Global fintech and funding innovation ecosystem

Why startups are leaving Silicon Valley

The Economist | Aug 30, 2018

why startups are leaving silicon valley - Why startups are leaving Silicon ValleyIts primacy as a technology hub is on the wane. That is cause for concern

“LIKE Florence in the Renaissance.” That is a common description of what it is like to live in Silicon Valley. America’s technology capital has an outsize influence on the world’s economy, stockmarkets and culture. This small portion of land running from San Jose to San Francisco is home to three of the world’s five most valuable companies. Giants such as Apple, Facebook, Google and Netflix all claim Silicon Valley as their birthplace and home, as do trailblazers such as Airbnb, Tesla and Uber. The Bay Area has the 19th-largest economy in the world, ranking above Switzerland and Saudi Arabia.

See:  Silicon Valley Bank Is Coming for Canada’s Burgeoning Tech Scene

The Valley is not just a place. It is also an idea. Ever since Bill Hewlett and David Packard set up in a garage nearly 80 years ago, it has been a byword for innovation and ingenuity. It has been at the centre of several cycles of Schumpeterian destruction and regeneration, in silicon chips, personal computers, software and internet services. Some of its inventions have been ludicrous: internet-connected teapots, or an app that sold people coins to use at laundromats. But others are world-beaters: microprocessor chips, databases and smartphones all trace their lineage to the Valley.

Its combination of engineering expertise, thriving business networks, deep pools of capital, strong universities and a risk-taking culture have made the Valley impossible to clone, despite many attempts to do so. There is no credible rival for its position as the world’s pre-eminent innovation hub. But there are signs that the Valley’s influence is peaking (see Briefing). If that were simply a symptom of much greater innovation elsewhere, it would be cause for cheer. The truth is unhappier.

Silicon Plateau

First, the evidence that something is changing. Last year more Americans left the county of San Francisco than arrived. According to a recent survey, 46% of respondents say they plan to leave the Bay Area in the next few years, up from 34% in 2016. So many startups are branching out into new places that the trend has a name, “Off Silicon Valleying”. Peter Thiel, perhaps the Valley’s most high-profile venture capitalist, is among those upping sticks. Those who stay have broader horizons: in 2013 Silicon Valley investors put half their money into startups outside the Bay Area; now it is closer to two-thirds.

See:  How to create an entrepreneurial ecosystem

The reasons for this shift are manifold, but chief among them is the sheer expense of the Valley. The cost of living is among the highest in the world. One founder reckons young startups pay at least four times more to operate in the Bay Area than in most other American cities. New technologies, from quantum computing to synthetic biology, offer lower margins than internet services, making it more important for startups in these emerging fields to husband their cash. All this is before taking into account the nastier features of Bay Area life: clogged traffic, discarded syringes and shocking inequality.

Other cities are rising in relative importance as a result. The Kauffman Foundation, a non-profit group that tracks entrepreneurship, now ranks the Miami-Fort Lauderdale area first for startup activity in America, based on the density of startups and new entrepreneurs. Mr Thiel is moving to Los Angeles, which has a vibrant tech scene. Phoenix and Pittsburgh have become hubs for autonomous vehicles; New York for media startups; London for fintech; Shenzhen for hardware. None of these places can match the Valley on its own; between them, they point to a world in which innovation is more distributed.

If great ideas can bubble up in more places, that has to be welcome. There are some reasons to think the playing-field for innovation is indeed being levelled up. Capital is becoming more widely available to bright sparks everywhere: tech investors increasingly trawl the world, not just California, for hot ideas. There is less reason than ever for a single region to be the epicentre of technology. Thanks to the tools that the Valley’s own firms have produced, from smartphones to video calls to messaging apps, teams can work effectively from different offices and places. A more even distribution of wealth may be one result, greater diversity of thought another. The Valley does many things remarkably well, but it comes dangerously close to being a monoculture of white male nerds. Companies founded by women received just 2% of the funding doled out by venture capitalists last year.

See:  Indiegogo’s New Hub for Entrepreneurs Is an Important Reminder to Us All

Shadows of the colossi

The problem is that the wider playing-field for innovation is also being levelled down. One issue is the dominance of the tech giants. Startups, particularly those in the consumer-internet business, increasingly struggle to attract capital in the shadow of Alphabet, Apple, Facebook et al. In 2017 the number of first financing rounds in America was down by around 22% from 2012. Alphabet and Facebook pay their employees so generously that startups can struggle to attract talent (the median salary at Facebook is $240,000). When the chances of startup success are even less certain and the payoffs not so very different from a steady job at one of the giants, dynamism suffers—and not just in the Valley. It is a similar story in China, where Alibaba, Baidu and Tencent are responsible for close to half of all domestic venture-capital investment, giving the giants a big say in the future of potential rivals.

