with a growing body of research, some of it by Hathaway, that points to a decline in startups and entrepreneurship in the United States.
Government overreach is killing this Mississippi tech startup
Mississippi should encourage innovative business ventures, not squash them because established industries don’t like new competition. Mississippi’s occupational licensing laws – especially in the hands of self-interested regulatory boards – threaten technological innovation and the rights to free speech and to earn an honest living. We are learning this firsthand because our innovative tech startup, called Vizaline, has been targeted for elimination by the Mississippi Board of Licensure for Professional Engineers and Surveyors. The more information banks have about their properties, the better. Less uncertainty means safer loans, safer banks and safer customers.
More: Madison tech-biz says rights are being violated by state board trying to shut him down. Vizaline uses publicly available data – legal descriptions written into deeds – to draw lines on satellite photos for banks. The board, which is made up of only licensed surveyors and engineers, is twisting Mississippi’s surveying laws. The board cannot stop our business from speaking just because it sees us as potential competition. If a Mississippi regulatory board can sue to shut down our speech and our business by twisting occupational licensing laws, no new business idea in Mississippi is safe.
We might not be the next Google, but we are a growing small business providing an in-demand service to banks across the South. What the board is trying to do is both short-sighted and unconstitutional.