As of May 2020, Silicon Valley was home to 2,000 tech companies — the greatest concentration anywhere in the world. Between 2011 and 2019, Silicon Valley startups received more than $113 billion of funding. Add in an incredible concentration of talent generating and building on innovative ideas plus top tech corporations hungry to gobble up new companies, and it’s been an environment impossible to emulate anywhere else in the world.
But times are changing, and Silicon Valley’s reign as an epicenter of technology innovation is coming to an end. In 2019, startups in the Bay Area saw a decrease in new funding, from $63.6 billion to $45.9 billion, while funding deals outside of Silicon Valley have been slowly increasing in recent years.
Silicon Valley’s environment is no longer ideal, in part because of the massive inflation in the cost of living over the past decade — the median home price is upward of $1 million, and even a six-figure salary isn’t necessarily enough to put you out of the low-income bracket. People started fleeing the area a few years ago in search of more affordable living, a trend that’s only accelerated with the massive shift to remote work during Covid-19.
So where’s the next hotspot? Experts have thrown in their vote for a wide range of places: Beijing, Shanghai, London, Paris, Berlin, Tel Aviv, Toronto and even Philadelphia, to offer a short list. Likely, it’s none of those places. In fact, I’d bet the next Silicon Valley is nowhere at all — it’s in the cloud.
The cloud gives companies several benefits, including the ability to easily scale and build geographically dispersed teams that can develop products virtually. “Companies founded today that are digital have a significant leg up — their cost structure is better and they can get the best talent anywhere to build digital solutions,” notes Springer. “The demographics of customers are also increasingly digital, leading to alignment between customers and the virtual startups solving business problems.”
When the epicenter of tech innovation becomes the cloud, implications for startups include:
- Success will no longer be dictated by location
- Startups will need to learn to build culture virtually
Although Silicon Valley is still recognized as the beating heart of tech innovation, the shift is already on its way. Startups that learn to develop technology virtually and build strong virtual cultures will be better positioned to thrive as the cloud becomes the next innovation hotspot. Read more via Forbes