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Entrepreneurship

Global hotbeds of innovation

Silicon Valley isn't the world's only centre of technology and innovation. We take a look at six growing tech hubs around the globe and what makes them attractive for founders and start-ups.

Date
Author
Steffan Heuer, guest author
Reading time
5 minutes

Colourful lights on a large official building in classical style. In the foreground you can see dark silhouettes of many people.
Silicon Valley is not all there is. A number of tech hubs around the world attract founders and start-ups for very different reasons. One of them, Berlin, also boasts a vibrant cultural and party scene. © KEYSTONE/EPA/Hannibal Hanschke

Bengaluru: India's Silicon Valley

Bus station with several blue buses and rickshaws in an urban setting
Bengaluru: India's Silicon Valley is one of the top 50 locations for successful start-ups. © istock/shylendrahoode

Formerly called Bangalore, this city of close to nine million is a multifaceted tech powerhouse. It's considered India's prime IT location, thanks to the many university graduates its education system churns out, and the legions of programmers who live there. This capital of Karnataka province is home to a host of globally successful tech companies, among them established consultancy and outsourcing champions Infosys and Wipro, and more recently Asian e-commerce player Flipkart, and ride-hailing service Ola. In 2023, more than 30 unicorns valued at USD 1 billion or more were headquartered here. Add in biotech, semiconductor, and defence contractors, plus R&D centres run by big US tech incumbents, and you get a recipe for growth not unlike California's Silicon Valley.  

Three young women in saris and T-shirts walk in a leafy courtyard in front of large commercial buildings.
The city of nine million is attracting founders thanks to its broad and deep talent pool, robust deal flow and access to capital and exit opportunities. © Dirk Kruell/laif

By one count, multinationals from Boeing and Mercedes-Benz to Walmart operate more than 630 so-called "global capability centres" in the city, and more than 85 semiconductor companies do design work there. Bengaluru's cachet as Southeast Asia's start-up central goes back to the 1970s, when a new master-planned suburb called Electronic City was built. Since then, many other tech enclaves from Whitefield to HSR Layout have emerged, cementing Bengaluru's reputation as India's Silicon Valley.

The broad and deep talent pool, healthy deal flow, as well as access to capital and exit opportunities led financial data platform PitchBook to rank Bengaluru 34th among the world's top 50 locations for successfully getting a start-up off the ground. 

Nairobi: Powered by mobile commerce

An adult giraffe and a young giraffe stand side by side on a grassland, with the skyline of a large city in the background
Nairobi is home to 97 per cent of the country's start-ups, as well as regional offices of many multinational companies. © istock/Goddard_Photography

You might be hard-pressed to name a Kenyan start-up, but chances are you've heard of M-Pesa, the mobile phone payment platform that's taken the country by storm since its launch in 2007. Today, about two-thirds of Kenyans use this system, which is run by mobile carrier Safaricom. It's not to be confused with Nairobi-based M-KOPA, in which LGT made an early investment through the Lightrock portfolio, which offers micropayments and access to appliances and electronic devices to the underbanked. So far, M-KOPA has raised more than half a billion dollars for its expansion throughout the continent, most recently to South Africa and Ghana. 

A man stands in a simple, dark shelter holding a light bulb.
M-KOPA, which offers micropayments and the rental of appliances and electronics to people without bank accounts, has raised more than half a billion dollars to expand across the continent. © Siegfried Modola

Kenya's capital of about 4.5 million is one of Africa's bright spots when it comes to tech ventures, albeit on a smaller scale than US or European hubs. According to Start-up Genome's 2023 report, Nairobi is "home to 97 per cent of the country's start-ups, as well as regional offices of many multinational companies." Google and Microsoft are among the firms operating research and innovation centres there, and Microsoft recently announced it's building a geothermal-powered data centre for its East African cloud offerings two hours northwest of the city. 

There's no shortage of homemade success stories, which usually revolve around mobile phones, e-commerce, agriculture, or cleantech. Like electric bus leasing company BasiGo; Sun King, which installs and finances PV systems for off-grid customers and has raised more than USD 700 million; and Twiga Foods, which connects farmers with urban retailers.

