Silicon Valley VC’s have been very focused on investing in Silicon Valley companies. I think it’s because of a simple truth; they have their eco-systems, networks and know how to help companies succeed in the Valley. In the .COM-boom days, the VC wandered outside of the Valley to find additional opportunities not found in Silicon Valley. Techcrunch artcile mentioned this last week:

“One reason I knew Silicon Valley would rise again after the 2000 crash was that it always does. Another was that the percentage of capital going to Valley companies increased, as VCs pulled closer to home and stopped speculating in more nouveau tech hot beds around the U.S. and overseas markets.”

But things are changing, and the are many other hubs around the world. VC’s keep a strong focus on Asia, even in these times of the financial crisis, and that is a shift from previous down-turns in the Silicon Valley. I think Sarah Lacy is right, as well as Rebeccca Fannin (with her book Silicon Dragon, book review is coming shortly!), emerging markets in Asia still represent a huge opportunity for investors. As all market segments are in growth, there is potential high return of business there. And financial crisis or not, China and India still have potential for continued growth. Especially if you are establishing new innovations and products on that market.

However, I do believe that there will still be a innovation hub in Silicon Valley, and for me as an entrepreneur and angel investor it makes sense to use Silicon Valley as a hub, and a launching pad for future Asia-based ventures. Besides if you are looking for lower risk model, with a early revenue focus (as I am doing with many of my startup ventures at this time), the US is still a primary market, if you want to reach consumers and corporations to sell your services and products, with 30% of the world GDP, and being in Silicon Valley, California alone being the 5th’s biggest economy in the world. So for more mature prodcuts/services/innovations and for a bit less risk prone ventures the US market still holds an very attractive position for me as an Entrepreneur.

With the combination of the worlds biggest local economy with a risk willingness to explore and try new innovations I think Silicon Valley will continue to thrive. And it will continue to be fueled by the Silicon Valley investors and VC’s.

But I wonder how Europe will do? The Venture Capital and angel investment industry is still very young in Europe, and I think I can name the few European VC’s that could “compete” in terms of approach, risk-willingness, focus and knowledge with the Silicon Valley based VC’s on one hand. And the US based investors are not looking as much at Europe as on Asia, and I think in the after-math of this financial crisis, we will again see the US and Asia as the most appealing places for Entrepreneurship. Europe will linger behind I think.

Next emerging market. I wonder when we will see the African boom? When some or more African countries are getting a stable enough economical and political climate to see real growth in their economies. Maybe this already started, but we in the western world might be too busy ignoring Africa as a development continent on subsidies, to see that this already started? South Africa seem to hold a lot of promise for the future for sure. And I would guess there are others around the corner.

2 replies
  1. Wille
    Wille says:

    I think once African nations get to grips with corruption, bad government and protection of property rights, the continent will surprise most westerners. I think a lot of westerners have a caricatured image of what Africa is, thinking everything is shantytowns and primitive people living in huts, whereas this is definitely not the case.

    I know a couple of Nigerian people, and for the most part they are hard working, thrifty and inventive people always on the lookout for ways of saving money and doing things better. Furthermore, because credit has never been a big part of the continents economy and welfare states never been built out, people don’t expect anything for free and realize they have to work hard.

    The biggest issue in Africa is endemic corruption, bad protection of property rights and bad government in general (funnily enough, most Africans I have met don’t want to resolve bad government by putting “their team” in power, they want less government, go figure..).

    Reply
  2. Nicolai Wadstrom
    Nicolai Wadstrom says:

    Yes, corruption is the problem, there are some interesting studies that shows a number of key factors, in the development of wealth in development countries, some of which are:

    – Socioeconomic freedom (a summary of things below actually).
    – Working judicial system, even if corruption exists, you will actually be prosecuted and sentenced.
    – Ownership being fundamental in the legislation.

    Most important is the ability to own things, own land, a company so forth.

    In some of the corrupt African countries the corrupt system is so well established that it is the only economy that works. The only way to improve your life is to be part of the corrupt economy. That is why it is so hard to replace once it is so widespread.

    People on the left often thinks that wealth in itself creates corruption, but the matter of fact the biggest driver for corruption is when people have no other means to improve their lives.

    Reply

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