Are Some Startup Hubs Doomed To Failure?


Are all tech hubs created equal?

Probably not. While the expansion, and accessibility of higher education has made the modern global talent pool more ingenuitive than ever, and although new businesses are growing at a blistering pace around the world, a series of common variables often lead to certain cities blossoming into new Silicon Valley’s, while others never reach their full potential.

Numerous factors play their part in determining whether a startup hub will thrive or remain stagnant. We’ll look into some of the defining components of what goes in to creating the next new business capital, and why some will inevitably be left behind.

1. Ease of Doing Business

This should never be overlooked. As dynamic a talent pool a city might possess, if enough roadblocks to opening a business, and capital movement (investment) are put into place, no number of startup accelerators, or coworking spaces will be enough to ward off the forthcoming failure.

Speaking from personal experience, Athens, Greece has a number of promising new startups, and talented young entrepreneurs. They’re growing businesses which, under different circumstances could make their mark across both domestic and regional markets. However in a country which is plagued by over-regulation of the business sector, including multiple bureaucratic obstructions limiting the ease with which foreign venture capital can be pumped in to support aspiring startups, one can’t help but be pessimistic for the current state of the community.

2. Cost of Living 

It’s hard to not think of Berlin when this issue comes up. Low rent prices were one of the primary ingredients in transforming the German capital into a dynamic tech hub, currently hosting over 2,000 startups. and amassing over $800 million in Q1 funding for 2015.

Being priced out of cities like London, a new generation of business leaders came to the city to build some of Europe’s leading ventures. While the prices have gone up over the past decade, Berlin remains an attractive option both within Germany, and in comparison with some of Europe’s other business centers.

3. Geography 

While it might be overlooked, geography plays its part in developing tech hubs. Europe is a prime example of this in action, with cities like Amsterdam, and Berlin being centrally located both across continental transport routes, which make them a natural crossing point to begin with. In addition, there’s also their proximity to national borders, making the influx of foreign talent all the more feasible as well.

In the same regard, geography can work as a disadvantage to cities across Europe’s periphery, including essentially isolated markets such as Tel Aviv, which in spite of the range of successful companies it has produced, is effectively cut-off from the rest of the continent.

4. Local Higher Learning

Having Stanford around the corner must be nice for executives in Silicon Valley.

In truth, having top ranked higher education institutions can provide a huge boost to cities looking to set themselves apart as tech hubs. Especially in cases where high level STEM programs are nearby, the level of talent flooding the job market breeds innovation on its own, and provides local firms with a major competitive advantage.

5. Culture 

Ultimately, it is a lot about culture. Different cities are known for different things, both in business and beyond. Brand recognition as a locality helps spur a more general culture of innovation, bringing in talented individuals who look to be at the heart of the action when it comes to new business development, product launching, and venture capital.

True startup cities are also renowned for their counterculture. It’s about having a new take on business, and embracing creativity, new ideas, and new technology. Corporate centers will always be around, however for a true startup city to exist, the above factors all play their part.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>