Venture Capital Insights: Beyond Silicon Valley | The Top 7 Tech Hubs to Watch

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?

Tel Aviv

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.

New York

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

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

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

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

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

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.

Alicorn-backed Glassbox lists on Tel Aviv Stock Exchange

Alicorn Global Ventures (Alicorn), which invests in late-stage technology companies, announces that its strategic investment, Glassbox Ltd (Glassbox), today started trading on the Tel Aviv Stock Exchange (TASE: GLBX). Alicorn is the global venture capital arm of Arowana International, the established B Corporation-accredited investment group.

Glassbox is a UK-headquartered global technology company that has developed an analytics platform that provides a complete view of all customer interactions across internet and mobile channels. The technology encompasses Traditional Web Analytics and Application Performance Management (APM), providing real-time analysis to identify issues and improve digital customer experience.

Today’s listing values Glassbox at pre-money valuation of US$350m, delivering another successful exit for Alicorn, which has invested $9m in the company since May 2020. Alicorn’s investment approach is to identify secondary and unique primary opportunities in top-tier, fast-growing technology companies. Alicorn leverages proprietary access to unlock value in harder-to-access, under-the-radar companies.

Alexander Assim, Principal at Alicorn says: “Glassbox is an attractive investment with proven, proprietary technology and a strong leadership team. Today’s successful listing reflects the company’s prospects and Tel Aviv’s increasing influence as a hub for technology investments.”

“At Alicorn, we focus on hard-to-access, tech-enabled companies at late-growth stages, which offer significant potential for investment performance.”

Alicorn invests US$4m in Data Storage group, Pliops

Alicorn, the global venture capital arm of Arowana, has just closed its investment in Pliops, an Israeli hardware storage acceleration company. It comes at a key growth inflection point for Pliops and represents the sixth company that Alicorn has invested in as part of its global venture capital secondaries strategy.

Alicorn has invested a total of US$4m to acquire secondary shares in Pliops, a technology leader that enables cloud and enterprise customers to offload and accelerate data-intensive workloads using a fraction of the computational load and power at significantly lower cost. Its solution is helping companies and data centres deal with an explosion in data workloads as CPUs struggle to keep up. Their patent-backed hardware offers breakthrough economics and performance for a wide range of data centre applications.

Pliops’ client base includes some of the world’s largest cloud, web, and edge service providers in addition to Fortune 1,000 IT companies. The company is backed by leading companies in the compute and storage space including Western Digital, Xilinx (AMD), Mellanox (NVIDIA), Intel, and most recently, Koch Disruptive Technologies (KDT).

As a storage processor company, Pliops is solving a business-critical yet worsening problem: exponential growth in data workloads combined with an end to Moore’s law. This convergence of trends is creating a race to solve a massive compute problem that we are consistently losing.

The company’s hardware-based solution eliminates the inherent inefficiencies present in both databases, analytics, machine learning, and software-defined storage and is already proving itself as the solution to the problem. We are very excited to be working with Uri Beitler and the team at Pliops. We are confident in their ability to execute and grow, and look forward to the journey ahead.

Alicorn invests US$13.5m across two hyperscale tech companies, Codefresh and Mocha Tech

As investors and operators of enterprises, the Arowana team is all too familiar with how mission-critical technology is to businesses and consumers alike. A few high-growth companies are standout technologies in their space, and we are looking forward to supporting them on their next stage of growth.

Alicorn Global Ventures, our global venture capital firm, completed a busy first quarter of CY2021 with two secondary investments in fast-growing technology companies totalling US$13.5m. Both investments are proprietary opportunities that remain confidential at the time of writing.

Alicorn recently invested $3.5 million in a global DevOps software company with a continuous delivery and collaboration platform for cloud-native applications and microservices. Its modern CI/CD platform is designed for software development teams building and deploying cloud-native applications using containers, serverless, and Kubernetes.

Alexander Assim, Principal at Alicorn said: “DevOps is at the centre of two critical trends in enterprises over the last decade: a mass transition to cloud-native systems, and a new mission criticality to the performance of business software and IT infrastructure. Today, the average enterprise has approximately 500 custom applications and will develop and deploy approximately 40 new applications in a year. That challenge is being solved through CI/CD and DevOps automation.”

