Once upon a time, the “tech startup” was strictly a Silicon Valley invention. Later, anywhere in the U.S. was fair game for a company to spring to life by creating an original and useful product or tackling a difficult real-world problem by using some form of technology.
More recently, the rest of the world is getting in on the startup frenzy, too. The number of foreign startups has risen dramatically over the last several years. According to World Startup Report, at the end of 2013, there were nearly 140,000 startups, with more than half of them based outside America. In the first six months of this year, according to the research firm CB Insights, 46 Asian start-ups had fund-raising rounds of $100 million or more. North America had just a few more, at 48.
U.S. tech companies are taking notice of these foreign hopefuls, too. Microsoft, for example, recently purchased a couple of Israeli-based startups, including cloud cybersecurity startup Adallom.
According to experts, increasingly decentralized global technology investments have the potential to bring many benefits to U.S. companies. Here’s a look at some of the biggest global startup markets and a few of their rising stars.
China
China, India and Israel are currently leading the charge when it comes to foreign startups. China and India have two of the world’s largest smartphone markets, so investors there are naturally interested in tapping those markets. But there's room for many other types of startups, too.
Last week, the Chinese ride-hailing app Didi Kuaidi said it raised $2 billion in just two weeks. The company originally set out to raise $1.5 billion, but it received so much interest, it was able to generate an extra $500 million.
And XueXiBao, a homework assistance app, has also been very popular in China as Chinese students look beyond traditional options to help them prepare for college entrance exams. XueXiBao allows students to do things like upload diagrams and text to the app or get assistance within just a few seconds.
India
In India, investor meetings are now demonstrating tremendous interest, according to Bank of America Merrill Lynch, which said it expects companies in India to raise approximately $100 billion of capital over the next three years. Meanwhile, several VC funds have opened to support the tech startup scene in that country, and Google Capital recently announced it will also establish an office there.
Indian startup PepperTap, a grocery delivery service that enables users to have everyday household items delivered to their homes via a mobile app, is currently among the country’s rising stars.
Israel
There are currently an estimated 1,200 startups in operation in Israel. One of them, Wiser, crawls the world's pricing databases to provide pricing intelligence and dynamic pricing tools to businesses, helping them adjust their listings based on both external and internal factors.
Everything to gain
As the global startup market continues to gain momentum, it will likely only be a matter of time before U.S.-based tech giants like Microsoft gobble more of the best of them up. Fortunately, U.S.-based businesses (and consumers) have much to gain from opening up to these new global sources of ideas and innovation.
