Around the world, cities are fostering technology hubs, wooing start-ups with discounted work space and tax breaks. The politicians recruiting these techies say these companies can jump-start economies and offer up new jobs.
But that competition isn’t necessarily breeding fresh solutions to major problems, or even jobs and improved quality-of-life, as many boosters promise. Instead, redundancy is the name of the game. Identical versions of apps exist three or five time zones away. Rampant competition for talent and nowhere near enough awareness, coordination and collaboration.
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Nowadays, ambitious people can become entrepreneurs anywhere — and they are. There are about 470 million entrepreneurs worldwide, according to the Global Entrepreneurship Center. Each year, the center estimates, 100 million start-ups are launched in every corner of the world.
Cities and regions want to woo these businesses — after all, a thriving company can bring jobs, tax revenue and young people. So these locations are building support systems so that start-ups have spaces to work, mentors to guide their ventures and access to capital. In Mexico City, for example, the government created Startup Mexico, a two-level campus that has everything from co-working spaces to offices for companies and mentors to open areas for events. There are even a few holes of mini-golf for breaks and socializing. Chicago’s 1871 has inspirational quotes on colorful walls, free wi-fi, communal areas for work and for aspiring entrepreneurs to meet with those who have succeeded. Staff tout 1871 as a “central address” for the startup community in the Windy City.
“Most big cities, from Berlin and London to Singapore and Amman, now have a sizeable startup colony (ecosystem),” “The Economist.” “Between them they are home to hundreds of startup schools (accelerators) and thousands of co-working spaces where caffeinated folk in their 20s and 30s toil hunched over their laptops.” The list includes powerhouses like New York and San Francisco, but also unexpected spots like Cape Town, Medellin and Madrid.
Nairobi, East Africa’s biggest rising star, packed its start-up activity into one physical space called iHub. Down a dirt road, past whizzing buses known as matatus and rows of women selling handmade wooden bowls, sits a hulking, window-filled building. Guards patrol the exterior; inside are five floors of everything a budding entrepreneur would want: a coffee shop leading to a balcony with a connected workspace, suites of Kenyan companies that have excelled enough to hire staff, an in-house research department that examines technology usage, a user experience lab for testing out concepts on a cross-section of mobile devices and offices for investors.
Becoming a top start-up hub is no easy feat. It takes money, but also a culture that supports risk and looks beyond its borders. And it requires one or two big breakthrough companies. That’s one mark Nairobi still needs to hit. Not only does international traction put that start-up on the map; it demonstrates to everyone in Nairobi what’s possible. Often, the founders of successful start-ups return home to mentor and invest in other fledgling companies.
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Because there are a finite number of entrepreneurs, start-up cities compete to woo them. There’s an arms race to round up talent and then to keep it.
Visas have become the hottest and latest way to get foreign workers to lesser-known corners of the globe. Five years ago Chile became the first nation to formalize a visa program as a means of luring foreign talent. Here’s how it works: the government: start-ups apply to migrate to Chile. The government chose their favorites and gave each $40,000, a Chilean ID and bank account, a physical space to work and a visa for a full year. Since the program’s inception, more than 1,000 start-ups from 75 countries have come. In the past few years, other countries have followed Chile’s lead, including Canada, Ireland to Italy.
But maybe, the solution isn’t fancy buildings or expansive visa programs. The most promising hubs are taking their natural gifts — longstanding industries or inherent geographic conditions — and using them as differentiators. In Nairobi, for example, developers are building mobile-first apps because so many Kenyans rely on their phones as their primary computing device.
Bangalore’s competitive advantage is its milder climate compared to the rest of India’s and its status as a major IT call center for corporations.
Israel’s mandatory Army service has created an environment in which young people fresh out of military service are anxious to go out on a limb and start companies. As Mira Marcus, the international press director for the municipality in which Tel Aviv resides, put it, compared to disassembling bombs, her job in the Army, the risk associated with starting a business is nothing.
In Amman, Jordan, women don’t have all the advantages and opportunities of their male counterparts. Yet in the start-up community women have found their voice. One of the city’s most unique startups, SheFighter, was devised by Jordanian Lina Khalifeh to teach women to defend themselves against violent attacks. So far, they’ve trained 10,000 women; they have a franchise business model to spread well beyond the Middle East.
Boston is especially strong as a home for medical-related startups, given its high quantity and quality of medical schools and hospitals. Niche accelerators and programs also have sprung up to bolster the health startup sector further.
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How, though, can these hubs work together better?
One idea being tried in Dublin is to appoint a specific person to focus outward when it comes to start-ups. In the case of the Ireland’s capital city, that person is a startup commissioner by the name of Niamh Bushnell. Her job is to reach beyond Ireland’s borders and shout to the world about Dublin’s growing ecosystem. If peer cities added a commissioner, they could create a United Nations of start-up activity, working together, communicating regularly and promoting the other cities’ assets and needs.
Investors can also play a role. Increasingly venture capitalists are traveling to foreign nations to seek out innovative companies to back. While doing this they can bridge divides between hubs as well as let startups in one place know about their counterparts elsewhere. That’s one major goal for Mbwana Alliy, creator of The Savannah Fund, a first-of-its kind seed-capital fund focused on early-stage startups in sub-Saharan Africa. Alliy has spent considerable time in Silicon Valley on prior businesses and is hoping to create a bridge between the United States and Africa. He says his top priority is to inject a global mindset in Kenya so that startups are thinking far bigger than ever before. More and more he’s making it possible for Nairobi-based entrepreneurs to take trips that would ultimately help their businesses.
It’s an example worth following and speaks to the notion that every player in a city’s startup ecosystem shouldn’t just be connecting the pieces in that city but the pieces across the globe.