Silicon Valley’s 70-year dominance in tech is ending…and that’s good for tech.
Earlier this month Stripe announced its $200mm acquisition of Paystack, a fintech startup from Lagos, Nigeria. For an African startup to exit at a meaningful figure at all is unusual enough, but that it had garnered a $200mm price tag would have been unfathomable by most observers a few short years ago — even by those long evangelizing Africa’s ‘emerging tech hub’ bona fides.
However, to certain observers and cross-border venture investors, such as us at Catapult, who’ve spent years shuttling between tech hubs outside Silicon Valley, stories like that of Paystack are becoming increasingly common. More to the point, they are a harbinger for things to come vis-à-vis Silicon Valley’s waning influence on the tech landscape; something that’s been underway for the better part of a decade and now accelerated by an order of magnitude by the impact of Covid-19.
The Rise of ‘Tier 2’ Tech Ecosystems Globally
While renown tech hubs such as Stockholm (Spotify, Klarna), Toronto (Shopify, Ecobee), and Tel Aviv (Waze, Mobileye) have generated significant technology companies for some time, the number of large exits originating from those geographies has skyrocketed in recent years. While this is to be somewhat expected, what is surprising is the emergence of technology leaders and meaningful exits from hubs heretofore largely dismissed by market observers. Think Dubai, and Uber’s $3.1 Billion acquisition of Dubai-based Careem; or Bogota’s Rappi and its rise to unicorn status; or Seoul’s Baemin, and its recent $4 Billion acquisition by Delivery Hero. Yes, Stockholm, Toronto and Tel Aviv are probably top of mind with most VCs by now, but I’d wager Dubai, Bogota and Seoul weren’t exactly on most investors’ bingo card.
It’s axiomatic that Silicon Valley has enjoyed an outsized reputation as the leading global tech hub since the 1960s and has cast a long shadow over the industry for decades. Silicon Valley lore is rich with heady tales of the days of Fairchild Semiconductor, XeroxPARC and the like. Technologies that emerged during that era changed the world. Talent attracted to Silicon Valley to work at those iconic companies would form a diaspora that would go on to build the next generation of technology…