STARTUP

The World’s Most Promising Startup Hubs May Also Be the Most Surprising

New research ranks the most digitally advanced areas of the world, and some of them may surprise you.

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BY Zoe Henry - 27 Jul 2017

PHOTO CREDIT: Getty Images

The U.S. is among the most technologically advanced nations in the world, but hubs including New Zealand and the United Arab Emirates aren't far behind, according to recent data.

Researchers at Tufts University's Fletcher School this month analyzed 60 nations to determine the most digitally connected areas of the world. To do so, they identified four factors that influence the progress of the digital economy--including demand, existing institutions, innovation and change--and segmented the nations into the categories 'Stand Outs,' 'Stall Outs,' 'Break Outs' and 'Watch Outs.'

"The internet is changing the way we work, socialize, create and share information, and organize the flow of people, ideas, and things around the globe," noted James Manyika and Charles Roxburgh, researchers with the McKinsey Global Institute, in the report. "Yet the magnitude of this transformation is still under-appreciated," they said.

New Zealand was one major 'stand out' in the survey, both for its high level of digitization, and its technological momentum in recent years. The South Pacific island nation, which has a population of fever than 5 million, has seen tech investment grow by a factor of 8 since 2011, according to CB Insights data. Overall, $61.2 million was invested in 94 New Zealand-based companies in 2015 alone.

New Zealand is home to companies such as Xero, a multi-national accounting software firm, as well as Weta, a visual effects startup that's worked on major motion pictures including Lord of the Rings and Mad Max. Billionaire venture capitalist Peter Thiel has called New Zealand a "utopia;" he was even granted citizenship there in 2011.

The UAE is another 'stand out' nation, according to the report. The Middle Eastern hub is home to two unicorn companies, Careem Networks and Souq.com, which were each valued at $1 billion in 2016. (Earlier this year, Souq.com agreed to be acquired by e-commerce behemoth Amazon.) Meanwhile, the e-commerce startup Noon.com raised a total of $1 billion in capital in late 2016 to launch this year.

Notably, countries with rapid growth in the technology sector often ranked comparatively low on measures of personal freedom. These included the 'break out' nations China, Malaysia, Saudi Arabia and Kenya, whose governments have been fairly active in supporting entrepreneurship and growth, even as political rights may be lacking.

One challenge facing the more familiar tech hubs, including Norway, Sweden, Switzerland and Denmark, has been consistency. Indeed, the faster these nations are able to adopt technology, the more difficult it can be sustain that growth over time, the study found.