LEVERAGING CITIES AS HUBS OF INNOVATION

AND DISRUPTIVE TECHNOLOGIES

Prepared by: Victor Mulas, Technology and Markets Unit,Finance, Competitiveness and Innovation Global Practice (FCI GP)

March 2019

AGENDA

1. Background:

Disruptive Technology Trends

2. Cities as Innovation Hubs:

Cities as hubs of innovation and disruptive technologies

3. The Urban Conundrum:

Embracing disruptive technologies and managing transformation

DISRUPTIVE TECHNOLOGY TRENDS

Photo Source: FastCompany magazine, https://www.fastcompany.com/3028726/for-new-york-citys-tech-industry-is-there-life-after-bloomberg

Tourism Hotel Chains Airbnb

Transportation Taxis Uber/Didi

Entertainment Radio/Television Spotify/Netflix

Education Vocational Training/Higher Education General Assembly/edX

Real Estate N/A WeWork

Finance Institutional Investment Kickstarter/Coinbase

Communications Phone Calls Skype

Retail/Groceries Hypermarket Chains/Malls Amazon/Alibaba

Manufacturing Big Automakers Tesla/Local Motors

Healthcare N/A Editas Med./Organovo

DISRUPTION IS AFFECTING ALL SECTORS IN THE ECONOMY. IT IS NO

LONGER A QUESTION OF WHAT IS TECH, BUT OF WHEN IS TECH

Sector Traditional Model Tech Model

ILLUSTRATIVE

Source: Mulas V., Garret, B., Nedayvoda, A., (unpublished). Anticipating the New Economic Disruption.

TECHNOLOGY STARTUPS ARE DRIVERS OF THE INDUSTRY OF

THE FUTURE

Source: World Bank 2018c, using data from CBInsights Unicorns and Exists (July 2018) and Forbes 2018 500 Largest Public Companies.

The United States and China host most of the global private sector of today’s industries and those of the future. Leading technology startups are emerging in countries different from where traditional global industries are, with countries such as, Colombia, Brazil, Indonesia or South Africa better positioned in

terms of startup unicorns.

160

6152

30 26 22 17 16 11 10 9 8 7 6 5 4 3 2 10

50

100

150

200

Distribution of World’s 500 Largest Public Companies (2018)

261

114

21 14 11 5 4 3 2 10

100

200

300

Number of Technology-enabled Unicorns and Exits (2009-2018)

TOP HUBS OF INNOVATION: CITIES

CITIES ROLE AS INNOVATION AND DISRUPTIVE TECHNOLOGY HUBS

Photo Source: FastCompany magazine, https://www.fastcompany.com/3028726/for-new-york-citys-tech-industry-is-there-life-after-bloomberg

CITIES PLAY A KEY ROLE IN CREATING THE ECOSYSTEMS THAT

FUEL THE TECH NEW INDUSTRY

Source: World Bank 2018c, using data from CBInsights Unicorns (July 2018). Exits not included.

• Cities and metropolitan areas play a critical role in providing large-scale ecosystems to create unicorns.

• Unicorns require a critical mass of quality startups, access to networks of talent and knowledge, top-notch experienced mentors, and access to large-scale domestic and international funding that only a few number of ecosystems can provide per country.

PERCENTAGE OF UNICORNS PER COUNTRY ORIGINATED IN MAJOR ECOSYSTEMS

80%83% 77% 62%

48%

21%

14% 52%

15%

9%38% 38% 62%

87 130 13 13 Unicorns Unicorns Unicorns Unicorns

DISRUPTIVE

TECHNOLOGY HUBS

ARE HYPER-CONNECTED

Note: Dots are either a high-tech startup or an investor. Lines shows investment connections between investors and firms. This map shows gravitational relations from country clusters. Dots are shown closer to those others that are more connected to (in terms of investment and country of origin). Central clusters denotes higher connectivity than external clusters. Source: Pitchbook and database of companies created by WBG.

LEADING DISRUPTIVE

TECHNOLOGY STARTUP HUBS

(AI, ROBOTICS, SPACE-TECH, QUANTUM COMPUTING)

PRELIMINARY

The US Government and the city of Chicago funded the Digital Manufacturing and Design Innovation Institute (DMDII), to collocate academia, industry and startups focused on advanced manufacturing. Advanced manufacturing equipment was provided with funded research projects and program for active collaboration among stakeholders. Singapore has also developed large community spaces to collocate R&D departments from universities, accelerators, VC and startups.

CITIES ARE FOSTERING THE CREATION OF HOME-GROWN

TECHNOLOGY HUBSTWO MAIN UNDERLYING GOALS: COMPETITIVENESS AND JOBS

THE NEW URBAN STARTUP ECOSYSTEM

NEW YORK CITY, USA

Second Largest Ecosystem in the World

VC: USD 2B (2010) → >USD 13B (2017)Unicorns: None (2010) → >15 (2017)Tech Jobs: 58,000 (2013) → > 300,000 (2017)

Strategic Policy Support Program (2008 -> 2019)

VC: Seed Funding catalyzation programTalent: Creation of tech leading campus and network of bootcampsSpace and Support Infrastructure: Network of co-working spaces and acceleratorsCommunity and culture: Promotion campaigns, events and competitions

NEW URBAN DEEP-TECH R&D HUBS:CHICAGO AND SINGAPORE

Models expanding through emerging economies cities: Medellin, Buenos Aires, Cairo.

DISRUPTING CITIES: THE URBAN CONUNDRUM

Photo Source: Innovators magazine, https://www.innovatorsmag.com/ireland-has-

diverse-startup-ecosystem/

TECHNOLOGY TRENDS DISRUPTING CITIES

Technology Trend Application Disruption

Self-driving cars, and new mobility and logistics trends

Adaptative and personalized mobility solutions for passengers and cargo

Public and private transportation and industry

Production and distribution of goods and services

Digital production and distribution of everything

Socio-economic and industry disruption

Rooftop, hydroponic and vertical farming

Food production and distribution on site Food logistics and local economy distribution

Designing, construction and management of buildings

New materials, digital manufacturing production, self-maintenance

Urban planning, construction industry

IoTs and 5G Management and maintenance of private and public infrastructure

Construction and infrastructure services industry

Big data analytics, geo-spatial and data sharing

Automatized and assisted city management; personalized service delivery; rapid and more accurate response.

City management and service delivery

Waste management Personalized and automated sensor sorting and water and energy production

Waste impact; waste industry, electricity industry

Producing and storing energy Personalize production and storage; distributed networks

Electricity industry and infrastructure

Source: elaborated based on IFC (2019) Reinventing Business Through Disruptive Technologies.

DISRUPTION IS HAPPENING:CITIES ARE NATURAL TEST-BEDS FOR DISRUPTIVE TECHNOLOGIES

MANAGING AND LEVERAGING DISRUPTIVE TECHNOLOGIES

URBAN LABS

(BARCELONA, LONDON)

REGULATORY SANDBOXES

(SINGAPORE, WASHINGTON, DC)

CATALYZING URBAN INNOVATION TO ADDRESS URBAN

CHALLENGES

MIMEDELLIN CO-CREATION PLATFORM

(MEDELLIN)

STARTUP IN RESIDENCE PROGRAM

(SAN FRANCISCO, AMSTERDAM)

LEVERAGING CITIES AS HUBS OF INNOVATION

AND DISRUPTIVE TECHNOLOGIES

Prepared by: Victor Mulas, Technology and Markets Unit,Finance, Competitiveness and Innovation Global Practice (FCI GP)

March 2019