I was in Perth earlier this week checking out Australia’s boom town economy looking out for signs of where the Federal Government’s $43 Billion NBN investment could deliver a potential ROI. (See Tasmania: The new Silicon Valley?)
From memory the High Tech Park has been a key part of Western Australia’s innovation strategy since the 1970′s when the WA Institute of Technology (the original name for Curtin University) was busy conducting research into Solar Energy. So it was interesting to see how the park had evolved from its early days as an R&D test facility for Solar Panels.
I began my search by surfing Datalysed’s new Start-Up Map of the world’s most innovative cities and discovered that Perth was the home to 5 tech start ups.
Admittedly this figure was low but it did make me think about a new coefficient for measuring the potential for innovation in any economy.
Perth has a population of about 1 Million people. 5 Start ups provides us with an Innovation Coefficient of 5 Start-ups per Million inhabitants. I wondered how that figure measured up against other cities around the world. Just how innovative was Perth compared to Singapore, Sydney or San Francisco?
Here is what I discovered. Perth, like all of Asia (including Australia, Singapore, India, Korea, China and Japan), averages less than 30 start-ups per Million.
In comparison the major European innovation centers (e.g London Stockholm and Tel Aviv) average between 50 to 125 start-ups per Million. As do New York, Chicago and LA in the USA.
Mean while way out in front is Silicon Valley with 570 start-ups per Million.
Another way of looking at this is to visualise the Long Tail of Technology Innovation with Silicon Valley at the Top, followed by London, New York, Stockholm, Tel Aviv and LA with Asia scattered out prospecting out on the long tail.
This is why it it comes as no suprise to discover that over 50% of Silicon Valley’s start-ups are founded by immigrants. Asia’s brightest and the most entrpenerial all gravitate towards the top of the tail and instinctively move to the valley. Australian’s are no different (Think Andrew Lacy of Tapulous) and even the Europeans continue to make the exodus to the valley. (See “Fighting and Thriving in the Valley” – Tips for UK Businesses going West [Slide Show])
Note: If you factor in the estimated 52.4% of Silicon Valley start-ups that are founded immigrants the start-up ratio for the valley is around 275 to 1 Million or double that of its nearest competitor (London).
Even the World’s financiers, investors and VC gravitate to the valley (Think: Jeremy Liew of LSVP who coincidentally is from Perth). You only have to use the Linksviewer to map the relationships between investors, industry sectors and funding across Silicon Valley to see how complex and interdependent the valley’s ecosystem has become.
These metrics suggest something fairly obvious – i.e. Innovation is a numbers game and the world’s innovation centres are successful simply because more start-up companies are actively involved in invest their resources and capital in commercializing new ideas.
What I find more interesting however – and as I have said many times before – is how little impact all this energy, investment and hype in the Silicon Valley innovation engine has had on the US Economy (Think: How important is the Internet to the US economy? and Google Economics).
Table displaying a sample of the Long Tail of the Innovation Coefficient
|San Francisco||3992||7 Million||570 per Million|
|London||1596||13 Million||123 per Million|
|NYC||1764||19 Million||93 per Million|
|Stockholm||152||2 Million||76 per Million|
|Tel Aviv||209||3 Million||70 per Million|
|Los Angeles||1148||18 Million||48 per Million|
|Bangalore||161||6 Million||27 per Million|
|Sydney||121||5 Million||24 per Million|
|Chicago||524||9 Million||22 per Million|
|Singapore||88||5 Million||18 per Milion|
|Chenai||80||5 Million||16 per Million|
|Perth||15||1 Million||15 per Million|
|New Delhi||170||13 Million||13 per Million|
|Tokyo||139||13 Million||10 per Million|
|Mumbai||144||14 Million||10 per Million|
|Shenzhen/Hong Kong||77||18 Million||4 per Million|
|Soeul||37||24 Million||2 per Million|