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.