Cities That Could Be The Next Silicon Valley
The tech boom across the world has blossomed into an undeniable force, giving people a glimpse of what the future holds: a technologically-geared world. 38% of the United States’ workforce comes in the professional and technical occupations, more than any other occupation. Every year, cities create hubs and give tax breaks to tech companies, trying to compete with the “birthplace of innovation,” Silicon Valley. Cities want a piece of the tech pie, and they will invest huge sums to attract tech companies, firms, and venture capitalists to their cities.
Software and hardware development are considered “advanced industries.” And while these 50 industries make up only 9% of the statewide workforce, they produce 17% of our gross domestic product, and they have created 65% of our new jobs. If a city wants to compete in the global marketplace, and remain afloat, it is imperative for them to adapt to the changing society of IT services, software and hardware development, the cloud, and online endeavors. This means giving techies an incentive to create their startups in your city. With startups comes funding, with funding comes jobs, and with jobs comes money for the company and the city they live in.
While Silicon Valley might be the mecca of the tech boom, there are many cities that are giving the bustling region a run for its money. Here are 10 companies that are on the cusp of becoming the next Silicon Valley.
10. Miami, FL
Like every state in the US, Florida was hit very hard by last decade’s Great Recession. Miami was able to make a rapid recovery, however, thanks to it being one of the country’s key “hedge cities”: cities that attract foreign investors who are seeking a US base of operations. Miami’s population rose 4.8 percent from 2010 to 2013, employment increased 2.9% in 2014, and real estate prices have remained low at $225,000.
These numbers have led to a burgeoning tech scene, where companies are locating in Miami to provide a US foothold to Latin American tech firms. For example, .CO Internet operates the top-level domain for Columbia, and venture capitalist-backed companies such as CareCloud (a healthcare IT provider), and KidoZen (a mobile app developer) have found great success.
Miami startups brought in $49.4 million in venture capitalist funding in 2014, and investment firms have acquired 19 tech startups since 2012, giving the city a great potential for tech and job growth.
9. Detroit, MI
The Motor City has always been known as a hub for manufacturing and the auto industry, while technological innovations have belonged in Silicon Valley. On paper, the areas couldn’t appear more different, but they’re actually quite similar. Manufacturing has gone high-tech in Detroit, while the Silicon Valley region has seen a rise in manufacturing.
A recent Brookings report listed a group of 50 advanced industries, ranging from software development to automobile manufacturing. These industries, with just a 9% workforce, produce 17% of our GDP and have created 65% of new jobs. While the automotive industry accounts for one-third of all advanced industry employment, 32,000 professionals in Detroit are employed in the computer systems design sector, with many feeding into the larger automotive supply chain.
On the production side, software companies are taking over large areas of the economy, which is helping to grow a dynamic between the automotive and tech industries in Detroit. General Motors, for instance, one of the largest employers in Detroit, has been increasingly moving into the software space, just as Google has been rapidly moving into manufacturing.
8. Dallas, TX
The real estate firm JLL recently release its national rankings of high-tech hubs, and Dallas placed #10 on the list. Finance company SmartAsset named Dallas the country’s fourth best tech city to work in, taking into account low median real estate prices ($197K), and one of the country’s highest job growth rates at 4.1%. Overall, the Urban Land Institute (ULI) named Dallas the fifth top market for overall real estate prospects, and ninth for investment opportunities.
With investor demand remaining high in 2015, tech companies and startups are flocking to the city. Dallas is home to electronics giants Texas Instruments, and sports and tech mogul Mark Cuban, and the city has a fast-growing swath of venture capitalist-funded companies, from IT services provider CPSG Partners, to real estate CRM developer Think Tech Labs, two of the city’s 14 entries on the Inc. 5000.
7. Portland, OR
Between 2010 and 2013, the pool of technology talent in Portland grew 28%, outpacing L.A., Austin, and even tech-mecca Silicon Valley. According to real estate firm JLL’s national rankings of high-tech hubs, Portland jumped from #16 to #8 in 2014. The industrial corridor in northwest Oregon has been nicknamed Silicon Forest for all its cluster of high-tech companies that have sprouted up.
Portland Incubator Experiment, Portland Seed Fund, and Upstart Labs, have all been backed by locals and venture capitalists. The result? Huge projects like Urban Airship (a mobile notification app), and Cloudability (a provider of financial and management tools for cloud resources). Many startups in Portland are focused on backend internet services and cloud technology.
To confirm the tech growth in the relatively small market of Portland, Google has confirmed that it is moving a large office to downtown Portland, and New York-based company WeWork is also coming to Portland. Other big-name companies that reside in Portland are computer chip giants Intel, electronic display companies Planar and InFocus, and printer companies Xerox, Epson, and Hewlett-Packard, as well as indie digital music aggregator and retailer, CD Baby.
6. Chicago, IL
Chicago is one of the country’s major real estate markets, and it ranks second in growth of tech jobs among the country’s most populous cities at 19.3%, behind Silicon Valley, but ahead of Seattle. The city’s population finally increased last year after years of decline, and one attraction was the huge number of high-paying tech jobs, with a median salary of 67% higher than the rest of Chicago’s workforce.
Another attraction was the city’s low median real estate price, at $220,000. There are a number of huge business-to-consumer companies in and around the Chicago area, including CareerBuilder, Orbitz, Groupon, RedBox, and Motorola, to name a few. There are also 29 venture capitalist-backed companies in the Inc. 5000, such as information sharing developer JumpForward, and cloud solutions developer MAX Digital.
Chicago is ranked #9 on the top 10 high-tech cities according to JLL’s office outlook. With the low real estate prices and continued growth of high paying tech jobs, Chicago is sure to be a heavy contender for tech growth in years to come.
