Is Silicon Valley the hottest place on earth?

Silicon Valley is where it all happens. Any aspiring (tech) entrepreneur in the world must be there. Or is Silicon Valley’s start-up dominance being challenged?

Are there other centres in the world where a similar vein of talent, capital and know-how come together? And why and how did Silicon Valley become such tech ‘royalty’ in the first place?

Silicon Valley origins

The bay area below San Francisco was named Silicon Valley in 1971 to address the collective of computer companies active in this area of Northern California. It was Don Hoefler, a journalist with the Electronic News (a local ‘tech’ newsletter at the time), who is credited with inventing the name. Why Silicon Valley? Because, simply, most computer companies that started out in the valley from the 1950s onwards used (and use) silicon (made from silica sand) for their computer chips, which is widely available in the region.

Cementing the start of what was to become the world’s tech epicentre, was the 1939foundation of Hewlett Packard, by Bill Hewlett and David Packard, in a one-car garage in Palo Alto.

In the 1970s, companies like Atari, Apple, Intel and Oracle were all founded in the area, followed in the 1980s and 1990s by eBay, Yahoo, PayPal, and Google, with Facebook, Twitter, Uber, Tesla and Tinder (to name a few) joining them from the 2000s onwards. The money made by early investors in these giants has led to the creation of many powerful investment funds with ample money and know-how to guide and build new start-ups. This has created an unbreakable start-up ecosystem and incredible riches for Silicon Valley, a small geographical territory with the highest GDP per capita in the world today. Could any other place challenge this monopoly?

Places outside the Valley are gaining traction

The sheer economic power of Silicon Valley is a hard act to follow, but – with increased global connectivity - quite a few new, hot, regional players have emerged strongly with their own investment ecosystems, and they are throwing down the gauntlet to Silicon Valley, with increasing success.

The relevance of cities or regions in start-up terms is measured in how many ‘unicorns’ - private companies worth more than $1 billion – these places have created and are creating and how many ‘futurecorns’ are in the pipeline (companies that have a reasonable chance of becoming a unicorn soon). This unicorn success ratio has led to some very competitive rankings.

Unicorn league tables

The US (still) takes the top spot with 288 unicorns in existence today, but an increasing number of these are being built outside Silicon Valley in places like New York, Austin and Los Angeles, each of which city has an eye watering array of hugely exciting start-ups. Some better-known start-ups are Popshop, an LA based live shopping channel, Caspar mattrasses and Scopely, a $3.3 billion valuation mobile gaming company.

China, like with many things, follows very closely on the heels of the US. Apart from previous, famous, unicorns, now exited (i.e. listed on an exchange) like Alibaba, companies you will know that are in the unicorn category are, amongst others Bytedance (parent of TikTok), WeRide and Horizon Robotics. China, today, is home to about 251 unicorns.

India’s Bangaluru, Mumbai and Delhi are beating the drum in being highly successful start-up eco-systems and collectively rank number 3 in the unicorn league tables, with a total of – according to Credit Suisse - about 100 unicorns. In 2021 to date, already 6 start-ups have passed this valuation milestone. India is well positioned to continue this streak, with heaps of available tech talent and ample and willing cash, both from homegrown sources and from outside investors, as many foreign funds wish to get a foothold in this massive market.

Europe, in fourth place with a total of 70 unicorns, has its key start-up hubs in cities like London (in first place with 25), Berlin, Amsterdam and Stockholm, each making enormous strides in the start-up world. Famous unicorns (some recently listed) like Deliveroo, DarkTrace, Cazoo, Klarna, Volocopter and GetyoutGuide are just a few names that are ‘made in Europe’. The know-how spun off from these has created a solid infrastructure to inspire the next generation of start-ups and has increased the level of ambition to become a ‘unicorn’.

Lastly, tiny Israel has become a hot, hotbed for start-ups. Many new tech developments were originally developed for the military (like in the US) and laid the foundation for innovation and invention. Today both Tel Aviv and Jerusalem are leading lights for start-ups in a variety of fields, ranging from security, fintech and healthcare. Israel on its own has produced 65 unicorns. An amazing feat for a country with only 8.7 million inhabitants. That makes Silicon Valley certainly look a bit puny in comparison.

So, is Silicon Valley losing its hotness? With many of the original start-ups having become giant companies, some say the ‘edge’ is off and new ideas are (too) quickly swallowed by Big Tech. Silicon Valley though retains its magic as the birthplace of tech, but luckily for all of us, there are more ‘Silicon Valleys’ than ever and closer to home, bringing a lot of opportunity with it.

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