It's only showing American startup activity as a proportion of global startup activity. I might have missed it in a quick read, but nowhere did I see total numbers by nation, or by startup city.
Let's shift perspective slightly. Is American investment in startups decreasing? Not compared to China or whatever, but compared to itself? Or is it staying the same, or growing? Looking at Pitchbook data, the biggest year for US venture capital was 2015 ($82.2B), with 2017 close behind at $81.9B, and 2018 looking to be about on par. So stable, basically.
What this tells us is not that the US startup activity is in any way unhealthy, but rather that the rest of the world is figuring out how to do it, too. And what's wrong with that? How is that a negative? We don't get that from the article, because it's stuck in this misleading mode of lost competitiveness from is comparison model.
This is why everyone should read Factfulness. No other book I've ever read has helped tune my bullshit detector so well.
Just look at the expansion in China since 2005, as one would expect, it represents the extreme majority of all VC expansion globally. The story should have actually been framing the premise as: China's dramatic economic expansion since the late 1990s, in which it added ~$80 trillion in cumulative economic activity over 20 years, has resulted in a lot of venture capital activity. They went from 1% of global VC activity, to 25%, in roughly 20 years (12x that of France now) - that's the primary story.
Or put another way, since ~2006, the US has bled only three to four points of its global share of all VC to 190 some countries, and roughly 24 or 25 points to just China and India.
That wouldn't make for nearly as attention-getting of a headline though.
Looks like the story here isn't the U.S. falling behind, but the rest of the world catching up.
Based on the data they presented, this is true in a relative sense. Actually, based on your quote as well:
>Is American investment in startups decreasing? Not compared to China or whatever, but compared to itself? Or is it staying the same, or growing? Looking at Pitchbook data, the biggest year for US venture capital was 2015 ($82.2B), with 2017 close behind at $81.9B, and 2018 looking to be about on par. So stable, basically.
You've just shown that recent VC growth in the US is zero.
That, I would say, is 'losing an edge', when everyone else around you is growing.
Yes of course, others are playing catch up and realizing that the institution of venture capital can have big pay offs. But for the #1 contender to stop growing, does mean that they're becoming less dominant in a relative sense. And if trends continue, they will cease to be number 1.
So I think you may have jumped the gun there.
America blazed the trail. Do you think the rest of the world is simply going to sit idly on the sidelines after watching the success? No. Entrepreneurs around the world have been watching, and they've been inspired to create movements in their own cities. Governments have been watching, and they're inspired to support their entrepreneurs. The rest of the world woke up and that's a good thing for the world.
Also what's with comparing America with an aggregate of the rest of the world? That alone shows how far and away America is that we need to make bad faith comparisons like that.
Here's an example from the article:
> While it is true that venture-capital investment in the U.S. continues to rise, having reached more than $90 billion in 2017, such investment is growing even faster in other parts of the world, expanding by nearly 375 percent — more than twice the 160-percent increase here.
I think Europe will. When it comes to business, they tend to eat their young.
There have been relatively big exits in the past five years, there's more money than ever in the ecosystem and people seem to be willing to do more risky ventures than before.
I've got a friend in Berlin in the startup industry who's very bullish in their local ecosystem as well. Neither of these places is Silicon Valley nor will they ever be, but they're both doing pretty ok and you can easily start a company here and have it be pretty successful, even globally.
The lost decade in Japan is often cited as such an example, but increasingly we are seeing things like wage stagnation among <30 in the US and Europe that may also be the result of this (of course plenty of mainstream explanations abound as well).
In the US and other English speaking countries, there are often revenue, employee count and public vs private carve outs for various regulations.
By not excluding small business and startups from costly regulations, they often stunt potential new businesses from developing in the EU.
Really? Trickle down proponents have co-opted the rising tide aphorism? Ugh.
