New York, Stockholm, Tel Aviv, London, Tokyo and Singapore. These are just a handful of diverse geographies that stand united in their quest to emerge as powerful innovation hubs. These cities are fuelling local economies and disrupting the global innovation landscape by nurturing a new breed of digital startups. As per the Global Startup Ecosystem Report 2021 by Startup Genome, they consistently dominate the global startup ecosystem rankings. Also, on the list of rising ecosystems in the world Hyderabad, Bengaluru, Delhi and Mumbai.
Despite the pandemic – or perhaps because of it — these geographies have strengthened their position as vibrant innovation clusters and are increasingly being viewed as viable alternatives to Silicon Valley. As innovation ecosystems become nimbler and more dynamic, leaders are seeking to create an integrated landscape that helps startups grow, enables corporates to invest in talent and R&D and attract other stakeholders to effectively participate in collaborative environment.
A robust funding environment
Financing an innovation ecosystem is critical to creating innovative products and services. Entrepreneurs can build sustainable businesses only if they have adequate access to funding and financing options. Some flourishing ecosystems—more than the others—have brought funding to the top of the agenda to enable entrepreneurs to find innovative solutions for unique challenges.
For example, funding is key to establishing Tel Aviv’s thriving tech scene. Besides top venture capital support, Israel also receives ample funding from the government. It raised a total of USD 6.55 billion and produced 19 IPOs even amid the gloom of the pandemic in 2020. The country’s maturing startup landscape is ripe for investors seeking to diversify their portfolio into AI, cybersecurity, and other high-tech areas.
The cornerstone of an innovation ecosystem is the connection and collaboration fostered among key stakeholders. Competitive advantage can only be achieved if a culture of collaboration and interdependence is encouraged to support innovation.
Also, only through mutual collaboration among stakeholders, new markets can be created, and customer needs addressed better. For example, as ecosystems worldwide have shown, a robust corporate-startup collaboration will democratize and promote innovation. This is particularly true in Germany where the changing nature of corporate innovation has resulted in several corporate-startup partnerships in robotics, MedTech and FinTech. German engineering multinational Bosch launched Startup Harbour, an open innovation program that fosters collaboration between the corporate’s business units and startups.
The entrepreneurial spirit of ecosystems can only be sustained if stakeholders provide adequate infrastructural support for startups. Ecosystem builders should focus on creating an innovation capability that promotes policy initiatives to foster a startup culture. Entrepreneurial ecosystems can flourish only if the government takes proactive interest in formulating policies that address the needs of all ecosystem stakeholders.
In recent years, Japan has emerged as an innovation powerhouse for multiple reasons. It has forged organic connections with local and foreign startups and embraced digitisation to solidify its presence as a key player in the global ecosystem rankings.
The best innovation ecosystems protect the Intellectual Property Rights (IPR) of entrepreneurs and innovators and focus on building partnerships with the desired stakeholders. Silicon Valley is a fine example of how a mature innovation ecosystem has prioritised protecting the valuable IPR assets of its innovators. The Silicon Valley ecosystem is experienced in litigating high-profile IPR disputes and driving innovation and technology disruption. Its enabling policies and regulations make it the preferred destination for startups from across the world.
As per the 2021 Global Startup Genome Report, Telangana was ranked in the top 15 Asian ecosystems for affordable talent, among the 280 entrepreneurial innovation ecosystems analysed and 140 ecosystems ranked. It is a testament to the critical need for ecosystem builders to focus on bringing together talented people to work on innovative ideas.
Cities like New York and Boston are magnets for attracting top-notch global tech talent that supports their mission to become innovation hubs.
Overcoming the barriers and forging ahead
For startup ecosystems to punch above their weight and seize new opportunities of growth, they need to overcome major barriers that pose an impediment to innovation. First, a weakly implemented innovation strategy stymies innovation. It results in lack of clarity on the role each stakeholder needs to play to achieve the ecosystem’s innovation goals. Second, a lack of agility in idea validation delays speed to market and limits the scope for iterations.