In addition, Alicorn has also completed a $10m co-investment in a mobile commerce monetisation company. The company’s AI/ML-powered technology enables frictionless commerce for users by presenting superior discovery recommendations, at the edge, thereby protecting user data from leaving the device. The platform infers what products and services the user might be interested in and generates recommendations in a seamless manner that complements existing user interaction. The company’s technology is distributed to millions of Android users worldwide through telecoms carriers, member organisations, and other entities. It recently received iOS-certification, further increasing its already significant addressable market.

“The company has achieved substantial growth through technology that improves the commerce experience of mobile device users without ever opening an application. We’re excited to be investing at such an inflection point for the team, before the release of their next product generation, and with it an exit from stealth,” notes Alexander Assim.

We are pleased to have led both investments in companies that already count the likes of Microsoft, Red Dot Capital Partners, and JRJ amongst their investors. We look forward to the journey ahead with our co-investors at Arowana and further investments from the wealth of opportunities we continue to see in the market.

Alicorn invests US$3m in autonomous business monitoring company, Anodot

Alicorn Global Ventures has completed an investment of up to $3 million in Anodot, a global software company recently included in Forbes’ Top 20 Machine Learning Startups to Watch. A leading vendor in the fast-expanding AI analytics space, Anodot is helping companies such as Vimeo, Atlassian, and T-Mobile to leverage artificial intelligence to surface business incidents much faster and prevent loss.

Anodot’s Autonomous Business Monitoring leverages patented machine learning algorithms to independently monitor metrics and detect anomalies in real time, correlating related anomalies across the business - a game-changing capability for companies who operate at scale. Customers use Anodot to reduce their time to detection by as much as 80 percent, consequently safeguarding revenue, minimizing operational costs, and improving customer experience.

Anodot is headquartered in Israel and Silicon Valley, with satellite teams located worldwide, and is entrusted by Fortune 500 companies in finance, telecommunications, and digital enterprise.

Alicorn is the London-headquartered venture capital arm of Arowana. Anodot represents the second investment in its Israel venture capital strategy this year, following its $6 million investment in Glassbox in June. The team’s expertise lies in secondary investments and bespoke primary funding rounds in VC-backed technology companies at a late growth stage. Alicorn works with these companies, their existing venture capital investors, and other stakeholders to facilitate secondary investments to solve liquidity requirements in addition to participating in unique primary rounds.

Alicorn completes US$6m co-investment in Glassbox Digital

Alicorn & Co. (Alicorn) has completed a US$6m co-investment in Glassbox Digital, a UK-based enterprise software company that recently closed a US$40m Series C round.

Alicorn is Arowana’s recently launched global venture capital arm and is headquartered in London. The new standalone entity is focussing on proprietary opportunities in enterprise software, cybersecurity, and data analytics. The current landscape has brought forward a period of digital transformation and with it, opportunities to invest in companies ready to take advantage.

Alicorn’s investment strategy is unique in that it focusses on exclusive primary funding rounds as well as providing secondary liquidity to shareholders of late growth stage technology companies. Alicorn works with these companies, their existing venture capital investors, and other stakeholders to participate in bespoke funding rounds and facilitate investments to solve liquidity requirements. The firm’s team span four continents with venture and advisory partners in the UK, Israel, the US, Singapore, and Australia.

About Alicorn

Established by Arowana, Alicorn is a global venture capital group that undertakes proprietary, exclusive primary and secondary investments in best-in-class, fast-growing technology companies in the enterprise software, cybersecurity, and data analytics sectors.

About Arowana

Arowana is a global B Corporation that has operating companies and investments across the UK, Southeast Asia, Australia, and the US. Established in 2007, Arowana’s purpose is to grow people, grow companies, and grow value.

Arowana moves to new London office to accommodate growth

We are excited to announce today that our London team is growing and moving into a new home at the Baltic Exchange.

We look forward to welcoming you at our new space...just as soon as we possibly can!

y can!