Long heralded as the world’s leading location for tech startups, Silicon Valley has a very real problem: the scale of leading firms such as Facebook and Google, along with their ability to identify which startups are likely to prosper, has resulted in the development of what some are calling the ‘kill zone’ – a point at which startups either get copied or taken over.
This is damaging the prospects of disruptors in tech. No longer are investors spending money in the way they were – by investing small amounts in many enterprises – but are concentrating money in fewer new companies. Now startups and young companies are developing with the intention of being acquired rather than becoming the next big tech company to emerge from Silicon Valley.
According to MarketLine analyst Chris Leymannicholls
“The trend is being driven by strong rivalry between the established tech big hitters, desperate to keep users on platforms under their control for fear of losing consumers to rivals but also for data gathering purposes. Some solutions proposed to solve the problem involve breaking up the big players. A more realistic idea would be to open up data, levelling the playing field by giving startups what they most need – information on user behaviors.”
For Silicon Valley to produce new disruptors capable of being the next big tech company that is independent, the business environment must change. MarketLine's latest report explores this in detail.