Continue to the full article --> here


NCFA Jan 2018 resize - Why startups are leaving Silicon ValleyThe National Crowdfunding & Fintech Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with fintech, alternative finance, blockchain, cryptocurrency, crowdfunding and online investing stakeholders globally. NCFA Canada provides education, research, industry stewardship, services, and networking opportunities to thousands of members and subscribers and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding and fintech industry. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: ncfacanada.org

Latest news - Why startups are leaving Silicon ValleyFF Logo 400 v3 - Why startups are leaving Silicon Valleycommunity social impact - Why startups are leaving Silicon Valley

Funding | Feb 23, 2024 Züm Rails Secures $10.5M Series A Funding to Expand Across North America Züm Rails, a Canadian fintech startup, is transforming the payment processing landscape by securing $10.5 million in Series A funding , led by American-based VC Arthur Ventures, funding to expand its innovative banking-as-a-service and instant payment solutions in the U.S. and beyond. Founded in Montreal in 2019 by Marc Milewski and Miles Schwartz, Züm Rails has quickly risen to prominence by addressing the fragmented nature of payment experiences for businesses. By developing an all-in-one payments gateway that integrates open banking with instant payments, Züm Rails is enabling companies to streamline their financial transactions without needing to become payment experts. With this recent infusion of venture capital, Züm Rails is poised to accelerate its growth, expand its offerings, and solidify its position as a leader in the fintech space. See:  Autonomous IoT Transactions and Micropayments The company's "omni rails" technology supports a wide range of payment methods, including traditional and real-time options, through partnerships with major financial networks including Visa Direct, Mastercard, MX and Canada’s Interac network.  Züm Rails' solutions are designed to reduce fraud, verify customer identities, and facilitate seamless payments, addressing critical ...
Freepik Global digital rails - Why startups are leaving Silicon Valley
Policy | Feb 23, 2024 Urgent Call for Reform Against Big Tech's Grip in EU Digital Markets In a letter to the Financial Times, Sebastiano Toffaletti, Secretary-General of the European Digital SME Alliance, is highly concerned about the state of the European Union's digital markets, dominated by a handful of tech giants. Toffaletti's letter, published on February 20, 2024, responds to the EU's chief competition official, Olivier Guersent, and critiques the European Commission's current stance on competition enforcement. He argues for a totally new approach to tackle the monopolistic practices of Big Tech, emphasizing the existential threat they pose to small businesses and startups. Despite the European Commission's efforts, the digital market remains under the control of a few large corporations, stifling competition and innovation. Big Tech's reluctance to comply with the Digital Markets Act by the March 7 deadline exemplifies the industry's resistance to change. Apple's criticized compliance measures, imposing significant financial burdens on app developers, serve as a case in point. See:  The Impact of Big Tech in Finance Toffaletti advocates for a shift in focus from consumer welfare and price indices to the broader economic and societal impacts of Big Tech's power accumulation.  Highlighting the "fierce sense ...
Unsplash Christian Lue EU Commission - Why startups are leaving Silicon Valley
Funding | Feb 23, 2024 Golden Ventures Closes $100M for Seed-stage Tech Innovators in Canada Golden Ventures, a prominent venture capital firm based in Canada, has successfully closed over $100 million in capital commitments for its fifth fund supported by existing and new institutional partners, including BDC Capital, ECMC Group, and Deloitte Ventures. This fund is dedicated to supporting seed-stage founders who are at the forefront of technological innovation, spanning areas such as AI, climate tech, blockchain, and quantum computing. Founded in 2011 by Matt Golden, the Toronto-based firm has evolved from a mobile-focused initial fund to a sector-agnostic approach, with a particular emphasis on bolstering the Canadian tech ecosystem. The fifth fund aims to invest in high-potential, seed-stage technology founders across various sectors. Founded by Matt Golden, with Ameet Shah as general partner and Nick Chen as the new principal. Golden Ventures plans to make around 30 core deals, maintaining a balance between core investments and angel-side investments. The firm has backed over 100 companies, including notable exits like Wattpad (acquired by Naver) and SkipTheDishes (acquired by Just Eat). Beyond financial investment, Golden Ventures emphasizes talent investment, mentorship, and building relationships with later-stage funds for portfolio companies. Canada's Early ...
