< Previous78 JULY 2021 S I T E S EL E C T I O N this decade? While the Global Startup Ecosystem Report will not be released until September, here are a few early insights. Why Dire 2020 Predictions Ended Up So Wrong It’s not an understatement to say that startups and venture capitalists were panicked in early . Early data regarding VC deals showed a contraction of % in Series A+ deals across Asia, excluding China, so it was fair to look at this as a model of what could happen to startups worldwide as COVID- spread globally. ere was considerable fear at fi rst that the world was headed for another recession. But as most policymakers stepped in, not only was the worst avoided, but venture funding started growing. Moreover, because so many startups are uniquely suited to address the challenges of the pandemic, COVID- separated winners and losers in the innovation economy, and Series B deals saw signifi cant growth. Another early prediction that turned out wrong was the idea that talent would leave their hubs. In cities such as New York City and London, doomsayers suggested talent would fl ee for smaller locales where workers would have more room to stretch their legs. While this happened at fi rst, talent is already back in droves. In fact, the only major startup hub where a large net out-migration occurred is the San Francisco Bay Area. is is good for everyone, including Silicon Valley. e only major startup hub where a large net out-migration occurred is the San Francisco Bay Area. is is good for everyone, including Silicon Valley.” — JF Gauthier, Founder & CEO, Startup Genome e only major startup hub where a e only major startup hub where a large net out-migration occurred is the e only major startup hub where a 80 JULY 2021 S I T E S EL E C T I O N According to the Silicon Valley Leadership Group, the No. 1 problem in the area has been housing and space generally. With rents down 30% and more, COVID-19 has eased this problem, opening the door to entrepreneurs and their core teams, while large tech companies have released tons of their cosmopolitan talent that will pollinate startup ecosystems all over the world. Startup Ecosystems Look Strong in 2021 Despite the difficulties of the pandemic, data collected in 2021 show that startup hubs ended 2020 in surprisingly good shape. Our data point to greater than 20% year-over-year growth on the dollar value of exits in technology startups worldwide. As we reach mid-2021, economic indicators point to this year being full of productivity and growth. With 2020 in the rear-view mirror, we can see that some startup ecosystems are growing almost twice as fast as before, including Houston, Sydney and Hyderabad. In these hubs, you can see rapid growth in ecosystem value. What also makes 2021 so promising is the acceleration of the transition to the digital economy. So much changed for companies in 2020 regarding how they rely on digital services and applications. As such, companies that provide these types of services grew quickly and continue to attract substantial VC investments. In Q1 2021 alone, global VC investments topped $120 billion, which is a 94% increase year over year, according to Crunchbase. Startup subsectors that are looking particularly hot in 2021 include: • Deep tech: Companies are creating tangible IP in areas S I T E S E L E C T I O N JULY 2021 81 such as artifi cial intelligence and machine learning, which in turn broadens ecosystems. • Green and climate tech: Climate change has created an urgency for startups and investors to pursue technology that reduces carbon emissions and lessens human environmental impact. • Life sciences: Digital health services and telemedicine will remain a more signifi cant force after the pandemic after people and offi ces adopted this technology. What Startups and Corporates Should Be Looking for in Hubs At this moment of tremendous growth in , this is a good time for startups to open offi ces and for corporates to expand. Using Startup Genome’s data-driven insights, I can share some of the most important things to pay attention to when looking for secondary locations. e most critical factor in your decision on where to set up shop in should be talent production. Look for diverse and inclusive cities that produce a large amount of technical talent. With the rise of Deep Tech, cities that may not have been strong in software engineering but count strong technical universities will rise, producing dynamic ecosystems With 2020 in the rear-view mirror, we can see that some startup ecosystems are growing almost twice as fast as before, including Houston, Sydney and Hyderabad.” — JF Gauthier, Founder & CEO, Startup Genome With 2020 in the rear-view mirror, we can see that some startup and machine learning, which 82 JULY 2021 S I T E S EL E C T I O N where large and small corporations will increasingly thrive. A secondary factor to pay attention to is whether governments have been aggressively investing in their innovation ecosystems. The whole world has awakened to the importance of supporting innovation and entrepreneurship, with innovation policy becoming the center of long-term economic policy. Cities and regions where governments act tepidly in this regard will see their ecosystems fall behind, soon affecting the ability to attract great talent. One thing that should not factor strongly into where to go is real estate pricing and availability. e simple truth is that expensive real estate often is a sign of a developed ecosystem where tech talent increasingly wants to be. As such, it’s unwise to let real estate