5. Westside, Los Angeles, CA
Although Los Angeles is really a county with 88 smushed-together districts, the areas of Westside (Santa Monica, Venice, and surrounding neighborhoods) are having a prolific tech boom. So prolific, that the area known as Westside has been dubbed the nickname Silicon Beach, for its surfer, bohemian lifestyle mixed with techie ingenuity.
Companies headquartered within Westside zip codes received $741 million of funding out of approximately $1.1 billion invested in greater LA in 2013. TrueCar, The Honest Company, and DogVacay all scored more than $15 million in 2013, and local startup monolith SnapChat raised $110 million between B and C Series funding rounds.
The close proximity between these companies on the Westside has helped sprout business partners, network solutions, local startup events, and companies within co-working spaces, which has helped the idea of a communal technology rise.
Google and Yahoo! both have offices in Santa Monica. Recently, Oculus CEO Brendan Iribe sold his company to Facebook for $2 billion. Disney bought LA-based Maker Studios for $500 million, Apple bought Beats for $3.2 billion, and mobile apps such as Whisper, Tinder, and SnapChat are thriving, and there are 889 startups in the region, proving that LA tech entrepreneurs are definitely on the up and up.
4. London, England, UK
TechCrunch brought its Silicon Valley conference, Disrupt, to London in 2014, and the London Technology Week is beginning to rival London’s Fashion Week. There is huge potential in the UK capital’s tech boom, with London acting as a bridge to US tech companies entering Europe, and for European companies to scale their businesses before expanding into the US.
Many US investors prefer to invest in UK businesses because of its proximity to Asian and US markets. In the second quarter of 2014, there were 92 European tech “exits,” including 10 IPOs, an increase of 74% from the 54 deals tracked in Q1 2014. In 2014, two London companies sold for £1 billion: AI startup DeepMind, bought by Google, and games company Natural Motion, bought by Zynga.
In 2013, 22 tech companies raised $795 million in equity funding on the London Stock Exchange’s main market. The first to market, Just Eat, saw its shares soar on the first day of trading, pushing its valuation above £1.5 billion, joining Zoopla and Markit as the tech industry’s biggest IPOs in Europe for Q2 2014.
The most highly valued British company coming from the tech boom has been King Digital Entertainment, makers of the smash-hit game Candy Crush Saga. Bloomberg has reported that in the South East of England, there were 744,000 techies, versus 692,000 in California, and London tech-job growth (11%) has outpaced both California and New York, showing that London has no plans to slow down.
3. New York City, NY
When WeWork Companies scored a $355 million funding at the end of 2014, pushing its evaluation past $5 billion, New York City proved that it was a huge player in the burgeoning tech industry. WeWork, a provider of shared office space, believes it can be as transformational to its industry as upstarts like Airbnb and Uber Technologies.
Tech players and investors have been drawn into New York’s hallmark industries: finance, fashion, media, marketing, and commerce. New York also has the added benefit of city and state policies focused on favoring and attracting tech companies with tax breaks and incentives. Mayor Bill de Blasio launched Digital.NYC last year, a hub of tech services intended to make the digital economy accessible to all New Yorkers.
Buzzfeed was granted a $4 million tax credit for its new 194,000 sq.ft. headquarters, as an encouragement for them to stay in the city. Etsy, meanwhile, was given a $5 million tax break for their own 200,000 sq.ft. headquarters in Brooklyn. The tech region of NYC, known as Silicon Alley, has grown 40% in employment since 2008, faster than Silicon Valley, and venture capital has jumped 138% to $1.7 billion in the New York Metro area in Q3 2014.
With digital media growth, incentivized tax breaks, and growing venture capital funding, New York City is on the verge of having the next huge tech boom in the US.
2. Austin, TX
Austin is one of the most alluring tech hubs in the country, for several reasons. First, it has a young, educated population, a large venture capitalist presence, and a world-renowned music and restaurant scene. It was named the “best performing city in the US” in 2015 by the Milken Institute, and ranks #2 on Forbes for future job growth because of its burgeoning tech scene, and because 9,000 new tech jobs will be created by 2017.
Austin is home to powerhouses Dell, National Instruments, Flextronics, and 17 companies on the Inc. 5000, including one of the country’s most promising startups, mobile app developer Phunware. The real estate market is very positive, with ULI and PricewaterhouseCoopers ranking Austin second on their list of “US Markets to Watch: Overall Real Estate Prospects.” The median real estate purchase price is $216,000.
Affordability of real estate, a big venture capitalist presence, and a positive growth in market employment are three huge reasons attracting investors and techies to Austin, making the city a tech-powerhouse in the making.
1. Seattle, WA
Seattle is already ranked #2 in JLL’s top 10 high-tech cities of 2014, with titans such as Amazon and Microsoft continuing to attract techies to Seattle. They are already somewhat in the midst of their boom, and are right on the heels of Silicon Valley as the leading tech hub of the US. Venture capitalist investments in IT companies nearly doubled in 2014 from 2013, as $804 million was invested in 139 deals.
One of those deals was a $71 million Series G funding for Redfin, and other VC-funded companies have been successful, such as the SEO tracking software developer Moz. Seattle is the fastest growing tech city of the country’s 50 most populous cities – 6.9% growth between 2010 and 2013. Median income is higher than in Austin and Dallas, which makes the real estate median prices also higher ($440K), a number that’s been climbing and attracting investors.
Seattle is the cloud computing capital of the world, according to the New York Times, and many startups are focused on business cloud solutions. Amazon is the #1 player in the cloud market, with Amazon Web Services, and Microsoft is #2, with Windows Azure. Cloud computing is the next platform in how computing is going to be done – building applications and services on top of platforms such as Chef, 2nd Watch, and Tier 3, which are all Seattle-based. With a lock on the cloud computing market, comes a lock for the future of internet technology.
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