How to build the next Silicon Valley

Many countries around are striving to have tech ecosystems like Silicon Valley in their cities. So much has been done by governments through funds but still there is a long way to go. Like Marvian Liao puts it, The likelihood of other regions being like silicon valley is very hard.The reason is Silicon Valley is a very unique place that was closed in innovation for 60+ years. So what’s the framework to building a thriving entrepreneurial ecosystem? Market: Simply how big is the market in that ecosystem? Capital: Availability of angel Investors and VCs is a critical component of great ecosystems. But a key drawback in this happens when early on founders give too much equity. Follow up funding becomes really hard to get when founders have only 30-40% of a company at a later stage when the company needs money for growth. Investors will not put their money in a company that has given away too much equity because it will screw their capital structure. Entrepreneurship culture: Some cultures have the trade mentality others don’t. Great examples of entrepreneurial cultures include Israel,US. Whereas France where the word entrepreneur was coined isn’t actually very startup friendly. Infrastructure: Do you have a good mobile, broadband infrastructure e.t.c? Regulations should be geared towards business friendliness. The most critical factor for tech ecosystems however has to be exits. There is truth in the phrase that “When an exit happens, a thousand angels are born’ Great examples are Maktoob in Jordan, icq in Israel,skype in estonia, and Yandex from Russia. Founders from these companies got money from exits which they pumped back to the ecosystem through investments and helping the next generation of entrepreneurs. Lastly, countries have to figure out what their competitive vector is. Every region has some level of expertise in certain fields  and they can leverage that. It would put them so far ahead instead of straight way copying what they see work in Silicon Valley. So to policy makers and ecosystem players that want to build the next “Silicon Whatever” find an area that your region is so good at and take advantage of that. Source: The video below by Marvian Liao at Startup Turkey 2014 where he gives a great indepth presentation on this topic.  ]]>

─ January 7, 2016