Urban Tech by the Numbers
Urban Tech is focused on improving the livelihoods of billions of people living in, or soon to be living in, urban centers. By 2050, 2.5 billion more people will live in cities — fueled primarily by growth in China, India, and Nigeria. That means New Delhi may be the most populous city by 2030 and new mega-cities will likely form across Africa to house 800 million migrating from rural settlements. Humanity is undergoing a massive shift and there will be no shortage of innovations in health, climate, and service delivery for people living in these environments.
Yet the boundary lines between Urban Tech and other disciplines are not clearly defined. Disciplines such as development economics, urban planning, and public policy are just as essential to the future of cities while Smart Cities is often used as an umbrella term for city innovation projects. So what is Urban Tech? And how can we distinguish its industry dynamics?
Urban Tech Verticals
Richard Florida has done the most work in synthesizing knowledge around Urban Technology. In an article from Spring 2020, he dissected Urban Tech into the following verticals:
- Mobility & Ride-sharing services
- Co-working services
- Urban informatics
- Food delivery
- Short-term rentals
- Urban infrastructure
- Prop / Real Estate Tech
- Construction Tech
In contrast, Smart Cities have been defined to “…address a diverse set of problems, such as efficient transportation, smart and enhanced buildings and homes, optimum energy utilization, and better administrative services. The increasing adoption of novel technologies that complement the management of cities in the future is also a major catalyst for the market growth.”
Simplifying, Smart Cities refers to innovations happening in the city while Urban Tech refers to innovations of the city. Smart Cities verticals entail updates to fundamental infrastructure — roads, lights, utilities, water, etc. — that makes a city operate. Urban Tech builds service layers on top of city infrastructure to improve urban life.
Follow the Money
So how is Urban Tech growing to meet the demands of a rapidly urbanizing world? To answer this question, I sought to assign investment dollars to the industry verticals proposed by Richard Florida and categorize by country. My hope is to build an analysis that is illustrative of how Urban Tech is growing across the world.
If we look at startup capital and growth investment dollars from 2016 to 2021, the Urban Tech industry has seen $145B in capital deployed globally. Mobility has led the industry’s growth, as growing city density naturally lends itself to innovations in how people get from A to B. Real estate technology falls in second, as improving how buildings function can dramatically reduce cities carbon footprints in the coming decades. And verticals such as Food Delivery and Co-Working come part and parcel, as a highly networked city enables improved service delivery for tenants such as restaurants and office space providers.
The same data offers new insights when organized by country. On average, the United States, China, and India see the most growth investment into their Urban Tech ecosystems, with first two often jockeying for the lead. The fourth and fifth spot is then up for grabs, often occupied by the United Kingdom or a ASEAN country such as Singapore or Indonesia. Brazil, Spain, Russia, Finland, Canada, and Germany also make appearances.
For a more expansive breakdown, please see this spreadsheet.
Key Takeaways
- Urban Tech is a global industry with the biggest opportunities in the developing world. While China and the United States see a bulk of the investment, countries such as India, Indonesia, and Brazil fall into the “best of the rest” category.
- African countries often fell out of the top 10. If the African continent, particularly Nigeria, will see the most rapid urbanization in the next three decades, why aren’t investors lining up to invest in African companies?
- The industry is still hard to define. While many groups have offered their own definition of Urban Tech, there is no consensus. And until the industry data and trends can be coherently categorized, many might not notice the visible tides driving this trend.
Some Notes on Methodology
- A constant reality I faced was working with the available data versus my ideal data. For reference, I used startup capital and growth investment as a proxy for sizing the industry in different regions. This means dollar values for Early and Late Stage VC, Equity Crowdfunding, Joint Venture, PE Growth and Expansion stand in place of revenue and user data that would otherwise be informative to how an industry has taken hold in a region.
- Arriving at a clear market sizing was not possible for some industry verticals, such as “Urban Informatics” and even “Mobility”. There are too many companies operating under these tags and fitting them into Urban Tech threatened to remove any accuracy in the sizing exercise.
- There are simply not many easy-to-access data sources for Urban Tech. The best I found were Pitchbook and Crunchbase.
