4 ms·

The challenge facing all these potential "startup hubs" is lack of exits. Investors invest to make a return. Silicon Valley's environment for exits is unmatched

The challenge facing all these potential "startup hubs" is lack of exits. Investors invest to make a return. Silicon Valley's environment for exits is unmatched. Tokyo, Singapore, Vancouver, all the same issue. Weak environment for exits means weak environment for investment means weak environment for recruiting, etc. I spent most of the last few years traveling, lots of time in Asia, and this is the disappointing truth. China is the notable exception where there are real exits and (no surprise) lots of investment money, talent, and ideas.

garyrichardson 11y ago
I think this is the most important/accurate analysis in this comment thread. Vancouver had a large AAA game industry for a decade or so. It was very much driven by exits -- all the small/medium studios got bought by Microsoft/EA/etc. The fever is over and AAA has all but collapsed in BC (and possibly the world -- I think there's been a big shift to indie games). I wonder if the lack of exits is a Canadian vs US culture thing? Is there data that shows fewer exits per capita? Are we Canadians more likely to settle for less? There's not that many huge Canadian tech companies, and I can think of a couple that failed due to hubris (RIM, Nortel).
danudey 11y ago
The other factor is return on exits. In SF, exiting with 7+ figures means you turn around and start your own startup (or, if you were the founder, another startup). In most other countries, you take your cash and put it into property and other mid- to long-term investments. There are so few investments, successes, or exits that the idea of taking $10m and turning it back into another company is less appealing. In SF, you can get a great idea implemented and exit via acquisition or acquihire before you've figured out how you're going to turn users into revenue. The money flows relatively freely in the right circumstances. In Canada, that feels far less likely, so even if I exit with $10m I still have to figure out not just how to make a great idea into a great product, but also how I'm going to make revenue from it, since I can't make any assumptions about being able to drum up external investment (since I don't have rich friends) or arrange an acquisition (unless I shop it around internationally).

garyrichardson 11y ago

I think this is the most important/accurate analysis in this comment thread. Vancouver had a large AAA game industry for a decade or so. It was very much driven by exits -- all the small/medium studios got bought by Microsoft/EA/etc. The fever is over and AAA has all but collapsed in BC (and possibly the world -- I think there's been a big shift to indie games). I wonder if the lack of exits is a Canadian vs US culture thing? Is there data that shows fewer exits per capita? Are we Canadians more likely to settle for less? There's not that many huge Canadian tech companies, and I can think of a couple that failed due to hubris (RIM, Nortel).

danudey 11y ago

The other factor is return on exits. In SF, exiting with 7+ figures means you turn around and start your own startup (or, if you were the founder, another startup). In most other countries, you take your cash and put it into property and other mid- to long-term investments. There are so few investments, successes, or exits that the idea of taking $10m and turning it back into another company is less appealing. In SF, you can get a great idea implemented and exit via acquisition or acquihire before you've figured out how you're going to turn users into revenue. The money flows relatively freely in the right circumstances. In Canada, that feels far less likely, so even if I exit with $10m I still have to figure out not just how to make a great idea into a great product, but also how I'm going to make revenue from it, since I can't make any assumptions about being able to drum up external investment (since I don't have rich friends) or arrange an acquisition (unless I shop it around internationally).