Every Tech Hub Needs A Model To Scale
How to apply lessons learned from leading commercialization centers across the globe
In the fall of 2023, the Economic Development Administration (EDA) announced the designation of 31 regional technology hubs as part of the first phase of the Tech Hubs program (formally known as the Regional Technology and Innovation Hubs program). South Florida’s designation was an important signal of this region’s competitiveness as a leader in climate tech and resilient infrastructure innovation. However, the second phase — an opportunity to access a pool of nearly $500 million in federal funding in the form of individual implementation grants of $40 to $75 million each — will create stiff competition among the regions vying for a piece of the pie.
Originally enacted as part of the CHIPS and Science Act of 2022 and tied to a $10 billion statutory authorization, the Tech Hubs program essentially asks designated regions to demonstrate: how might we, over a five year time period and in a specific technology area, move from a nascent industry to mass commercialization on a global scale?
In order to answer this question, South Florida tech leaders must make a more foundational and critical self-inquiry: what is our model to scale?
The Curious Case of Taiwan
Taiwan is an international tech powerhouse. It produces more than 65% of the semiconductors (plus 90% of the most advanced chips) in the world, with global microchip sales in 2023 exceeding $500 billion. Annually, Taiwan exports integrated circuits worth more than $180 million that represent nearly 25% of its national GDP (gross domestic product). This begs the question: How did this small island nation gain such a strong competitive edge to become the premier hub for outsourced semiconductor production?
Economists routinely herald Taiwan’s meteoric rise to dominate the high tech manufacturing market, given that in the 1950s and 1960s, it was primarily an agricultural economy with high levels of poverty. Yet, a closer examination reveals that Taiwan’s accelerated growth was fueled over time by a well-defined industry focus and an expertly implemented commercialization strategy at an ecosystem level.
The most effective interventions also include a combination of: (1) government engagement, (2) investment in education and research, (3) a skilled workforce, (4) a robust ecosystem of resources, and (5) strategic partnerships with industry leaders.
Notably, organizations like the Taiwan Semiconductor Industry Association (TSIA) and the Ministry of Science and Technology (MOST) have provided support and resources to semiconductor companies. Institutions like Taiwan Semiconductor Research Institute (TSRI) and Taiwan Semiconductor Manufacturing Company (TSMC) have collaborated with universities and research centers to drive innovation and skill development. Top-tier engineering universities and vocational training programs aligned curriculum to help supply the industry with a steady stream of talent.
While Taiwan provides a formidable blueprint, to adapt its model and key learnings to a local context requires much more than deconstructing a singular case study. As a regional tech hub, we have a unique opportunity to redefine and intentionally develop the inputs necessary to create Taiwan-like impact and outcomes.
Lessons from Tech Commercialization Engines Across the Globe
South Florida is poised to be at the forefront of commercializing climate resilience technology due to its proximity to ever present risks. Specifically, sea-level rise, extreme weather and other climate change impacts render it the best market to demonstrate the efficacy of technologies in mitigating the impact of heat, humidity, and coastal risk. It is therefore well positioned to gauge how climate change will redraw maps globally, affect military and private sector infrastructure, and alter supply chains.
Our region is the only subtropical climate in the United States to test coastal and energy resilience technologies due to its unique marine environment marked by humidity and frequency of extreme weather events. This geographic placement enables it to surface vulnerabilities endemic to subtropical climates and other coastal cities. South Florida also produced 2% of all US patents in climate tech over the past five years and experienced an uptick in climate tech investment, including $137 million in 2022.
However, despite the noteworthy influx of startups and an exponential growth in venture funding from 2021 to 2022 ($5.8B deployed and $5.0B raised), the current density of climate tech companies and capital remains insufficient to attract a critical mass of founders and investors to the region.
Even though South Florida has a wealth of resources and the essential ingredients to become a global tech hub, it needs to develop a more effective and better defined regional infrastructure to commercialize and deploy climate resilience technology.
