Beyond Silicon Valley: 6 Booming Startup Hubs Around the World

by Rohan Ayyar on Startup Grind

Silicon Valley, once the dream destination for setting up tech startups, is losing its sheen for many. More and more countries around the world are showing remarkable growth in the startup index, all the while rent prices and competition in Silicon Valley continue to skyrocket.

Almost two decades back, yours truly would have laughed at the suggestion that Tel Aviv would be the next Silicon Valley — or “Silicon Wadi” as they put it. But today, I wouldn’t write off any country as the next big startup hub.

Thanks to internet fueled global community, easy-to-obtain work permits, government encouragement and creative entrepreneurs across the globe, the tech landscape is growing beyond all standards and recognition.

In this article, we’ll round up the six most burgeoning startup ecosystems worldwide and touch on some kick-ass startups in these countries.

Seattle, USA

Beautiful and friendly, Seattle is favored by many US-based entrepreneurs because of its large population of software engineers. Believe it or not, there is a region in Seattle where you will find more software developers than anywhere in the world — yes, even Silicon Valley!

One of the most versatile hubs in terms of size, you will find companies ranging from a few hundred thousand in net worth, up to a cool billion in Seattle. This means the entry level for entrepreneurs is accessible, but the performance ceiling shoots through the roof.

Seattle is host to Amazon, the giant e-retailer, coexisting with many comparably small but highly versatile companies like Moz and Zulily in Seattle.

You can also see wide variation in the types of tech startups. On one hand, you have serious, data-oriented businesses like SkyKick, which facilitates enterprise cloud migration, and on the other, a light-hearted content sharing platform like CheezBurger, where 18 million people share funny content every month.

On an average, office space can be rented at far lower prices than Silicon Valley. For instance, the median rate in the Seattle metropolitan area is $27/sq. ft./year as compared to $37/sq. ft./year in Silicon Valley.

However, there are some downsides to starting up a tech company in Seattle. One of the biggest problems (in common with Silicon Valley) is that overseas citizens don’t get visas to the US easily. This makes it difficult for companies to invite talent from other countries.

Further, Seattle’s existing top talent is concentrated in bigwigs like Microsoft and Amazon. Another problem is that the city’s homegrown VC funds have dried up and capital flow to the region is stagnating.

Toronto, Canada

Although Toronto slipped from #8 down to #17 in the Compass Global Startup Ecosystem Rankings for 2015, there are hordes of aspiring entrepreneurs preferring Toronto, which also happens to be the world’s most livable cities.

Also, there is no dearth of investors looking to invest in Canadian startups. For instance, Scribble Technologies Inc. based in Toronto raised $23 million and another well-known name — Shopify, which is based in nearby Ottawa — raised $122 million. A lot of startups in Toronto and nearby parts of Canada are maturing at top speed and have become unicorns, or will be soon.

Another reason why Toronto is a good choice for starting up a tech business the talent: a lot of innovative grads come out of the computer science and engineering departments, so finding new hires is never an issue. What’s more, an immigrant who has received venture capital of $200,000 or angel funds around $75,000 can easily get a “Startup Visa” to set up shop in Toronto.

These benefits, along with tax incentives for startups make an exciting proposition for entrepreneurs.

Last but not the least, starting up in Toronto is not a pricey affair as according to the Toronto Real Estate Board, the average GTA office lease rate is around $12.64.

Cons: Funding is hard to come by for Canadian seed-stage startups compared to their Silicon Valley cousins. As Bill Tatham, Michael Bloom and several other Canadian entrepreneurs put it, the financing and venture capital culture in Canada is mostly risk averse.

Oslo, Norway

Although one of the priciest places to set up shop, Oslo is also one of the safest places in Europe. You will find honest, professional and creative employees with great values like trust and collaboration imbibed in them.

Norway jumped from 9th to 6th position in this year’s Ease of Doing Business report, which is published by World Bank Group. Norway is very relaxed in their business registration formalities such as notarization, inspection and other requirements.

There is always some exciting new startup coming up in this part of the world, thanks to various incubators for entrepreneurs such as StartupLab and Oslo International Hub that connect you with successful and experienced entrepreneurs, expats and re-pats in the Norwegian community.

