The Geography of the Cleantech 100
What makes for a strong Cleantech Cluster? City-regions around the world form business clusters based on emergent factors such as access to resources, talent, population size and culture. The i3 Connect 2019 Cleantech 100 and Startup Ecosystem Genome 2019 provide us with some data to explore the geography of Cleantech clusters, with a focus on Vancouver.
Six of the one hundred companies on the Cleantech 100 list are from Metro Vancouver where I live. That is half of Canada’s total companies on the list. So what makes for a strong Cleantech cluster within a startup ecosystem? The goal of this exploration is to understand the geography of Cleantech Clusters and invites you to share your thoughts on the topic. This analysis looks at the rankings above and their convergence with Business cluster theory and the 3T’s of economic development.
Let’s look at the number of companies on a per country basis.
On a per country basis, the US dominates the list. With 31 of the companies based in San Francisco, America’s success may be less a function of federal scale support than it appears. Except for Israel, all countries listed above are in the top 10 countries based on Nominal GDP. We can see a rough correlation between the top performers on the Cleantech 100 list and their rating on the 2015 global creativity index.
Federal programs alone do not define success or failure for regional clusters, state and municipal governments play significant roles in cluster formation. Startups, large business, universities, accelerators, incubators, grant availability and R&D facilities also contribute to a cluster’s effectiveness.
I’ve categorized the companies below by functional economic regions represented by Metropolitan Statistical Area (MSA) from U.S. census, Census Metropolitan Areas (CMA) from StatsCan 2016 and European Metropolitan Area.
The world’s population is 7.6 billion [from Wikipedia.] The relative measure I am interested in as relevant to the strength of each ecosystem is:
City Cleantech ecosystem performance/capita = (City share of companies on List as %) / [(Population of city/population of world)]
The clear powerhouse ecosystem for Cleantech is the Bay Area, which includes many cities, counties and 74 billionaires.
Now that we can see the dominance of some regions over others based on per capita share, we can look at some of the factors that led to these geographic clusters’ success.
The book Startup Nation speaks to Israel and Silicon Valley’s success through the concept of high-tech “Clustering.” It summarizes this as “tight proximity of great universities, large businesses, startup, and an ecosystem that ties them together, everything from suppliers, engineering talent pool and venture capital.”
Less often discussed, is the role of national military industrial complexes in supporting the underlying needs of a startup ecosystem. In Israel, the mandatory training and work placement within the Israeli Defence Forces creates a high standard of technical education for all talent entering their workforce. In the Bay Area, Stanford and UC Berkely rank as two of the top five engineering universities in the world, providing the startup ecosystem with talent, and companies incubated inside universities. Lesser known, two National Laboratories Lawrence Livermore NL and Lawrence Berkeley NL quietly go about their world class basic research at the edge of the Bay Area. The accomplishments of these National Labs may take years or decades for startups to directly benefit from. In the meantime, they likely have acted as a talent attractor and development multiplying force for the region.
On Talent, a clear advantage that both the Bay Area and Israel have that most other ecosystems lack is multi-generational success within the technology startup niche. As Steve jobs was able to call up Bill Hewlett as a 12 year old in the late 60’s, Silicon Valley startup founders have access to mentors that have had success and exits with tech startups going back six decades.
In contrast, Los Angeles, Toronto and Vancouver have fewer decades with leaders with tech company IPOs and exits, and are markets where movie and television production helped drive their booming luxury real estate markets, that are often more appealing time and money investments than high-risk technology startups.
As someone that has participated in the Vancouver startup ecosystem since late 2015, I’ve had a view of what makes Vancouver unique. Unlike Toronto and LA, Vancouver did not enter the dot.com and post dot.com technology paradigms with mature centres of corporate headquarters and federal offices. Instead, the region was known for its resource extraction, aerospace support for the Boeing supply chain, tourism, film and penny stock scams. As the smartphone, app store and e-commerce created a ‘Cambrian Explosion’ in startups, Vancouver was moving into a decade-long high-rise luxury condo boom fuelled by off-shore investment, lifestyle travel, and international money laundering.
Beyond strong universities in UBC and SFU and their world class internal entrepreneurial support, it’s hard to point out a mix of institutions that account for Vancouver’s strong performance on the cleantech 100 list. In my experience a differentiator of the region is that most founders and companies have legitimate social impact goals at the core of their business. This is a city where environmentally regenerative products act as luxury status signallers, with the high proportion of Tesla’s and electric vehicles (powered by hydro-electricity) providing one example.
Looking a bit deeper at the idea of talent in the 3T’s, Vancouver’s surrounding natural geography offers a unique contributor to attracting talent. Vancouver is situated in relatively untouched wilderness, which a large percentage of tech professionals escape to at every chance they get. Vancouver also ranks high on the tolerance list, with two major immigrant populations and more than half of its residents having moved from other places. San Francisco, Boston and Toronto also have access to similar wilderness escape opportunities close by. The reason this factor is important is that people who engage in wilderness activities are more likely to identify as stakeholders in protecting wilderness and global environment from our civilization’s extractive practices.
A city’s love of the outdoors does not explain how it ends up with a strong cleantech cluster. Beyond the factors alluded to above, what do you think are contributing to these clusters’ performance? Is Israel’s success solely a function of originating the first ‘Clean-tech’ (drip irrigation) and strong military industrial alignment? Is San Francisco overrepresented on the list because of its digital technology and venture capital clustering? I invite you to share your thoughts in the comments below.