pricing count as a strong negative as to where to set up an offi ce. Up-And-Coming Ecosystems to Watch Finally, as we look at what transpired in and look ahead, our research has shown that a few innovation hubs are particularly noteworthy. ree stand out for their fast growth and great talent. First up, one American city that shows a dramatic growth in startup success and innovation is Philadelphia, Pennsylvania. is city with its longstanding pharmaceutical industry presence has become an emerging life sciences hub that benefi ted from the research around treatments and vaccines for COVID-. Additionally, the city has seen a strong uptick in companies focused on AI and Big Data. Second is Melbourne, which has steadily grown as a hub for tech and life sciences. Its new policy investments across venture funding stages, artifi cial intelligence, and women entrepreneurship show a commitment to the rapid rise of its tech ecosystem, alongside its leading academic institutions supporting a thriving biotech sector. irdly, two Canadian startup hubs with rising success are Toronto and Montréal, thanks to their sustained innovation policy investments, leading AI ecosystems and great universities. In fact, Montréal counts one of the world’s largest number of college students per capita — higher than even Boston — and was ranked the top international student city, dethroning Paris. Finally, a European startup hub that continues to rise in the ranks is Frankfurt. is city is home to the European Central Bank, leading to an injection of fi ntech talent and corporate demand for innovation. Additionally, many blockchain companies have popped up to support fi ntech. Having a strong banking legacy encourages blockchain companies to try out partnerships and to create policy sandboxes in this ecosystem. JF Gauthier, founder and CEO of Startup Genome, is a Silicon Valley- based serial entrepreneur and angel investor. Watch for the Global Startup Ecosystem Report to be released in September with further insights and rankings. For more information, visit startupgenome.com. e simple truth is that expensive real estate often is a sign of a developed ecosystem where tech talent increasingly wants to be.” — JF Gauthier, Founder & CEO, Startup Genome e simple truth is that expensive e simple truth is that expensive real estate often is a sign of a e simple truth is that expensive by ADAM BRUNS adam.bruns@siteselection.com Sightseers take in the view from atop the Blue Ridge Escarpment at Caesars Head State Park in Greenville County. Photo courtesy of South Carolina Department of Parks, Recreation and Tourism84 JULY 2021 S I T E S EL E C T I O N When I visited Upstate South Carolina in early May , graduation ceremonies were underway at Clemson University, Spartanburg Community College and other institutions. e Greenville Drive baseball team got to play its home opener vs. the Bowling Green Hot Rods at Fluor Field in Greenville — the fi rst game at the stadium in days. A banner off the left-fi eld foul line proclaimed, “Live Fearless.” New residential development climbed toward the sky behind the stadium. e city’s Sound Check concert series had just kicked back into gear. e streets buzzed with spring, people and possibilities. It’s a feeling the counties of the Upstate have been experiencing for some time. U.S. Census Bureau fi gures on in-migration show the region welcomed , new residents from through , arriving at the rate of per day. Very few are leaving. Residential permits have tripled since to nearly ,, with healthy recent increases in Spartanburg and Anderson taking some of the pressure off the white-hot Greenville market. But city economic development leaders also are making sure attainable housing is part of the picture, injecting $ million into workforce housing and making robust use of public-private partnerships to support hotel, conference and park projects across the city. Warm Welcome Many of the Upstate newcomers have come from foreign countries, including nearly , from Asia, Europe and Central and South America landing in Greenville County alone. And they’ve arrived from all other states (yes, even from Hawaii). Craig Brown is one of them. e owner and president of the Boston Red Sox South Atlantic League affi liate Greenville Drive minor league baseball team once found himself leading the search for a new city after a stadium deal fell through in the state capital of Columbia. “ at is how the Capital City Bombers became the Greenville Drive,” he tells me. “Having spent -plus years in New York City where you might pass thousands of people every day without ever looking anyone in the eye, I was surprised to fi nd such a sense of community in Greenville. From the very start Greenville city leaders were excited about partnering with us as our self-fi nanced stadium would help anchor the West End which was still being revitalized, and business and community members were thrilled that baseball would be returning to Greenville.” In the Greenville News referred to Fluor Field as the front porch of Greenville. “I came to understand that the front porch is where the family gathers — where it celebrates its victories and comes together in times of adversity,” Brown says. “ at’s exactly what we hope our team and ballpark is for the Upstate, and we are very grateful UPS T A TE S C | INTELLIGENCE REPOR T INTRODUCTION A VISIT ON THE FRONT PORCHfor the continuing support of this wonderful community.” It’s not a stretch to call the Upstate the front porch of South Carolina. The region in 2020 saw 57 announcements connected to more than $1.2 billion in capital investment and 3,017 jobs. Announcements have continued to flow this year: filtration company Pall Corp. in Duncan; Sweden’s Frauenthal Gnotec in Greenville County and China’s Gissing North America in Laurens County, but both in Fountain Inn; Standard Textile investing $15 million and creating 45 jobs in Union County; and Oshkosh Defense creating 1,000 jobs at a new postal vehicle plant it will locate in a repurposed warehouse in Spartanburg. “It doesn’t look like we went through a pandemic,” says Aimee Redick, director of global engagement for the Upstate SC Alliance, citing data that show manufacturing up by 1.5% and construction up by 5%. The Upstate is an outlier in terms of the pandemic’s economic impact. But crisis response and bounce-back is now a more prominent site selection criterion. “Site selection experts are saying their customers want to go to a state that minimizes their risk of shutdown,” Redick says. “We think we weigh really well on that. Manufacturing and construction were considered essential businesses in South Carolina.” The Upstate SC Alliance represents the 10-county region whose population now has surpassed 1.5 million, consistently growing at more than double the U.S. rate. The Alliance is celebrating its 20th anniversary, and so is the Greenville Area Development Corp, with new study results that estimate the total economic impact of the county on the region at $6.9 billion annually, supporting 82,693 jobs. That includes a new record set in 2020. Not a bad haul for what’s universally regarded as a bad year. Indeed, I felt the year of panic and worry fading as I rode my bike on my last day in town along part of the 22-mile Swamp Rabbit Trail that takes you out of downtown Greenville all the way up to Travelers Rest. Refurbished mill buildings abounded, as did a healthy cross- section of the population, as we made our scenic way toward the campus of Furman University. It felt like everything would be much more than OK. Since landing in Spartanburg County, BMW’s economic impact has ballooned to $11.4 billion invested, more than 11,000 jobs on site and more than 40 direct Tier I suppliers in the state (plus 260 others across the U.S.). Photo courtesy of BMWUPS T A TE S C | INTELLIGENCE REPOR T 86 JULY 2021 S I T E S EL E C T I O N QUIET GIANT: MILLIKEN & CO. PRODUCTS ARE EVERYWHERE But the pioneering company’s longtime home is in one place: Spartanburg County. C ORPOR A TE SNAPSHO T : MILLIKEN & C OMP ANY If BMW’s $11 billion of investment put Spartanburg County on the map, Milliken & Co. was the mapmaker. That’s not just a metaphor: Textile legend Roger Milliken almost single- handedly got BMW to locate where they did after the German company had committed to the state in general in 1991. “BMW needed 1,500 acres. They were going over to Clemson,” David Britt, vice chairman of the Spartanburg County Council and a player in the BMW process himself, tells me over lunch on a patio at Cribbs Kitchen in downtown Spartanburg. “Mr. Milliken met with them, and said, ‘You don’t need to be over there. We have all this property. I’ll make it happen,’ and he convinced the BMW executives.” What happened next in an area decimated by the loss of 25,000 textile jobs was “a godsend,” Britt says. Many would say the same of Spartanburg-headquartered Milliken & Co., which employs more than 7,000 associates globally (3,200 in South Carolina), and is known for having accumulated 2,200 U.S. patents and more than 5,000 patents worldwide across its work in chemicals, composites, floor coverings, industrial textiles, performance apparel, protective fabrics and specialty textiles. Milliken & Co.’s identification with South Carolina began with its 1884 investment in Pacolet, South Carolina, a town whose name was adopted as part of Pacolet Milliken, a separate company charged with looking for development opportunities for legacy Milliken land. In 1958, the company, like BMW 33 years later, moved to a peach orchard, where it maintains a unique headquarters and R&D campus called the Roger Milliken Center (pictured above). That’s where I met Halsey Cook, Milliken & Co. president and CEO, who came on board in 2018. “I think it’s the most business-friendly place I’ve ever worked in,” he says of the Upstate. “I find the business leadership really engaged with government leaders in South Carolina in a way I’ve not witnessed in other states.” Milliken & Co.’s first recycling policy dates to 1901. Today, sustainability is part of the company’s transformation strategy. Moving into new areas through acquisitions is too. “Over time we might want to bring some of these acquisitions into the Upstate,” he says. “There is a lot of benefit to being close to our core R&D resources and HR. We’ll look for opportunities to put more of Milliken here over time.” Cook says the only governor on further growth is labor supply. “We’re being more aggressive and inventive,” he says. “In the same breath we’re also trying to be as inclusive and attractive an employer as we can be. You look at our research scientists and it looks like the United Nations. We want them to be in communities where they feel exceedingly welcomed. The way we’re thinking about it is not to move to a place with more labor, but become a more attractive employer.” That said, Cook would still love to see more companies setting up headquarters in the Upstate. “I think Charlotte has 11 or 12,” he says. “Atlanta has many more than that. The Upstate doesn’t have a lot of companies headquartered here. We’d love some company.” Halsey CookNext >