With costs rising, fierce competition for talent and an uncertain economy, Silicon Valley is losing its luster for entrepreneurs, digital nomads and many small enterprise startups looking to set up shop.
All eyes are on Asia, as startup ecosystems continue to sprout in every corner, proving these days, an internet connection, a rice paddy and a community of like-minded entrepreneurs can be enough to turn a small idea into big business.
Based on new research and interviews with startups from around the region, we’re counting down the top five cities in Asia for startups based on business ecosystems, cost of living, talent acquisition and quality of life.
Coming in at number one, Singapore is no surprise as its economic titles and rankings are enough to fill a trophy case or two. Called ‘The World’s Easiest Place to Do Business’ by the World Bank, its other business accolades include ‘Top Investment Destination in the World,’ ‘Best Business Environment in Asia Pacific,’ ‘Most Transparent Country in Asia,’ ‘Top 2 in Asia for Best Quality of Life’… and the list goes on and on. It was also ranked in the top 10 in The Global Startup Ecosystem Ranking, a comprehensive Compass Co. & Crunchbase report.
WIth a population of 5.4 million, the networking opportunities are endless and the startup community is already well established with investment capital and mentors at the ready. Things can happen fast for startups willing to hustle in this well educated, fast moving city.
Although the environment is ripe for business, entrepreneurs say there are still some challenges. Some of the downsides include a ‘talent crunch,’ a culture that does not value risk-taking, high rent and overhead costs and because the market is small, difficulty in scaling.
The grandfather of tech startup hubs ranks at number two. Bangalore built its first Indian Institute of Science more than 100 years ago in 1909. Today, it has the largest number of engineering colleges (within city limits) in the world. With its roots in tech education, there is no shortage of talent in India’s third most populous city, with 9.6 million people. Often referred to as, ‘The World’s Back Office,’ Bangalore came in 15th in the world, according to The Global Startup Ecosystem Ranking. The Back Office city also was noted for its fast hiring times and cost efficiency for businesses looking to hire, with the average software engineering salary below $25,000 annually. There is also quite a bit of access to capital as the UK has taken a huge interest and built large networks in Bangalore, looking to capitalize on the market.
Another advantage in India for startups, is the inspiration factor. India is facing so many problems - from clean water to education to poverty and more - it is easy to have a startup that quickly created a big impact. And for anyone who has traveled or lived there knows, if a solution can work in India, it can work anywhere in the world. It is also cheaper to do business in Bangalore rather than Delhi or Mumbai, and as many will tell you out of all the big cities, Bangalore has arguably, the best weather.
However, it almost goes without saying that India is not for the faint of heart startup. Its bustling, often chaotic startup ecosystem is like the ‘Wild, Wild East,’ if you will. With a sometimes dysfunctional infrastructure, not everyone can adapt to the way of life in Bangalore. There are also some negative connotations for expat businesses thanks to large conglomerate corporations taking advantage of the ‘cheap’ workforce here.
Location, location and location. The City of Angels is number three on the list as its startup ecosystem has seen a recent explosion and may soon make it on more global rankings. Bangkok’s central location in Asia, its transportation, access to resources and strong business infrastructure make it ideal soil to plant a startup. Here, you can play as much as you work. The quality of life here is also one of the biggest draws for young entrepreneurs looking to enjoy the nightlife and easy access to some of the best vacation destinations in the world.
With 75 percent of Thailand’s population online, there are more mobile phone subscribers than there are people in the country - 80 million. The tech savvy population likes to spend and there is also plenty of capital flowing in from other countries with heavy investment from the U.S., Singapore, Japan and China. The Thai government is also relaxing some rules and giving more tax and legal incentives for foreigners looking to start a startup in Bangkok. For example, foreigners may own 100 percent of a company started in Bangkok with new ownership allowance guidelines.
As Taskworld is based in Asia, we can tell you firsthand how much fun we have working and living in Bangkok but personal opinions aside, there are few downsides to living in Thailand. The main challenge startups face here, is the difficulty to attract and keep qualified talent. Many businesses here spend a lot of resources for recruitment.
Work in Bali? Enough said. This Indonesian island ranks high on the list for its incredible beauty, friendly locals, cheap rent and quality of life. Virgin Entrepreneur recently featured Bali in a series on the world’s best startup hubs, as it is becoming a sort of Mecca for digital nomads. With co-working spaces, TED talks and access to more seasoned entrepreneur-mentors, the chilled islands’ dot is getting bigger on the startup map. The word is out and many are choosing to form new companies in this fast-growing startup hub of 4.2 million people. The environment here is also more open, close-knit and collaborative than many other more competitive cities on the list.
Entrepreneurs working with Wifi on the beach don’t have too many bad things to say about running a business in Bali, but what they will all say is that the devil is in the regulations. Indonesia is famous for its over-regulation, which can be quite a huge hurdle for new businesses. If you don’t mind filling out heaps of forms, perhaps you can tolerate this, in exchange for living in Bali.
5. Ho Chi Minh City
Would you believe that Apple designers are ditching Silicon Valley for the former Saigon? This hub in southern Vietnam generally manages to fly under the radar but it too, is a new pet of Virgin Entrepreneur, making it on its top list of growing startup ecosystems in Asia. CNN has also named Ho Chi Minh City in the ‘Top 10 emerging Cities for Startups.’
It’s five on our list for its young, passionate talent, speed and cost of setting up shop, good climate and its unique culture. With an established startup community, Ho Chi Minh City is the place to go if you want to find a building, throw up a sign and hire some folks in a day. Many disenfranchised college grads from the U.S. are finding a more nurturing environment for fresh startup bootstrappers with skill and hustle here. The cost of living is cheap and convenient, with the motorbike culture allowing for delivery for just about everything, and access to things like Western gyms and amenities. Seventy percent of the population is under the age of 30, with many entrepreneurs calling Ho Chi Minh City the ‘New York of Vietnam.’
Downsides may be access to capital, as the majority of investments are still centered in the northern city of Hanoi. In addition, because of the young population and competition for work, many startups say turnover is a bit higher. They point to some workers trying to take shortcuts to get ahead, meaning that the quality of work sometimes suffers. However, with adept management, these potential pitfalls can be avoided.
We acknowledge some very close runners-up on our list, including Kuala Lumpur and its growing startup ecosystem. According to The Global Startup Ecosystem Ranking, the Malaysian government is investing heavily in the city’s infrastructure for a blossoming startup community. Also in close running, is Manila, Philippines. This city has been named in CNN’s emerging startup ecosystems report and is known for its incredibly hardworking labor force and cheap cost of doing business.
There are many new and growing startup hubs popping up around the world with growing access to the internet and the digital nomad movement. Tools like Taskworld help startup teams manage work across time zones, keep communication lines open and files all in one place.
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Any thoughts on the best cities for startups or what makes a great incubator community?
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