Lightrock: A global impact investing platform

Alongside traditional financial factors, impact investors take social and environmental aspects into account when managing their portfolios. LGT's partner company Lightrock is one of the pioneers in impact investing: since 2009, Lightrock has been investing in sustainable and fast-growing companies in Africa, Europe, India and Latin America that make a measurable contribution to systemic change.

Learn more about Lightrock

Austin: Weird and Wired

A man in a futuristic costume walks his dog in a matching costume. In the background is the skyline of a large city.
Austin is now one of the fastest-growing tech hubs in the US, thanks to a strategic decision in the 1980s to attract IT companies. © KEYSTONE/AP Photo/Austin, American-Statesman, Deborah Cannon

Hardly any other tech hub in the US has grown as fast or as furiously as Austin, the Texas state capital that's home to PC pioneer Michael Dell, as well as to the influential South by Southwest conference (SXSW) that has drawn tens of thousands of artists, creatives, founders, and investors to the city for the past 37 years. With its population rapidly approaching one million, Austin is one of the most vibrant places to launch a company, thanks also to its University of Texas campus with around 52 000 students. 

A light-flooded hall with a modern glass and wood construction, through which young people move or linger.
Austin is one of the most attractive places for start-ups, partly because of the University of Texas campus, which has around 52 000 students. © Jeff Goldberg/Esto/Redux/laif

Austin's ascent dates back to a strategic decision by local businessmen and politicians in the 1980s to focus on attracting IT companies. Besides Dell, today most major tech brands have an outsize presence there, surrounded by a vast orbit of around 2000 smaller tech companies and start-ups. They are embedded in a lively and quirky arts and music scene, whose official motto is: "Keep Austin weird". That mantra, though, has begun to clash with the byproducts of rapid growth, as evidenced by more high-rises, traffic jams, and gentrification pressures.

In 2023, Austin saw 416 deals totalling USD 3.8 billion in venture capital. While that was a 30 per cent drop compared to 2022, it's still a sizeable chunk of all American venture dollars. When analysts look at venture dollars per capita, which is a nifty trick to correct for size when comparing different tech hubs, Austin comes in at seventh place in the US, ahead of much larger metro areas like Seattle or LA.   

Chicago: An old hub reinvented

People in yellow suits raise their arms in a shower of confetti. In the background, large screens display rows of numbers
The Chicago Mercantile Exchange, the leading trading centre for global derivatives, remains as central to Chicago as the many large Fortune 500 companies that provide capital, expertise and mentorship to start-ups. © KEYSTONE/MAXPPP/Bloomberg News/Landov/Frank Polich

The "Windy City" has come a long way from its roots as a transportation, manufacturing, and finance hub. The Chicago Mercantile Exchange, which started out as the Chicago Butter and Egg Board and is now the premier trading platform for global derivatives, is based here, as are numerous large Fortune 500 companies that provide the capital, knowhow, and mentorship opportunities to get Midwestern start-ups off the ground. Major academic institutions such as the University of Chicago and Northwestern not only pump out Nobel Prize winners but also help to constantly replenish the talent pool.

It was in Champaign, two hours south of Chicago, that a previously unknown student by the name of Marc Andreessen developed the first web browser called Mosaic back in 1993. It quickly morphed into Netscape, which helped unleash the dot.com boom of the late 1990s.

A nondescript brick building stands on a street corner.
The University of Chicago runs its own venture arm, the Polsky Centre, to connect inventors with commercial partners and venture capital. © polsky.uchicago.edu/Jean Lachat

Many of today's start-ups in and around "Chicagoland", as local economic boosters like to call it, focus on industries that are homegrown strengths: from fintech to agricultural technologies to life sciences. In 2023, start-ups in the city raised a total of USD 4.73 billion. Chicago not only has a local offshoot of the nationwide accelerator program Techstars, the University of Chicago also runs its own venture outfit called the Polsky Center, which pairs academic innovators with commercial partners and venture firms.  

