We have become accustomed to stories about the death of various entities related to tech. Whether it’s a device like the PC or a region like Silicon Valley, the public appears to have an almost unseemly interest in the demise of anything tech related. This is, of course, inherent in the nature of the revolution: supplanting the old with something newer, better and far cooler.
As the article below explains, a majority of the biggest tech success stories may have had their origins outside the Holiest of Holies, ‘The” Valley. The question is whether that matters. Because, as the article goes on to point out, it’s not necessarily where you start, but where you end up. The reality is that many of those startups achieved their insane valuations because even bigger enterprises from Silicon Valley – or from Seattle, the home of Microsoft and Amazon – were willing to pay to acquire them.
Ultimately, there is some truth in both statements. Tech is truly global, but much of the funding and, to be honest, the inspiration still comes from the US and, specifically, northern California. Will that ever change? Possibly, but the concentration of capital and talent still gives the Valley an advantage until some new center of excellence creates enough mass and scale to surpass it. Good luck. JL
Murad Ahmed reports in the Financial Times:
The majority of tech start-ups that have gained a $1 billion valuation in the past decade hailed from outside Silicon Valley, according to research that casts new light on the global growth of fledgling digital companies.The research into "unicorns" – fledgling tech groups that are valued at $1 billion following an initial public offering, sale or publicly-declared funding round – found that 60 per cent of major internet or software companies were created outside California's Bay Area.
The study seen by the Financial Times, and created for Atomico, the London-based venture capital group led by Skype co-founder Niklas Zennström, analysed the 134 companies that reached the billion-dollar mark over the past 10 years.
It found that 79 were from the US with 52 from the Silicon Valley area, while 26 came from China and 21 from Europe. There were none from Latin America, Africa or the Middle East.
Mr Zennström said the proliferation of computing expertise worldwide, coupled with greater access to capital for non-US start-ups, meant that an "irreversible trend" was forming that will see the proportion of major technology companies not hailing from the American west coast rise over time.
"To build a truly successful company you have to have remarkable entrepreneurs," he said. "That talent is everywhere."
Recent success stories include Mojang, the Swedish gaming company behind Minecraft that was bought last month by Microsoft for $2.5 billion, and Zoopla, the British property portal that conducted an IPO worth around £1 billion in June.
Others, however, were sceptical of the findings. Hussein Kanji, co-founder of Hoxton Ventures, a London venture capital firm, said that the vast majority of tech companies still emerged from the US and that the likes of Google and Microsoft are often the most likely buyers of significant tech start-ups.
He added that many overseas tech groups grew by establishing ties with American investors, while companies such as China's Alibaba and Denmark's Zendesk have established significant offices in the Bay Area.
It can come from anywhere, but it would be hard without a presence in Silicon Valley. When these companies grow, they often end up moving to New York or the Valley, and they end up looking much more like American companies in identity," said Mr Kanji.
Atomico's research found that the speed at which successful tech groups were growing is faster than ever before, taking only six years on average to become a unicorn. Twenty-four companies were able to reach the $1 billion mark within three years of founding, the majority of which were founded in the past five years.
"Today, there are so many more people on the internet. The mobile internet has accelerated things," said Mr Zennström.
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