In August 2011, leading venture capitalist Marc Andreessen wrote an article in the Wall Street Journal titled ‘Why software is eating the world’. He wrote that “all of the technology required to transform industries through software finally works and can be widely delivered at global scale”.
A decade later, and recently mobilised by the effects of Covid-19, much of the world has taken bold leaps into more e-commerce, remote working, new hybrid working arrangements and accelerating Industry 4.0 innovations. With so much attention on tech these days, are economic developers and investment promoters placing the right amount of emphasis on the IT and tech sectors.
My answer is yes — it is an essential sector, but our perspective must continue to evolve.
During the 18-year period between 2003 and 2020, fDi Markets data reveals that the software and IT services sector generated the largest number of inbound investment projects and the highest number of total jobs in both the US and Canada. They also generated the greatest total capital investment from inbound foreign direct investment (FDI) in the US.
New start-up activity is accelerating even more than FDI, with diverse geographic and industry distribution. Newmark’s latest Venture Capital Update shows that 18 different metros in the US and Canada saw more than $1bn in venture capital funding during the first half of 2021. Funds have been invested at a record pace and directed into more than 60 different IT verticals touching most economic sectors.
Startup Genome and The Global Innovation Index demonstrate where and how tech clusters are growing and evolving. These are valuable data points. Beyond the leading tech markets in the US and Canada, the likes of Mexico, Chile, Costa Rica, Brazil and Colombia are making efforts to attract new tech investors, and spur new local start-ups. Great potential is illustrated through firms like Brazilian fintech company Nubank, which is now the largest neobank in the world, and Argentinian e-commerce company Mercado Libre, which is the dominant online retailer on the southern continent.
Diversity and inclusion are touchstones that must inform our tech perspectives. In addition to commonly referenced location ‘cluster’ data are other vital considerations, such as the emerging tech ‘communities’ comprising under-represented groups including women, LGBT+ and people of colour. An abundance of diverse talent is burgeoning across the Americas in both clusters and communities: it remains the economic developer’s role to promote them, and the site selector’s role to find them.
Gregg Wassmansdorf is a senior managing director, consulting, at Newmark, a global commercial real estate services firm, and also a member of the Site Selectors Guild.
This article first appeared in the August/September print edition of fDi Intelligence. View a digital edition of the magazine here.