Why the Next Silicon Valley Might Be in Jakarta
William Altman ’12, analyst at CB Insights, on the global innovation hubs that are rising to prominence—and the startups that are changing the world.
As a senior intelligence analyst at CB Insights, a New York startup that uses machine-learning algorithms to collect and analyze data on the future of global public and private markets, Will Altman ’12 examines global trends in cybersecurity and venture capital. Recently, Altman used that data to highlight emerging startup hubs in countries that attract relatively little venture capital and to identify pioneering startups whose disruptive technologies could change society for the better. His findings illuminate the bleeding edge of the innovation economy—and offer hints on where the next big thing in tech might come from.
How do you identify entrepreneurial hotspots in places like Africa, the Middle East, and Southeast Asia?
Places all over the world are claiming to be the next Silicon Valley. Africa has the Silicon Savannah; the Middle East has the Silicon Oasis. That’s a bit of hype and hyperbole, but it does signal where people are looking for innovation.
At CB Insights, we also look statistically at the distribution of venture capital deals globally, because that tends to be a decent barometer of innovation potential.
More than 50 countries get less than 5 percent of the VC deals. By looking at which of those frontier markets are getting the most deals and the most venture capital, we were able to quantitatively identify emerging startup hubs based on the numbers.
Should we be surprised to see so much startup activity in countries like Indonesia, Turkey, and Poland?
No. Entrepreneurs solve problems. And successful entrepreneurs tend to be people who experience these problems firsthand, get passionate about them, and then use their skills and expertise to formulate a solution. That’s a global phenomenon.
What’s not global is access to resources. I spent two and a half years with a group called Wamda helping to develop the entrepreneurial ecosystem in the Middle East and North Africa, and investors in that region are typically very risk averse; they don’t want to put their money into an unproven tech startup at an early stage. So those companies have trouble getting off the ground.
So to me, the idea that there’s innovation happening in developing countries is not surprising. What’s surprising is that despite their tremendous potential, these places still tend to underinvest in their ecosystems. And that has everything to do with the opportunities that are presented to young people and whether or not there’s a culture that promotes risk-taking and failure, which are often part of the entrepreneur’s journey.
What’s special about the places you identified as nascent startup hubs? What gives them their edge?
No two places are alike; they all have their own unique strengths and weaknesses. Take for example Amman, Jordan, and Beirut, Lebanon. Both have strong traditions of entrepreneurship, and both are doing interesting things when it comes to startups.
But if you look at what’s driving them, in Amman it’s primarily a government agenda to diversify the economy, create jobs, and become a global technology powerhouse. We’ve seen the king himself funding startups and incubators.
In Beirut, on the other hand, there’s very little leadership from the government when it comes to risky endeavors like technology and innovation. What tends to drive the ecosystem there is the resiliency of the Lebanese people. They’ve dealt with so many problems, whether political or economic, that they tend to be very keen on solving them on their own and that makes for highly competitive businesses and entrepreneurs.
Are any startups in these hubs worth watching? The startups that are sure to catch my eye are solving some of the larger problems of our time, especially around access to resources. For example, the Kenyan startup Sanergy is addressing sanitation issues in the slums of Nairobi. That’s a problem they experienced firsthand, and now they’re going after it. Another Kenyan startup, BRCK, offers rugged, low-cost internet connectivity and has partnered with schools to give students access to technology.
A company out of Dubai called Fetchr is also doing interesting stuff. One of the biggest obstacles to the adoption of e-commerce in the developing world is that many people lack a physical address, and the infrastructure to deliver packages hasn’t been set up. But everybody has a mobile phone, and those mobile phones are equipped with GPS. So Fetchr uses the GPS-location data provided by mobile phones to deliver goods. If successful, they could open up e-commerce to the wider developing world.
“At the end of the day, it’s all about getting and retaining the best people. That goes for companies and the entire country."
While the U.S. still dominates the global startup scene, countries like China and India are gaining fast. Do they represent serious competition? Yes, I would say they do.
China’s ecosystem is growing, and its startups get a lot of government support. Policies are being put in place that help position China as a global leader in leading-edge technologies involving artificial intelligence, like face recognition, quantum communications, and driverless vehicles.
In India, formerly disenfranchised populations are being brought into the digital fold through everything from mobile payments to electronic national ID cards.
Now, I tend not to look at this as a zero-sum game; I don’t see China’s gain in venture capital deals and dollars, for example, as a direct loss for the U.S. And I think it’s important to recognize that the U.S. is still a magnet for talent.
But I also think that recent government policies have made entrepreneurs around the world who might otherwise have dropped everything to pursue their dreams of joining or launching a high-tech company in the United States feel less welcome. That does not bode well for innovation and technological progress in the U.S., because at the end of the day, it’s all about getting and retaining the best people. That goes for companies and for the entire country.
You’ve identified 30 startups around the world that are developing disruptive technologies with the power to do good, from robots and neurotechnology to synthetic agriculture and animal products. Why these technologies, and why now?
We’ve reached a tipping point: We have tons of big data, and machine learning algorithms have progressed to the point where we can now make sense of that data and use it for artificial intelligence. That’s impacting industries across the board from cybersecurity to healthcare, and a lot of advances are stemming from that general trend.
When it comes to things like lab-grown meat and improved agricultural production, the data on how unsustainable many of our practices around cultivation and consumption have become are now undeniable. It comes back to entrepreneurs being problem solvers: They recognize a problem or an inefficiency, and they start an enterprise to solve that problem.