A review of the 2019 World Forum For Foreign Direct Investment.
When we think successful start-ups, a few key things tend to spring up in people’s minds. Silicon Valley. The Bay Area. The garage spaces of Apple, Amazon and Google – showing that even the largest companies in the world all started from humble beginnings, hard work and a singular vision and purpose.
But, given the next great business is now just as likely to come from Tel Aviv as it is from The Big Apple, what is the true reality of the global startup landscape?
How can new, innovative businesses with groundbreaking ideas find the perfect markets and locales to see them emerge out of the incubator into fully formed, sustainable entities with the right conditions to grow?
And how should businesses and government work together to cultivate startup innovation hubs?
At the recent 2019 World Forum for Foreign Direct Investment, our founder Maren Lesche joined Crea CEO Upkar Sharma and 500Startups Venture Partner Bonnie Cheung for a panel discussion hosted by Gartner’s Director of CFO Forum, Vanessa Ronan-Pearce to answer these questions.
What is the true reality of the global startup landscape?
Maren says that a key part in assessing the opportunities for a startup in new markets is realizing where the bottle-necks for innovations are, and where the left-of-centre opportunities might be arising.
“You have to see which cities are growing the most. Silicon Valley is not growing that much anymore, it has reached a point where it is saturated,” Maren mentioned.
“So if you see Tel Aviv, if you see Berlin, if you see small cities like Antwerp which is close to Brussels, the kinds of cities that grow off older innovation hubs, in terms of the information technology, the attractiveness for founders is much higher than Silicon Valley.”
How can new, innovative businesses find the perfect markets to grow?
Crea CEO Upkar Sharma suggested that the global business community – and with close reference to startup culture – is beginning to awaken to the idea that successful ventures thrive on acute awareness of the unique, wider frameworks of societal operation.
“There are perils in copying the Silicon Valley model. Most of the emerging startup ecosystems need to understand that.”
“You see, all money follows consumption, and consumption is driven by culture. So when you copy and paste, without having the cultural milieu in place, they are doomed to failure.”
So how does this work for other regions?
In India, however, Sharma states that there is a tendency to seek bright bursts, and this kind of thinking needs redesigning.
“Even though you read about the amount of money that is being pumped into the ecosystem. The fact of the matter is there is a large amount of money chasing very few sexy startups, and a lot of really fundable, scalable businesses, with very, very relevant business models that don’t get that kind of financial support.”
For Bonnie Cheung, Venture Partner for 500Startups, there is a natural progression of entrepreneurship that flows from the fluidity of adoption – and this stream should be tapped and let to pour of its own course.
“From a content perspective, what people create inside that environment, has to be what is advantageous in your local market. If you look at e-commerce, consumption, retail related, South East Asia has been doing great. And what the entrepreneurs have realised is that they have one of the biggest and youngest populations around the globe. Indonesia alone has 250 million people.”
“So building startups, and new companies, in that area is natural. Sometimes I see government trying to dictate to certain sectors, but I say let entrepreneurs find their way! Because you can provide as many tools as you can, but you then have to be patient.”
How should businesses and government work together to cultivate startup innovation hubs?
From the panel, there was a unanimous agreement that the development of new and emerging geographical ecosystems for startups requires a well-defined layer of knowledge — around cultural fit, resource allocation, and effectively harnessing established markets and industries. Governments have an important role to play in this process.
Within these ecosystems, each sector requires its own focus – healthcare, fintech, e-commerce for example – in terms of legal support, developmental funding, community outreach and market testing. These focuses need to be developed with business and government in agreement.
Next for global startup innovation hubs
The question now lies, can these emerging ecosystems create the right channels for output?
Where are the real, grass-roots challenges that exist within each of these ecosystems, and how can they be solved?
This is an overview of what was discussed at the ‘Interview: Startups & Innovation’ panel at 2019 World Forum For Foreign Direct Investment — you can view videos from the forum on our Instagram account. We will continue to publish the learnings from future events like these on our website. Please feel free to join the conversation below or tweet us.
Feel free to reach out, comment, share thoughts on some of the statements, or just connect to exchange notes.