VC funding continues to rise as a whole, and the declining share of US VC invested vs. rest of the world is just a trend of a broader portfolio growth from international startups. That would be just lazy statistics - e.g. if I go from 1 US city to 3 US cities + 3 UK cities, I have growth in VC funding as a whole, as well in the US, but the US goes from 100% to 50%.
VC funding is growing faster in other parts of the world? Well when you're denominator is 0, or really low, of course growth "rate" is going to be high by definition. It's not really apples-to-apples. Further, I don't see whether or not the US has hit diminishing returns, yet, from this article, or if US growth is still healthy.
The data on China, though, is intriguing - maybe someone else here more informed than I am could speak to that.
But what's really surprising is the speed. The reason? The best markets and the best people are not coming here anymore.
Sometimes when I go to Asian countries, I almost feel like they're from the future. Payments, electric scooters, charging stations, rental bikes, AI, digital ecosystems, car sharing, hotels, biofuels, cloud based systems etc. are all waay more important, waay more mature, waay more people designing, waay more usage, waay more convenient than the US.
The more that smart entrepreneurs decide that US is not the future, the more tides are a turning. The next Sergey Brin will probably be in Asia.
China has made a lot of progress in the last few years, they are definitely making faster progress than the USA. But they also started way behind and are still, to much extent, behind in many areas.
I agree. But that's the difference between US until the last decade and today. Cloud providers here are mature because Amazon pioneered it in the last decade.
But AI on cloud is all Alibaba. We don't hear about it here in US media but US companies are playing catchup.
Same for charging stations. They don't need a charging station in whole foods because most people don't even drive as much. They order groceries on apps. Even if they do, charging stations are present in gas stations there. Their low cost cheap cars have features that rival Tesla (albeit at a lower quality and lower price)
We here in the US just don't get this shown to us in media.
Huh? I mean, Alibaba is doing alright, but not particularly better than the other cloud providers.
> Same for charging stations. They don't need a charging station in whole foods because most people don't even drive as much. They order groceries on apps. Even if they do, charging stations are present in gas stations there. Their low cost cheap cars have features that rival Tesla (albeit at a lower quality and lower price)
Teslas are actually fairly common in Beijing now because of the plate lottery.
The Chinese have plenty of parking lots and plenty of driving. The biggest challenge to personal electric cars in China, something I don't think anyone has figured out yet, is that many people don't actually have formal overnight parking spaces for their cars. Sure, it works for taxis, you'll see taxis use those charging stations, but no one else.
Look, I've totally been there. We used to have bottled water delivered to our apartment (heck, even before the apps came out, we'd just call the store downstairs). I don't do that anymore now that I'm back in the USA, I just drink from the tap. And no, I never had a car in China either, but plenty of other people did and the grocery stores weren't empty (especially when compared to a western one)!
> We here in the US just don't get this shown to us in media.
But other major asian cities like Shanghai, Shenzhen, Taipei, HongKong, Kuala Lumpur all have 70% or more of those.
You'll find some of those even in Vietnam, Thailand and India.
China aside, the U.S is still by far the strongest place for startups. Venture capital was invented in the U.S, but just because it is not the only country with such industry today doesn't mean it has lost its edge.
I see this as a very good thing. What we should do is, find a way to collaborate with each other and to help each other do better.
Article states that investment outside the United States is increasing at a faster rate. That makes sense since its a combination of trying to catch up from a lower base and a faster growth rate in gdp.
The us share of world gdp is 23%, if venture capital was proportionally distributed across the world the us would only get 23% of total venture capital spending.
Now if you want to list which places are the best to BUILD a startup, that's a different thing all together.
I came across this awesome site the other day and its made me think about potentially opening up shop somewhere other than NYC.
I have lived in China for 15 years, am located in Beijing and am a founder of a startup.
Look at Appendix 7
Top 50 Cities for venture capital deals
Top 50 Cities for Pre-Venture Capital (Angel + Seed Stage) Deals
Especially the second one clearly shows it.
