Start-ups were once synonymous with Silicon Valley or London – but that’s no longer the case.
Here we look at five emerging global start-up hotspots, and ask which factors make each one so attractive to today’s tech entrepreneurs.
COVID-19 has upended the world and our global society at a pace and in a manner that are both unprecedented. In this era of uncertainty, start-ups play an ever more important role by bringing to market innovative solutions for tackling the challenges and mitigating the negative impacts caused by the pandemic. These days, however, such solutions do not originate solely in Silicon Valley or London; they are coming from other regions of the globe with strong start-up ecosystems and unique values and cultures.
Here we look at five countries – Singapore, the Republic of Korea, Brazil, Kenya and Israel – that have become innovation hotspots and ask how they are attracting entrepreneurs and start-ups, with a specific look at how each government has developed policies to support the ecosystem within their nation.
Testimonials from the new cohort of Technology Pioneers, members of the World Economic Forum’s global community of trailblazing companies, are included to provide on-the-ground voices from each country.
Singapore came top in the World Economic Forum’s latest Global Competitiveness Report, both overall and in factors such as infrastructure, health, labour market functionality and financial development. The country was ranked 13th in terms of its innovation capability, and boasts numerous factors that attract entrepreneurs. Aside from strong local connectedness and a high-quality stream of talent coming from competitive institutions, the government is at the centre of a drive to implement various start-up-friendly policies to lure start-ups and talent into Singapore. These include tax reduction and exemption schemes, grants and business-incubating and execution infrastructure. Another example is Startup SG, an initiative that was launched in 2017 to unify various aspects of governmental support schemes for ecosystem stakeholders including start-up founders, investors, incubators and accelerators.
Thanks to these concerted government-driven efforts, and a growing private financing ecosystem, investment in Singapore has risen steeply from $2.39 billion in 2017 to $8 billion in 2019, according to Enterprise Singapore. Within the same period, start-ups in deep tech industries such as advanced manufacturing, urban solutions and healthcare have started to gain momentum. The total amount of investment in deep-tech start-ups increased by 260% from $160 million to $580 million over the same period, while traditionally strong industries such as fintech continue to grow. According to an Accenture study, investments in fintech reached $861 million in 2019, more than double the amount raised in 2018.
The success of Singapore’s fintech sector is down in large part to the state’s financial regulator, the Monetary Authority of Singapore (MAS), which provides various kinds of support – including a regulatory sandbox and an API exchange platform to enable live experiments, as well as rapid design and deployment of potential solutions. Jointly organized by EnterpriseSG and MAS, the Singapore Fintech Festival x Singapore Week of Innovation and Technology (SFF x SWITCH), the world’s largest fintech and deep tech innovation festival, attracts numerous talents to connect, collaborate and co-create ideas.
Michele Ferrario of StashAway, which is developing a digital wealth management platform aimed at building long-term wealth, says that Singapore provides a great platform to start and scale services for the more than 600 million people living in South East Asia. “Singapore is a unique place as, at the same time, it provides access to the very fast growing markets of South East Asia while offering the benefits of a global financial centre,” he says. “Having started in Singapore, StashAway benefited from access to local and foreign talent as well as capital, and from the supervision of a very respected and forward-looking regulator.”
The support for fintech is part of the government’s broader support for the overall start-up ecosystem, including enhanced support measures amidst the COVID-19 crisis. For example, up to $110 million has been set aside to enhance the Startup SG Founder programme that will provide venture building, mentorship and start-up capital support for aspiring entrepreneurs. Rolled out in 2017, Startup SG Founder provides first-time entrepreneurs with mentorship support and start-up capital, as well as venture building support through accredited mentor partners who will identify qualifying applicants based on the uniqueness of business concept, feasibility of business model, strength of management team, and potential market value.
Tel Aviv, often dubbed ‘the city that never sleeps’, is famed for being Israel’s start-up capital. Israel – often dubbed the ‘start-up nation’ – has the highest concentration of start-ups per capita globally and is the global leader in deep technologies. With barely any available natural resources, Israel has pursued a path of embracing innovation early on in numerous industries such as water, agriculture and ICT with the aim of becoming the world’s leading powerhouse. The spirit of ‘chutzpah’ (A Yiddish word that means audacity and extreme self-confidence), constant questioning and challenging of the status quo, combined with an ambitious aim to target global markets from the get-go due to its small domestic market, have created an aggressive entrepreneurial mindset within the country. Global tech giants such as Google and Microsoft saw huge opportunities and potential in Israel and, as such, support start-ups in the country both with investment and acquisition. Many entrepreneurs that enjoy successful exits become serial entrepreneurs and patrons to new start-ups that are being formed by the great flow of human capital in Israel, and this virtuous cycle keeps the ecosystem sustainable and vibrant.
Israel’s compulsory military service also plays a part, by providing unique programmes for conscripts that boost their technological skills and help to nurture their creative mindset – all of which encourages them to pursue an entrepreneurial path after leaving the service.
The Innovation Authority of Israel has broadened its mandate to further foster Israel’s innovation ecosystem. This body is responsible for developing innovation infrastructure, provides grants and financial support for innovative technologies and connects the Israeli economy with the outside, as well as promoting and encouraging programmes, policies and laws, all to maintain Israel’s status as the ‘start-up nation’.
Israeli start-ups raised a record $8.3 billion in funding in 2019, a rise of 30% on the previous year, thanks to larger foreign capital investment pouring in, driving industries such as software, internet, life sciences and semiconductors.
Read more at: https://www.weforum.org/agenda/2020/10/5-start-up-hubs-to-watch-and-we-don-t-mean-silicon-valley/