Freepik upklyak investing in startups - Why startups are leaving Silicon Valley
Advocacy | Feb 22, 2024 Sherwood Neiss Says the "Expanding Access to Capital Act" Will Boost the Economy, Job Creation, and Inclusive Innovation Sherwood “Woodie” Neiss, a founding partner at Crowdfund Capital Advisors (CCA) who was one of the creators of the JOBS Act of 2012 (legislation that legalized investment crowdfunding), and NCFA Advisor, has sent a letter to Congressional leaders, informed by data-driven evidence, advocating for HR 2799, also known as the Expanding Access to Capital Act. This proposed legislation aims to bolster support for entrepreneurs and small businesses, thereby enhancing economic growth. The correspondence was directed to key figures within both major political parties in the U.S. House of Representatives and was in response to a letter sent by the North American Securities Administrators Association (NASAA) opposing the legislation. See:  NASAA Intensifies Access to Capital Debate The Expanding Access to Capital Act will build upon the successes of the JOBS Act by further democratizing access to capital. This move promises to enhance economic growth, spur innovation, and support the creation of jobs, while maintaining a commitment to investor protection. Despite opposition from the North American Securities Administrators Association (NASAA), the overwhelming evidence and support from the crowdfunding sector ...
Freepik rawpixel.com Regulation crowdfunding - Why startups are leaving Silicon Valley
News | Feb 22, 2024 Reddit and Google Forge $60M/year AI Training Deal Reddit has licensed its vast array of user-generated content to Google for a staggering $60 million annually. This strategic partnership will significantly enhance Google's AI models by providing access to a diverse and rich dataset, comprising the myriad discussions, opinions, and interactions of Reddit's global user base. As Reddit marches towards its much-anticipated IPO, this deal not only opens new revenue avenues for the social media platform but also boosts the development of more sophisticated and nuanced AI technologies. The deal is valued at $60 million per year, highlighting the fact that user-generated content in training AI models offers significant economic value. As Reddit prepares for its IPO, this deal represents a crucial revenue stream and a strategic move to diversify its income sources ahead of its public listing. See:  AI’s Ethical Dilemma Grows as Innovation Surges Google's access to Reddit's content is expected to significantly advance its AI models, making them more nuanced and reflective of a wide range of human experiences and perspectives. The deal has sparked discussions around data privacy and the ethical use of user-generated content, emphasizing the need for transparency and user ...
Unsplash Brett Jordan Reddit - Why startups are leaving Silicon Valley
AI | Feb 21, 2024 Revolutionizing Industries and Raising Ethical Questions.  AIs Dual-Edge Sword The AI landscape is rapidly evolving, with recent developments sparking both excitement and concern. Here's a roundup of the latest significant updates: OpenAI's Ambitious Funding Goals and Ethical Concerns Sam Altman, the face behind OpenAI, has been in the spotlight for seeking up to $7 trillion in funding, aiming to revolutionize the AI and chip industries. This move has raised eyebrows, considering the potential environmental impact and ethical concerns surrounding the massive energy consumption required for AI technologies. See:  Australia to Regulate High-Risk Artificial Intelligence OpenAI's shift towards military applications and the vast ambitions of controlling the semiconductor industry underscore the complex ethical landscape of AI development. AI and Election Integrity In a proactive step, major tech firms, including Google, Meta, Microsoft, OpenAI, and TikTok, have agreed to adopt "reasonable precautions" to prevent AI from disrupting democratic elections. This agreement, announced at the Munich Security Conference, focuses on detecting and labeling deceptive AI-generated content. While the accord is symbolic and lacks binding commitments, it represents an industry-wide acknowledgment of the potential threats AI poses to the integrity of elections and the broader democratic process.  Read more ...
Unsplash Igor Omilaev AI and GPU Processors - Why startups are leaving Silicon Valley