I lived in Sweden for almost one year as an expat (I'm a software engineer). Now, I live in the Netherlands for more than two years.
I can say for sure that Europe is nowhere near Silicon Valley in terms of compensation for ambitious software engineers. Sweden went total nuts with taxes, anything above $6500 per month would be taxed at 55-60% tax rate. It's effectively cap to enforce equality of outcome.
60% tax doesn't mean that ultra-high salaries will be taxed at this rate. It means that ultra-high salaries will not exist in job market in the first place.
The best Swedish startup threatens to leave Sweden because of regulatory and tax burden .
The Netherlands recognized importance of highly-skilled expats by introducing tax discounts called "30% ruling". I do respect their efforts to attract talent. That's why I moved from Sweden to the Netherlands in 2016.
However, as non-EU citizen you can work only for publicly registered sponsors . Usually, it's boring well-established companies. So I missed some cool opportunities due to this limitation.
As I learned dutch local job market, I found that almost nobody will pay you 10'000 EUR per month.
Aside from tax and regulatory burden in Europe, there are cultural things like Law of Jante . I can't imagine how society with such mentality can attract highly ambitious people.
Also, talking about money in Europe is kinda taboo. And dutch automatically repeat "money is not everything". It wouldb't annoy me if someone committed to work for open source software. Or being great painter. But when recruiter respond me "money is not everything" when I'm asking "too much", it annoys me a lot.
With that in mind, I decided to abandon idea of living in Europe, getting citizenship, learning dutch language etc. It was tough decision for me but it's time to move on. It's not kind of a society where I want to spend rest of my life. Sorry dutch and swedes, I don't fit here.
So I decided to move to Hong Kong. I've just got very lucrative job offer in Hong Kong (in HFT). The size of compensation is far beyond of what Europe can offer me. Now, I'm almost on par with US (I couldn't get into US because I don't have any degree). Now, I'm just waiting for my HK visa getting approved.
You might troll me saying that, I'm whining. OK, I have answer to that. Just look at my net salary increases:
Russia -> Sweden (2015) +28%
Sweden -> Sweden (2015) +15%
Sweden -> the Netherlands (2016) +63%
the Netherlands -> Hong Kong (2018) +83% (and possible bonus up to 300% of yearly salaries!)
I will work like crazy fanatic and in next six years I will be well over $1M of liquid net worth.
So Europe lost me. Europe is perfect place for people who just want to work from 9 to 5 and put family as their top priority. It's not suited for risk takers.
For the kind of people like you who want to work long hours and reach the stars, I can agree Europe is probably not the place.
But there are many talented people with families who want a work-life balance. For them places like Hong Kong is not going to cut it. My wife has family there that have visited us, and IMHO they have zero work life balance there. It may be good for making money, but not for having a family.
They speak of kids committing suicide because they are so insanely stressed out about their life.
Still I found your perspective very interesting to read. I wish I get to hear sometime in the future how your life in Hong Kong turns out. I have always been very fascinated by the city and hoped to visit it some time in the future.
> It's effectively cap to enforce equality of outcome.
It isn't so much to enforce equality of outcome as to enforce equality of income. What you are experiencing is to a large extent being on the wrong side of inequality. Just that isn't income inequality, but rather things like wealth, real estate, inheritance and education. Inequalities which people in Sweden largely aren't aware of, or accustomed to. If you had arrived 10 years earlier you would have, at least to a larger extent, been set for life. Other than that I can certainly see your perspective because it is almost impossible for a "salary man" to catch up in Sweden.
I don't mind if group of people voluntarily decide to live in communism and share with each other everything they earn. Like hippies who lived in сommunes.
If high taxes (>33%) are not voluntary then it just means that social democrats are not confident that most successful people in the country will share their ideals.
If European social democracy is so cool, then it should work on purely voluntary basis.