Berlin: Techno meets high-tech

Beyond a large urban square, skyscrapers and a television tower rise against a bright blue sky.
Berlin's hard-to-beat party scene attracts not only tourists but also young talent to the city of 3.5 million. © istock/Andrey Danilovich

Germany's capital scored another unusual point this year, with "techno culture" being added to the national intangible cultural heritage list compiled by the German commission for Unesco. The unrivalled party scene by the Spree is one asset that not only draws tourists but also lures start-up talent to the city of 3.5 million, notwithstanding Germany's reputation for bureaucratic red tape and high taxes. 

Market watchers estimate there were 468 tech start-ups in the city in 2023, or one in five German start-ups, 21 of them unicorns with a valuation of USD 1 billion or higher. They cement Berlin's role as one of the world's most vibrant start-up communities, claiming the number two spot in Europe right behind London (although Paris-based start-ups raised USD 1.5 billion compared to Berlin's USD 1 billion in 2023). 

Black wall with white graffiti, a person jumps in front of it.
One in four students in Berlin comes from abroad. Many want to work for start-ups. © Unsplash/Albert Laurence

The city's international draw is reflected by the fact that roughly one quarter of university students here are from abroad, many of them eager to work in new ventures where English has become the standard office language. Fintech, e-commerce, and cleantech are the strong suites of new companies sprouting up in the German capital. While a software engineer in Berlin will earn less than in Silicon Valley or London (USD 71 000 vs. USD 154 000 and USD 78 000), the significantly lower cost of living and the lively cultural scene more than make up for the income gap. 

Barcelona: Where start-up life's a beach

A man and a woman are sitting on a bench looking at their laptops and mobile phones. In the background the city skyline by night
The fact that 14 nationalities are already represented in the still-small LGT Digital Incubator Factory team is testament to Barcelona's role as a talent magnet. © KEYSTONE/EPA/Alejandro Garcàa

Catalonia's storied capital has long been a prime address for tech gatherings, from the Mobile World Congress to consultancy firm Gartner's IT Symposium/Xpo. "Barcelona is a very dynamic tech hub that attracts talent from all over the world, especially Latin America," says Michael Schwieter, the head of LGT's new Digital Incubator Factory based in the city.

Portrait of a middle-aged man
Michael Schwieter, head of LGT's new Digital Incubator Factory in Barcelona © Universität St.Gallen (HSG)/Grichnik

Catalonia's economic development agency ACCIÓ can point to more than 2200 start-ups that call the region home. They form a vibrant ecosystem together with major universities and innovation hubs established by large companies, with Lufthansa Group among the most recent arrivals. Barcelona actively supports its start-up scene with a growing innovation campus spread out along piers in the old port that house young companies. The Tech Barcelona association counts more than 70 000 members, many of them working in the 22@District, a formerly dilapidated industrial district that was reinvented as a master-planned Mecca for knowledge workers


The viewer looks out over a large expanse of water towards a harbour and a city beyond. A cable car is visible in the sky.
In Barcelona, more than 2200 start-ups form a vibrant ecosystem alongside major universities and corporate innovation centres. © KEYSTONE/EPA/Alejandro Garcàa

Attracted by this energetic melting pot with a rich cultural history plus beach access, LGT picked Barcelona to launch its digital development hub. Announced in April 2023, the outfit is being ramped up in partnership with German software firm GFT, and as of May 2024 had 20 employees. Its goal is to develop new digital offerings for the bank and its customers. It speaks to the city's role as a talent magnet that 14 nationalities are represented among the hub's staff of 20, with an average age of 32, and women making up an unusual 40 per cent of the programmers. "Barcelona," explains the hub's director Schwieter, "is the ideal place to work on fresh products with fresh minds, and to do so fast."

The interior of the National Robotics Engineering Center
Entrepreneurship

Pittsburgh: Where the robots roam

Driven by renowned universities and a deep talent pool, Pittsburgh has evolved into a global hotbed of robotics and automation. The only thing startups and established players would like to see more of is venture capital to fund their ideas.
Middle-aged man in a suit, leaning against a wall with his arms crossed in front of a dark background.
Entrepreneurship

"Camels instead of unicorns"

Overnight success and huge profits are no longer the driving forces behind entrepreneurship. Dietmar Grichnik, Professor of Entrepreneurship at the University of St.Gallen (HSG), explains why the focus has instead shifted to sustainability, purpose and happiness.
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