I’ve been traveling around the world studying how startups get formed. Yesterday I visited Bootup Labs in Vancouver. Last week I was at Startup Riot in Atlanta and while at the Olympics I’ve been hanging out with Saeed Amidi. He was recently profiled in Business Week and is CEO of Plug and Play, an incubator in Silicon Valley (he invests in, and rents to, more than 280 startups in Silicon Valley and now owns the building where Google and PayPal, among others, started up). I’ve been at YCombinator and Techstars events recently. I’ve visited London, and Paris in the last year to meet startups there. In April I’ll be visiting Israel again to study startups there in more detail.
There are some common trends.
1. Most everyone outside of the valley complains that they can’t get access to enough capital.
2. Most everyone outside of the valley complains that they can’t get access to enough PR.
3. Most everyone outside of the valley complains that their best startups get dragged to Silicon Valley once they get big and need more talent (Flickr, for instance, moved from Vancouver to Silicon Valley when it sold out to Yahoo — they sold in part because they needed help dealing with scaling issues, I’ve heard that story over and over from other companies and communities, too, like Atlassian who moved to the valley from Australia).
4. Most everyone outside of the valley complains that they don’t have the business infrastructure that they need to succeed. Mark Zuckerberg told me he moved Facebook to the Valley to have access to mentors, lawyers, PR people, and other people a fast-growing tech company needs.
5. Most everyone outside of the valley complains about lack of entrepreneurial culture. In Europe, for instance, failure is stigmatized. In other places there just isn’t the kind of culture that values wacky weird ideas. Go to a local coffee shop in your neighborhood, for instance, and ask people what Foursquare is. I guarantee you that in most Silicon Valley coffee shops you’ll find someone. Not so in most other places in the world.
But you already know these problems, among others. So, what’s changing? A lot.
1. The infrastructure needed to start up a tech company is now decentralized. You can use cloud servers from Rackspace, where I work, or Amazon or other companies. That infrastructure didn’t exist five years ago and before then if you wanted to start a web company you would need to build your own data center. Not every community has datacenters, but today everyone has access to the same cloud hosting services.
2. PR is being decentralized. Thanks to blogs, Skype, YouTube, Twitter and Facebook you can get onto TechCrunch no matter where in the world you are.
3. Costs are coming way down. Associated with first point. No longer do you need hundreds of thousands of dollars in servers to start up, you just need a few hundred bucks on a credit card to buy cloud servers.
4. A ton of startup accelerators/incubators have formed in past few years. I’ve listed a few on this post. They provide money, offices, mentoring, and other services you need like legal help.
5. Tech talent is growing around the world. Silicon Valley used to have a lock on geeks. That no longer is true as many universities around the world have educated tons of computer scientists and engineers.
6. Tax advantages. In Vancouver government officials told me this week that they are seeing a widening corporate tax rate gap. They expect that in 2012 their rate will be 25% while USA’s rate will be 40%. Other countries, like Ireland, have even lower rates. Plus, tons of countries want to help form tech zones. In Vancouver Bootup Labs officials told me they are working on getting some R&D subsidies from the Canadian government, (I’ve heard similar things from other countries, which can help even more businesses startup around the world).
7. Lower costs of living. In San Francisco it’s expensive to buy housing and health care needs to be purchased at sometimes great costs to families. Not so in many other communities around the world.
Even Silicon Valley folks are seeing these trends and are looking to capitalize on them. Saeed told me he’s looking to build Plug-and-play facilities in many communities in the world. I’m seeing other incubators/accelerators like YCombinator and TechStars do the same, spreading outside of their original communities to get deal flow from startups around the world.
I expect over the next few years these trends to speed up. I’m looking forward to it.
Are you noticing the same?