Let's re-frame conversation from arguing to selling. I mean there are lots of top technical talents in India and China. How are you going to convince them to go to Sweden instead of US? It should be pretty damn good reason to decline $300k offer from Silicon Valley and go to Stockholm instead!
P.S. I think selling/pitching society ideals is much more positive and productive than arguing.
It is one of the few ways to have an equal society. With to large income inequality the welfare state becomes unsustainable. The poor can't pay for services performed by the rich and ultimately you get a society like the US or worse. Everywhere doesn't have to be the same, no one is forced to live in Sweden. Swedes have very good visa conditions and generally do very well abroad.
> How are you going to convince them to go to Sweden instead of US?
Sweden is a small place. To the extent it needs top talent there is plenty available. People who want to make $300k shouldn't and largely won't move to Sweden anyways. This isn't a competition Sweden can win. Sweden is largely successful because it competes, or have competed, on its own terms. Not by trying to be a worse copy of something else.
Swedish society can, or could, attract people that wants things that are in line with what it is good at and not readily available in other places i.e. its unique selling proposition. Things like education, family and quality of life. There is a foundation to provide those things that has been lost in the last 10 years or so. A lot of people move for opportunities, making money is only one opportunity.
I think it is telling that you are also leaving the Netherlands as a significantly lower tax rate couldn't keep you there either. Note that I am not saying the Sweden is attractive at this point, just that I find it unlikely that taxes are the main problem.
Personally I don't like Hong Kong, but it will certainly be different. Don't miss out on going to Shenzhen.
My guess is that Sweden might be popular choice among people who want to pursue PhD or something like that.
I fell in love with Hong Kong first time I visited it as a tourist in 2013.
It seems most Russian immigrants either come from the 80s phd era or have wealthy patterns and go to a foreign school.
So, you learned on your own?
Basically, in 1990s many of us, used what was popular in 1980s in UK.
My father wasn't technical person but I fell in love with ZX Spectrum from day one! So I just learned it all myself.
Schools were terrible, I mostly skip all classes. But ZX Spectrum is very simple machine, so it's possible for 10 year old kid to learn it without external guidance.
Funny fact, I started working in Internet club in Uzbekistan in 2003 for 10 USD per month. In 2004, I discovered wonderland called Knoppix and FreeBSD. Then I learned programming in Bash. After that I learned programming in C because Kernighan and Ritchie books was so thin and at the same time all Unix/Linux was written in C.
More details on how I learned programming:
Then learned everything else on my own with whatever sources I could find (resources from the computer club, magazines, books, etc). And took part in programming contents. These were of all levels, there were town level contents, then the winners would move to county level contents then the winners going to national level. I made it to national level for years after having that ZX Spectrum clone at home. By the time I had some kind of computer class in my education path (high school then later on college) I already knew all that they were going to each. At least it made those classes easy :)
By the way, your username reminds me of great game on ZX Spectrum called Dizzy:
I sometimes have urge of nostalgia and play such games on ZX Spectrum emulator :)
You can read my post dated 2014:
In short, I was very upset by political situation in Russia and I felt that I must settle in any relatively free country even at great opportunity cost.
But now, I became more confident of my skills and as a result I became more risk tolerant and more ambitious. I decided that in order to be truly happy I should take more risks and completely abandon the idea of stable and predictable life in Europe.
When I leave the Netherlands, all my legal time till citizenship will reset. And I can't truly settle in Hong Kong because housing prices are insanely high and I can't get citizenship there but my bet is that I will become so successful that I will be able to settle anywhere I want as high net worth individual.
No. I was referring to "It's not suited for risk takers". I was curious about where you see risks. What is the danger, what is the valuable thing you might loose by the move. Excluding trade-offs - "legal time till citizenship will reset" is more of trade-off or cost because you know it will happen. It is uncomfortable and obstacle and challenge for sure, I don't want to deprecate the difficulties involved, but it is not what I wanted to ask about.