Opinion: Why going east is more important for startups now according to this European

Photo credit: antikwar / 123RF Stock Photo.

A few weeks ago, I led 16 Belgian tech startups on a week-long mission to Singapore. This was part of our efforts at Startups.be, a non-profit that helps Belgian tech startups grow and reach new markets. We organize international missions each year for young Belgian companies.

In Singapore, we visited the Singtel Innov8 incubator, Blk71, Impact Hub, and PSA (Port of Singapore Authority). Our startups also got a booth at the Innovfest Unbound conference.

It was very interesting to see how impressed our entrepreneurs were with the city. The most striking parts for the delegation were the entrepreneurial climate in Singapore, the steps the government is taking with its Smart Nation initiative, and the focus on technology and innovation in the region. Even Silicon Valley veteran Ian Hart of the American-Belgian company Onsophic was completely awestruck by the city-state’s energy.

It took Hart, who has been living in The Valley for 20 years and used to be a senior director at Apple, only a few days to start talking about a shift in the technological center of gravity from Silicon Valley to Asia. He said this without ever having visited Shenzhen or Beijing—two cities that are probably more entitled to being crowned “Tech Capital of the East.”

Talented techies

Without selling Silicon Valley short, it is becoming clear that there’s a lot of truth in Hart’s assumptions and that The Valley’s lead is diminishing to the benefit of other—mostly Asian—tech hubs.

Partly because San Francisco has become so expensive, more talented techies are now moving away from the city than they are arriving. At the same time, a study by Startup Genome reveals that Singapore has recently taken the lead in attracting tech talent.

While the number of unicorns outside the US was tallied at 37 percent in 2014, this figure had already increased to 58 percent in 2016. The number of startups is in fact on a downward trend in the US. Fewer and fewer of them are making it big, leading to the average business becoming older and less dynamic.

An American entrepreneur I know who moved to Singapore affirmed that The Valley is slowly falling asleep. According to him, people there are too comfortable with their organic lunches and free massages. Instead of designing the future as restless pioneers, they are increasingly embracing the status quo.

Turning point 

Admittedly, startups in Silicon Valley still find considerably more capital than their competitors in other regions (about one-fourth of all venture capital goes to companies in that area). The VCs with the deepest pockets can still be found on Sand Hill Road in Menlo Park. But we’re almost reaching the turning point.

In 2016, VC investments dropped by 28 percent in Silicon Valley, and China is expected to take the lead in two years. In 2016, of the wordwide total of US$336 billion VC money, US$72 billion came from Chinese investors.

Currently, it’s the Chinese technology giants such as Tencent (WeChat), Baidu, and Alibaba that are pumping the most money into Asian startups. Tencent can even present a better investment report than American leader Sequoia Capital, with 19 unicorns in its portfolio (compared to 13 for Sequoia).

Tencent and Alibaba have also been leading the way in making smartphone payments the norm in China. The all-powerful Facebook today draws its inspiration not only from Snapchat but also mainly from its Chinese competitor. And while Google has started focusing on artificial intelligence, the aforementioned Chinese companies have been doing so for years and are at least on the same level.

The world-renowned Massachusetts Institute of Technology (MIT) considers Baidu to be the second smartest company in the world, with Amazon occupying the number one spot for now. And as a reader of Tech in Asia, you probably know that while everyone in the West has its eyes on Tesla, approximately half of Shenzhen’s public transport is already electric, thanks to automaker BYD.

The sky is the limit

Belgians also looking to the east