Fast-growing companies and start-ups were once the preserve of Silicon Valley and Seattle. No longer.
Today, the United States boasts several innovation hotspots, including Austin, Miami, New York City, and Washington, DC. In recent years, similar hubs have also emerged in Europe, including in Amsterdam, Berlin, Helsinki, London, Paris, and Stockholm. But this phenomenon is no longer limited to the advanced economies of the West. In fact, start-up culture has gone global.
At the top of the list of innovators is China, with India close behind. But unicorns (private companies with a valuation above $1 billion) can be found in a wide range of countries, including emerging market economies and newly advanced economies, such as Brazil, Indonesia, Israel, Japan, Nigeria, Singapore, and South Korea.
The largest share of high-growth companies can be found in financial technology, or fintech, with other key sectors, including e-commerce, internet software and services, healthcare, education technology, artificial intelligence, cybersecurity, and supply chain logistics and delivery, not far behind. One common thread is obvious: the digital economy.
To be sure, that is not the whole story. Significant activity, growth and value creation can also be found in sectors relating to the green energy transition and the circular economy. For example, the Paris-based Back Market－which has a valuation of $5.7 billion－facilitates the refurbishing and recycling of electronics, thereby helping to tackle the world's growing e-waste problem. Biomedical science－with its applications in medicine, health, agriculture and synthetic biology (devising new biological parts, devices and systems, or redesigning those found in nature)－is another notable area of innovation.
The digital domain has provided particularly fertile ground for innovation around the world. This largely reflects its growing accessibility, enabled first and foremost by the rapid expansion of the mobile internet. With more than 6.6 billion smartphones in use today, the market for digital services delivered on the internet is massive, comprising nearly 84 percent of the world's population.
Equally important, a combination of public and private investment has increased the speed and quality of mobile-internet connections and reduced the costs of both internet-enabled devices and streaming data. As I wrote last year, India is a prime example, of how availability and affordability support the emergence of new economic ecosystems within which innovation, entrepreneurial activity, and expanded consumer services can thrive.
Low barriers to market entry also help: capital requirements are small, and a large and growing supply of creative talent is available to staff startups. Moreover, for many digital-service businesses, costs tend to be concentrated in software and development, with accessible cloud-computing services eliminating the need to create and manage a vast information technology infrastructure. So, the marginal costs of adding potential customers are low. Scaling up may not be a trivial challenge, but nor is it very expensive.
And there is plenty of space to scale. For internet-based businesses, the addressable total market is often large. In many areas, such as software, it spans the globe. Chinese estimates indicate that the average distance between seller and buyer on e-commerce platforms is roughly 1,000 kilometers, compared with 5 km for a traditional retail or service business.
Read More at https://global.chinadaily.com.cn/a/202204/06/WS624ccc2aa310fd2b29e55260.html
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