The Future of Entrepreneurial Hubs

After spending time in Spain last month co-hosting our #ScaleUpSpain event and participating in the IN3 conference, I put some thought into international entrepreneurial hubs. What enables certain communities to create unicorns? How can we apply our understanding to increase international expansion? How should startups adapt to an increasingly global startup community?

Our #ScaleUpSpain event and the IN3 conference focused on bridging the entrepreneurial ecosystems between the US and Spain, connecting innovators and kickstarting a movement to create a global network. Of course, the importance of global collaboration was a common theme in discussions, in addition to access to quality education and government support. While these topics are important, in order to better understand international hubs it is useful to study three (unique) models of success: Tel Aviv, Santiago, and Singapore.

Tel Aviv, Israel

At the IN3 conference, Eric Schmidt surprised many audience members when he claimed that Tel Aviv was the second largest entrepreneurial ecosystem (behind Silicon Valley but ahead of New York) with exits reaching $15b in 2014. Tel Aviv’s access to investors separates it from many foreign hubs, but its unique business culture is equally critical. The open business environment and desire to share knowledge means that founders are working together to avoid the same mistakes and foster innovation. Many Israelis undergo advanced technical training in the military, producing a high-tech talent pool of extremely focused and independent thinkers, who naturally take on additional responsibilities and require little micro-management.

Aside from Tel Aviv’s impressive business culture and community, we cannot ignore how public policy contributes to Israel’s innovation engine. The Israeli government has been focused on fostering innovation for decades, leading the world with its budget for R&D. The risk-taking culture in Tel Aviv has been shaped by risk-sharing policies, like 85% subsidies provided for investments in any of the 20 “certified” incubators in the country.

Santiago, Chile

Latin America has a wealth of entrepreneurial spirit. A recent article on global cities of the future explains that Santiago “has made a name for itself as one of the most foreign-entrepreneur-friendly cities on the planet, and as a test bed for launching into Latin America.” Not only is its government removing barriers for entrepreneurs, they’re offering one-year visas, free workspace, and more than $30,000 to move there. Chilean government understands that “to change the culture, [you] need to bring foreigners in,” according to an advisor to Start-Up Chile. Interestingly, 20% of Santiago’s entrepreneurs are female, compared to 10% of the Silicon Valley entrepreneurial community.

Singapore

There are several conditions in Singapore that provide it with the potential to be the next great startup hub, but most significant is government support. Similarly to Israel, Singapore has liberal immigration policies for skilled workers and has mandatory military conscription for males which, according to Dan Senor and Saul Singer in Start-up Nation, can be a “breeding ground of innovation.” The government has created an extremely hospitable environment and removed barriers for entrepreneurs, allowing new companies to be set up in hours. Government programs are working to draw in global technology talent and attention, like the National Framework for Innovation and Enterprise, which launched the Early Stage Investment Fund to allow 5 venture capital companies to receive matching funds from the government. The government is also promoting innovation in University programs and is sending students abroad to help shift its culture to one that encourages risks.

It’s clear that government plays a huge role in the growth of entrepreneurial ecosystems, but we must continue making global connections and developing a strong international startup community that is eager to share knowledge, take risks, and foster innovation. Successful startups will contribute to the international startup ecosystem and think globally as they analyze competition and develop strategy.