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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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).
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.
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.
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
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."