Release | Feb 21, 2024 Round13 Digital Asset Fund (DAF) Posts Over 40% Gains Despite Volatile Market TORONTO – February 20, 2024 – Round13 Digital Asset Fund (DAF), a native crypto fund in Canada with an innovative open-ended structure, announced yesterday gains exceeding 40% since its inception in April 2022, despite the turbulent market backdrop. This achievement underscores the Fund's exceptional ability to outperform major cryptocurrencies, with a 30% lead over BTC and a 60% advantage against ETH. See:  Bitcoin Ordinals: Exploring the Convergence of Fungible and Non-Fungible Digital Assets Leveraging strategic investments in 20 portfolio companies across pivotal stages such as Seed and Series A, with investments ranging from $250,000 to $5 million, Round13 DAF has curated a diverse and impressive portfolio. These companies are pioneering advancements across crucial crypto market segments, including AI, gaming and Metaverse, identity, and infrastructure. Noteworthy portfolio companies include Wombo, Improbable, Confirm, and ChainSafe. Several portfolio entities have successfully secured funding at significantly enhanced valuations, demonstrating resilience and growth potential. A notable aspect of the Fund's portfolio is the presence of token projects poised for native token launches this year, further enriching the investment landscape. Round13 DAF remains optimistic about the prospect of additional ...
Freepik market growth - Why startups are leaving Silicon Valley
Women in AI | Feb 21, 2024 Bridging the Gender Gap in Artificial Intelligence A recent TechCrunch article titled "The women in AI making a difference" highlights the significant contributions of women in the field of artificial intelligence (AI), aiming to give them the recognition they deserve.   Some of the notable individuals mentioned include: Irene Solaiman, head of global policy at Hugging Face. Eva Maydell, a member of the European Parliament and advisor on the EU AI Act. Lee Tiedrich, an AI expert at the Global Partnership on AI. Rashida Richardson, senior counsel at Mastercard focusing on AI and privacy. Understanding the Gender Gap The gender gap in AI is a multifaceted issue rooted in educational barriers, workplace challenges, and societal norms. Despite the critical roles women have played in advancing AI technology, their representation remains disproportionately low. A 2021 Stanford study revealed that only 16% of tenure-track faculty focused on AI are women, and a World Economic Forum report highlighted that women hold just 26% of analytics-related and AI positions. This disparity is not narrowing; in fact, a 2019 analysis by Nesta showed a declining trend in the proportion of AI research papers authored by women since the 1990s ...
Freepik Digital women in AI - Why startups are leaving Silicon Valley
BoC Payments Consultation | Feb 21, 2024 Seeking Feedback: Bank of Canada Drafts Supervisory Guidelines for Payment Service Providers (PSPs) The Bank of Canada has recently announced a consultation phase for its draft supervisory guidelines under the Retail Payment Activities Act and its regulations. This legislative framework requires PSPs registered with the Bank of Canada to adhere to specific operational standards, including the management of operational risks, incident response protocols, safeguarding of end-user funds, and mandatory reporting of certain incidents and significant changes to the Bank.  These requirements are set to take effect on September 8, 2025. See:  Canada’s New Retail Payment Regulations: Registration and Compliance The draft supervisory guidelines prepared by the Bank of Canada delineate the Bank's expectations for PSPs in meeting these obligations. The guidelines are designed to ensure that PSPs operate in a manner that is safe, efficient, and in the best interest of their end-users. They cover a broad spectrum of operational and risk management practices that PSPs are expected to implement. Your Input Is Required This consultation represents a critical opportunity for stakeholders within the fintech and payment sectors to review the proposed guidelines and provide feedback. The Bank of Canada is seeking input ...
Digital Canada - Why startups are leaving Silicon Valley
Feb 21, 2024 75% of Canadians are involved in some form of gambling, with lotteries (45%) reigning supreme. Sports betting (12%) while casinos (26%) follow closely behind. Males of the 45-64 age group of Canada participate more in gambling. Low-income individuals gamble more and face greater risks of problem wagering. 65% of Canadians over 18 have gambled in past years. In 2018, sports betting accounted for 7.9% of gambling activities in Canada. Both genders enjoyed online gaming machines equally (12% male, 13% female). Non-regulated sports betting dominated in 2019, capturing 57% of revenue. Only 2% of Canadians over 15 struggle with gambling addiction. Canada's gambling market shrunk to $12.54 billion in 2021. There is a list of rules and offline or online gambling laws in Canada that regulate activities on the casino market. Online casinos boasted a high 97% win rate in 2022. User penetration in the Canadian online gambling market soared 47% in 2023. It is expected to keep growing. There are fines and penalties for non-compliance with Canadian online gambling laws. Canada’s wagering license signifies adherence to local security standards set by authorities. 61% of sports betting online is unregulated, while 39% is done through land-based establishments. Imbalance ...
Pixabay Gambling laws in Canada - Why startups are leaving Silicon Valley

 

Leave a Reply

Your email address will not be published. Required fields are marked *

twelve − 5 =