Why China Is Becoming the New Silicon Valley
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Working at a Silicon Valley is a dream for many, but only lucky ones get the opportunity. The home of world's largest high-tech offices is known for its positive work culture and relaxed environment. It does seem impossible that any other city can beat this premier startup destination, ever, in any area. With growing competition, many cities will want to steal the title of next Silicon Valley. Although it seems the race has already begun.
According to a new report by CB Insights, Beijing and Shanghai are ramping up to compete with Silicon Valley fundraising levels, sustained by large rounds to hot startups like Didi, Toutiao, Mobike and Ele.me
The report looks at 25 tech hubs around the world, comparing their data around funding and exit events for startups around the world. The top tech hubs were chosen based on a deal share basis of the global total.
Entrepreneur India takes a look at key highlights of the report:
China Catches Up in Global Race:
The report adds that the two cities are poised to be the tech hubs of the future. They lead among high-growth hubs for unicorns, mega-rounds, and large exits. Thanks to some of the promising startups of China who are giving a tough fight to some of the big startups globally. For example, Didi Chuxing, Beijing’s largest ride-hailing service defeated Uber in China. DiDi acquired Uber's China unit on August 1, 2016. Also, it is the only company to have all of China's three internet giants Alibaba, Tencent, and Baidu as its investors
Outsized returns help funnel new capitals into an ecosystem, as investors don’t want to miss out on the next big exit. The report stated that JD.com and Alibaba were among the largest exits globally in the period studied and will fuel more resources and talent. On the other hand, globally, Silicon Valley saw 4 times more $100Mn+ exits than the next hub, New York. Hubs with the largest exit counts also included London, LA, and Beijing.
“Large exits are the best indicator of a healthy ecosystem,” CB Insights pointed out in the report.
Silicon Valley Still in the Race:
Silicon Valley is still a major player even though it's losing ground in terms of fast-growing startups. As per the report, since 2012, Silicon Valley-based tech companies brought in a total of 12K deals, followed by New York area-based companies with 5K. For funding, Silicon Valley companies brought in a total of $140Bn with Beijing next coming in at $75Bn.
This clearly means that beating Silicon Valley is not going to be a cakewalk for China.
Talking about the unicorns, Silicon Valley is leading the race, with 57 unicorns, while Beijing has 29 and Shanghai has 11. But in the first quarter of 2018, Shanghai and Beijing jointly hailed 3 new unicorns, the same number as Silicon Valley.