What we can learn from Taiwan and other successful tech hubs is that, in addition to an equitable and inclusive workforce strategies and regional public sector alignment, we can leverage four distinct strategies to meet global market demand at scale:
Facilitated Customer Connections
Industry giants like Taiwan Semiconductor Manufacturing Company (TSMC), United Microelectronics Corporation (UMC), and MediaTek would not have become global leaders in the semiconductor market absent strategic partnerships with international corporations, like Apple, Qualcomm, and Nvidia, to manufacture cutting-edge chips for smartphones, computers, and other electronic devices.
Every successful tech hub needs to prioritize technical assistance that focuses on customer pipeline development. Growth stage companies benefit greatly from strategic connections to private and public sector prospects, readiness assessments, and expert mentorship.
What’s more, by identifying opportunities for unique segmentation through partnerships with established industry leaders that can provide access to new markets, distribution channels or complementary technologies, companies are better able to optimize the allocation of their go-to-market resources through high ROI (return on investment) connections.
Market Validation Opportunities
Emerging tech hubs routinely adopt tech-to-market acceleration strategies s that provide opportunities to test technology in commercial settings through facilitated pilots with industry partners or the public sector. A few prime examples include:
- Smart grids: Washington: the Pacific Northwest smart grid network demonstration site
- Unmanned aircraft systems: FAA-approved UAS testing location at a decommissioned airport in Rome, NY
- Green hydrogen: Green Light demonstration power plant in Brentwood, Long Island
- Sustainable carbon capture: North Dakota’s Project Tundra
- Electronic vehicle charging infrastructure: through the EV Project pilot sites in California Washington, Arizona, Tennessee, and other states
This approach not only addresses a critical step in the product life cycle, but also enables companies to validate market demand by ensuring the technology meets industry standards, increase adoption rate by establishing the efficacy and feasibility of technology outside of controlled testing environments, and shorten time to market through insights into regulatory challenges and compliance standards.
Policy Innovation Sandbox
Regulatory sandboxes are not novel and have proved effective across a variety of sectors and geographies, including sustainable electricity (Germany, Canada, Singapore), EV smart charging (E.U.), natural gas (Canada), and Fintech (Singapore). Where public sector leaders struggle to regulate advanced technologies because existing policy predates innovation, adapting these models proves beneficial.
In South Florida, a climate tech policy innovation sandbox might include specific geographies that create regulatory white space, including relaxed or non-enforcement testing geographies to test technology. Additionally, a sandbox could include a platform by which to identify policy, structural, and practical barriers to Hub Technology commercial deployment as well as develop priorities, best practices and unlock technical assistance from federal or national entities to drive rapid regulatory change.
Capital and Company Density
The notion that innovation ecosystems can boost their chances of success if they catalyze a critical mass of start-ups and venture funding has consistently proven out in world-renowned tech hubs, including Boston/Kendall Square, Silicon Valley, Research Triangle Park, Israel, and Singapore to name a few.
Similarly, in order to position South Florida as a global launchpad for climate tech and innovation, the region ought to develop new mechanisms by which to increase the deployment of and access to both dilutive and non-dilutive capital, highlight clean tech investment opportunities as well as invest in support for early-stage companies and founders to incubate climate tech concepts and exploit tech transfer opportunities.
A New Opportunity Awaits
New and emerging markets are competing to unlock unprecedented public and private sector spending in climate tech related sectors. For example, the U.S. Department of Defense has committed to investing $3.6 billion into resilience infrastructure, to improve its energy and water capacities, and modernize its operations. Other federal agencies have earmarked $9.5 billion in investment mandates and global investment commitments in these verticals now exceed $632 billion.
You might ask: why the fast paced rally?
There is an urgent need to source, build, and deploy critical technologies to combat the effects of extreme weather and climate change across the globe. Its impacts have increased the cost and complexity of both defense operational continuity, city infrastructure demands and present a great threat to our national and economic security.
As a result, we have opened a short window within which to become a significant net exporter of climate technology. With a well developed model to scale and the appropriate infrastructure to rapidly commercialize in this sector, South Florida can and will be ready for the opportunity that awaits.
