Investors have set their sights on the world’s innovation capitals.
Silicon Valley continues to set the gold standard for technology hubs around the world, consistently ranking #1 across different subsectors such as artificial intelligence, robotics, and life sciences. The region has an ecosystem value of US$677bn, according to research firm Startup Genome.
Global venture capital, however, is fuelling the growth of startups and scaleups outside of California. Even the more established names in tech, like Google and Facebook, have been investing heavily in building their own research and development centres beyond Silicon Valley.
Which world cities are transforming into innovation capitals?
Out of all the global tech hubs on this list, Tel Aviv might just be the fastest riser. This city on the Mediterranean coast leads the world in the number of startups per capita. It is currently home to more than 100 foreign R&D and innovation centres including Amazon, Barclays, Facebook, and Google.
Tel Aviv has positioned itself as a major hub for AI development. The sector makes up more than 40% of all startups in the city. AI companies also employ a quarter of the entire workforce in Tel Aviv. Other sectors thriving in the Nonstop City include the medical, automotive, aerospace, and cybersecurity industries.
Israel exports as much as US$6.5bn worth of cybersecurity products every year. It was also the first in the world to offer a cybersecurity PhD programme. There are now six cybersecurity university research centres operating in the country.
The Israeli government is also very supportive of local businesses. This is one of the many reasons the country is such an attractive place to invest in for startups.
Israel offers backed loans for businesses that need funding and encourages institutional investors to enter the market. The Ideation (Tnufa) Incentive Program, for example, was created to help fledgling entrepreneurs develop innovative concepts. It offers grants of up to 85% for approved expenses.
The Tnufa fund is available for both local and foreign investors. Entrepreneurs with no ties to Israel can apply for funding by first securing a visa. Once they do, they are eligible to get financial support on the condition their operations remain based in Israel. The Tnufa fund allows recipients to develop their business ideas without taking on debt.
The Israeli government also launched a US$462m+ support plan as part of its COVID-19 policy. The program includes a US$200m+ aid package to small and midsize companies through the Israel Innovation Authority.
Israel remains a very stable ecosystem. In 2020 alone, Israeli companies and startups raised nearly US$9.5bn in capital.
The Big Apple has made significant strides in the tech space over the past few years. The subsectors powering this are AI, big data analytics, cybersecurity, and education technology. Overall, there are more than 100 startup incubators and 9,000 startups in New York. In 2020, 886 companies in this tech haven attracted VC funding of about US$16.2bn.
Shanghai is committed to helping businesses innovate. Zhangjiang Hi-Tech Park, often referred to as China’s Silicon Valley, can be found in the city. It has over 400 R&D centres and has attracted more than 1,000 startups, mostly from the education technology and gaming sectors.
China is also the world’s largest market for mobile gaming. More than 25% of global gaming revenue comes from the country. Shanghai, for its part, is home to over 130 gaming startups.
Deal-making in the city is also thriving. In fact, EdTech firms have received about US$1.3bn in venture funding between 2015 and 2017.
London, where Alicorn is headquartered, isn’t just Europe’s global financial centre anymore―it’s also fast becoming a major tech hub. Many consider the city as the third most important innovation centre in the world today.
According to a report by Business & Industry, UK tech investments reached £10bn for the first time in 2019. The local tech industry itself grew six times faster than any other industry.
The London tech hub owes much of its growth to a startup visa program. To attract potential investors, the city introduced in 2019 a two-year visa route that allows early-stage but high–potential entrepreneurs to enter the country and start a business.
If you’re about to launch your startup, you’ll have three things going for you in London: easy access to investors, consultants, and experts; opportunities at networking; and a great talent pool.
Meanwhile, if you are already an established entrepreneur, you can benefit from the guidance of 125 incubators in the city who can help you grow your business even further.
Tokyo is emerging as another hotbed for tech startups. For decades, Japan has served as the world’s most active industrial robot manufacturer, producing more than half of the global robotic supply. It didn’t take long for other tech sectors to grow.
Today, Japan is one of the best places for fintech companies and other tech startups to make their mark. The country ranks as the third most competitive financial centre in the world, according to the Global Financial Centres Index.
Moreover, in 2017, the Tokyo Metropolitan Government established the Tokyo Financial Award. The honour is given to financial institutions that provide innovative products and services that meet the needs of Tokyo citizens. It also helps promote ESG investments in the city.
The Japanese government also announced its “Beyond Limits, Unlock Our Potential” strategy. The initiative is meant to strengthen the country’s startup ecosystem. The plan includes providing entrepreneurship education, improving accelerator programs, and creating a startup hub in the city. In 2018, former Prime Minister Shinzo Abe also laid out the country’s plan to develop at least 20 tech unicorns by 2023.
Singapore’s land area might not be as big as Tokyo or Shanghai’s, but it’s a financial and tech powerhouse in Asia, nonetheless. What the city-state lacks in geographical size, it more than makes up for in grit. Singaporeans are some of the hardest-working people in the tech industry.
The Southeast Asian hub also benefits from innovative business strategies and a highly skilled talent pool. The government’s primary goal is to create a culture of innovation by attracting talent with the right mindset.
Businesses enjoy several other advantages, such as low taxes and strong investment opportunities. They also benefit from the city’s IT infrastructure, which is deemed one of the best in the world.
As proof of Singapore’s resilience, the city-state attracted US$17.2bn in fixed asset investments in 2020, at a time when many other ecosystems faltered due to the COVID-19 pandemic.
The government also doubled down on its commitment to grow businesses by investing US$19bn into enterprises as part of its 2020 Research Innovation and Enterprise plan.
Toronto is a haven for high-calibre tech professionals, and this talent pool has helped the city attract entrepreneurs looking to start their business. In 2017, Toronto produced the highest number of tech jobs in the world. It managed to beat other markets like the San Francisco Bay Area, Seattle, and Washington, D.C. In the same year, the city also edged out New York in a “talent markets” ranking.
Toronto is also home to academic institutions on the cutting-edge of development, such as the University of Waterloo and University of Toronto. Both schools are known for producing promising engineers and developers.
The city government also supports local investment and employment through its Economic Development and Culture Division.