What do cities such as Guadalajara, Lagos, Denver, Tokyo and London have in common? 

They are all tech cities, part of a long list of technology hotspots that are home to – and seek to attract – innovative companies of any size to their streets. 

Silicon Valley, with its high concentration of hardware and software companies, is by far the most famous representation of a tech city – but the concept has been exported and replicated across the globe.

In London, for example, technology companies have historically settled in the east of the city, around Shoreditch. The mass arrival of start-ups into the area has, over time, paved the way for a wider ecosystem of co-working spaces, accelerators, incubators, venture capital investors, and entrepreneurial density.

But tech cities are also springing up further afield, sometimes in surprising locations. Silicon Mountain is the name coined to represent the ecosystem in the mountain area of Cameroon, with an epicentre in Buea, which is home to start-ups and a growing community of developers, designers and universities. The model is also spreading across the country. Just last year, the Cameroon government announced plans to back a new tech hub to be called ‘Cameroon Silicon River’ in its capital city Yaoundé.

On the other side of the world, Guadalajara – Mexico’s second largest city – has reinvented itself as a technology hub, transforming into a research and development hotspot and giving outsiders an insight into its potential future. 

Unique selling points

Each tech city, or cluster, has its own story and unique selling point, but each one strives to birth and support the next wave of successful technology companies.

Tech cities are hugely beneficial to local, national, and international economies. They create employment, attract investment, talent, and can help re-energise local pockets in cities and more remote areas. 

Successful tech clusters can help cement cities’ prominence on a global scale, making them more attractive to incoming businesses, investors, tourists and workers. Lesser known hot spots, on the other hand, can literally be put on the map thanks to a specific company’s success – and the world hearing about it. 

The positive effects are obvious but they also bring about certain challenges. Driven by the surplus of demand, office space can become unaffordable for the less funded, or less successful, start-ups. There is also the danger of insularity and the cluster itself becoming less receptive to external collaboration. 

But one thing is for sure: tech cities seldom emerge on their own, rather they are often the byproduct of resolute urban planning and government intervention. 

Policy support 

Traditionally, they have been intrinsically linked to clustering – the building of technology parks or specific innovation districts where companies, R&D labs, universities, and the private sector can co-exist in close proximity and harmony. This kind of approach requires significant investment and support from local authorities. 

Governmental policy plays a pivotal part in the ideation and creation of tech cities. It is almost always impossible to imagine such a cluster existing without the direct intervention from governments hoping to get ahead in the global tech race. 

In November 2010, former British prime minister David Cameron set out the government’s ambition for London’s East End to become a world-leading tech city to rival Silicon Valley. Speaking to high tech business leaders and entrepreneurs in the area, Mr Cameron said the Olympic Park press and broadcast centres in London would exist beyond the 2012 Olympic Games and be used as an accelerator space, offering flexible office space, facilities and expertise to the city’s tech companies. 

“Right now, Silicon Valley is the leading place in the world for high-tech growth and innovation. But there’s no reason why it has to be so predominant,” Mr Cameron said at the time. 

“Our ambition is to bring together the creativity and energy of Shoreditch and the incredible possibilities of the Olympic Park to help make east London one of the world’s great technology centres. I want to show you how we can get there,” he added. 

As part of his strategy to boost the country’s tech capabilities, Mr Cameron also launched Tech Nation (formerly Tech City) – a government quango that seeks to support, promote and consolidate technology clusters all over the UK.

Over in the Netherlands, the Dutch government has worked hard to negotiate favourable trade deals with nations across the globe, to make cities such as Amsterdam, Rotterdam or Eindhoven attractive to operate in. 

StartupAmsterdam, for example, was born out of a collaboration between the City of Amsterdam and the private sector, which came together to devise a start-up and scale-up-focused initiative to help these very companies grow in a suitable environment. Today, several international tech companies including Netflix, Uber and Tesla have chosen Amsterdam as their European HQ. 

While the Dutch and UK governments have made great strides they arguably pale in comparison to French president Emmanuel Macron’s pledges to make France, and in particular, Paris, Europe’s start-up nation. The city is already home to Station F, a multi-million pound start-up incubator that is largely touted as a symbol of France’s tech renaissance. 

Since being elected in 2017, Mr Macron has constantly tried to woo tech entrepreneurs and executives with a string of tempting initiatives, including tax breaks, subsidies, and credits for research. In spring 2018, he vowed to pour €1.5bn into AI research through to 2022. 

Berlin, Germany’s hip capital city, is a veteran in European tech city rankings and has also benefited from the government’s Digital Hub Initiative which seeks to strengthen connectivity and cooperation between startups in a digital age.

Government intervention in the emergence of tech cities or clusters should not take anyone by surprise. Tech and innovation undoubtedly go hand in hand with economic prosperity and it is in every government’s interest to promote this. 

On the other hand, tech cities are an integral part of local entrepreneurial ecosystems and without them, it would not be farfetched to question the long-term survival of risky, yet valuable, start-up companies. 

Urban dwellings and capital cities unsurprisingly make the most appropriate settings for tech cities or clusters, but it is possible that this phenomenon will eventually spread across entire countries, reaching smaller cities and towns as both startups and governments look for opportunities further afield.

Yessi Bello Perez is a senior writer at TNW’s Growth Quarters.

Published in the June/July issue of fDi Magazine.

The FT and TNW’s Ecosystems Couch Conference on start-ups and the digital economy takes place on June 25