A look at the disadvantages: In UK, you need to put aside only £15 in your bank as a minimum for incorporating a limited company. In Oslo that figure is roughly around £3,000. The most hilarious part is that this threshold has been brought down recently — from £10,000!

Oslo finds itself amongst the most expensive locations for office space in EMEA as per the Cushman Wakefield Research Publication. The average rent for offices is $85.45/sq. ft./year.

Berlin, Germany

Source: Intuit

According to a Startup Genome report, Art = Entrepreneurism. Unsurprisingly, Berlin’s art and culture scene is often the reason why entrepreneurs flock to the city. Moreover, there are numerous accessible entry points to get your startup going and plenty of events that allow you to take your marketing to the next level.

The average yearly office space rent is $30-$40 per sq. ft., which is quite low compared to other European countries. Affordability and relaxed visa regulations are two reasons Berlin is now the sixth most important startup city in the world.

If you have ever played Agent Alice and Diamond Dash, you might be aware of Wooga, which is headquartered in Berlin. Some other exceptionally brilliant — and more famous — companies like WunderKinder (that developed Wunderlist) and SoundCloud are also based in Berlin.

However, it’s a rough road for entrepreneurs in Berlin. Although funding is easy to come by at the seed stage, investors are hesitant to loosen their purse strings beyond a million or two million euros. As a result, when you’re growing and need more funding, you need to look beyond the borders.

Warsaw, Poland

If you are looking for some of the best programmers in the world, head to Poland. The average cost of hiring software developers in Poland is 30,000 euros per year — almost half of what you would pay in Berlin and one third of that in the USA. Poland, however, retains all the benefits of being located in East-Central Europe. So it comes as no surprise that a lot of entrepreneurs are gravitating towards Poland to start their tech ventures.

According to Borys Musielak, co-founder of Startup Poland and ReaktorWarsaw, Warsaw, Kraków and Gdańsk are the main Polish cities where you see entrepreneurs bee-lining to start tech ventures. The average office rent in these cities is $25- $40 per sq. ft. per year. (Cushman and Wakefield)

The popular cross platform CRM software BaseCRM finds it origin in Poland. Also Positionly, an SEO and rank monitoring tool belongs to this country.

The startup scene in Poland is not fully matured yet but there are ample opportunities to create and grow, with respected investors like HardGamma Ventures and Innovation Nest hanging around.

Warsaw hosts the Wolves Summit, one of the biggest networking events for entrepreneurs and investors in Europe, too.

Of course, Poland has its share of minuses. Infrastructure is a big pain in Poland with even “S-class” expressway roads having only single lanes in each direction.

Tel Aviv, Israel

The Silicon Wadi, or Startup Nation — these are just two terms that describe Tel Aviv, home to tech startups like Wix, Optimove, Moovit and PetBNB, which bring varied flavors to the potpourri of culture and business in Tel Aviv.

Israel has the highest density of startups in the world. In fact, over 60 Israeli startups are listed on NASDAQ! It acts as a huge magnet for immigrants, which directly translates into strong pool of talent and an open business culture.

Despite the immense benefits, there is still the question of security — the Middle East is one of the most conflict-prone regions of the world and this raises security questions for Western conglomerates. The huge time difference between North America in the west and Australia in the east is also a bit of a drawback.

The Wrap

The most inspiring lesson from all these startup breeding grounds is that anyone can start their business today in any part of the world without raising hundreds or thousands of dollars.

With the necessary regulatory compliance and permissions, a roof over your head, a team of creative and passionate brains, a functional website that doesn’t burn a hole in your pocket (such as Spaces, a DIY landing page builder with payments integrated, ideal for tech startups, SaaS and service-based ecommerce sites) and most importantly, a drive to excel, nothing can hold you back in today’s startup friendly environment.

With these words of inspiration, I would like to sign off. But before that, here are some findings from a Compass report on the top 20 startup ecosystems around the world that can help you find out the best hub for your next startup!

  • Silicon Valley remains the number one honeypot for startups despite the hues and cries over its steep prices.
  • New York City, Los Angeles and Boston come second, third and fourth respectively, making the U.S. still the most favored country for startups.
  • Brazil, India and Ukraine are some other countries to watch out for their disruptive startup scenes.
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