Why the World Can't Afford to Let Silicon Valley Win Alone

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California is the fifth-largest economy in the world. Not the United States. California.

That single fact should terrify every government official, economic development leader, and policy maker outside of Silicon Valley. Because it reveals just how concentrated the world's innovation engine has become, and how dangerous that concentration is for everyone else.

"You don't need to be a great theoretician or mathematician or economist to see that these timelines line up," says Adeo Ressi, CEO of Decile Group, which has helped launch nearly 1,000 venture funds globally. "What does California have that Portugal or Spain don't? Great weather? They all have great weather. What California has is a thriving venture capital ecosystem."

The implications extend far beyond economics. In an era of AI and robotics, regions without their own innovation capacity won't just fall behind financially. They'll lose sovereignty.

"We're not that far away from where AI and robotics really fundamentally change civilization," Ressi warns. "If you don't have your own capacity, you are going to be beholden to foreign nations for your own sovereignty."

Consider defense. If your military relies on foreign AI systems and robotics, you're dependent on another nation's continued goodwill for your security. Consider food production. If your agricultural technology comes from abroad, you're vulnerable to supply chain disruptions or political pressure.

"If you can't defend yourself because the enemy has modern weaponry, they're sending in robots and drones and all this stuff, you're in trouble," Ressi says. "If you can't make your own food because you're relying on a sickle and they're relying on robots, you're in trouble."

The gap between technology haves and have-nots is accelerating. And it's not going to slow down.

Europe offers a cautionary tale of what happens when a developed region fails to build venture infrastructure.

Despite having world-class universities, talented entrepreneurs, and substantial government funding programs, Europe is falling catastrophically behind. The continent's most promising AI company, Mistral, faces an existential challenge: its competitors are raising tens of billions of dollars while European capital markets can't come close.

"How much money do you have? 'We raised a billion dollars.' 'I raised $20 billion.' How can you compete?" Ressi asks. "You can't get the talent. You can't get the servers."

Meanwhile, China, despite having less money and facing severe hardware restrictions due to export controls, is outperforming Europe in AI development.

"China not only has much less money, but also, because of export controls, they have terrible hardware," Ressi notes. "So they're having to make stuff while being way behind the ball in every way. And yet they're outperforming."

The variable that explains the difference? Regulatory burden and ecosystem infrastructure.

The world needs innovation happening in more places, not fewer. Problems vary by region. Local entrepreneurs understand local challenges in ways that Silicon Valley founders never will.

That Latin American insurance company that figured out same-day delivery when incumbents took two months would have never been solved by a Silicon Valley startup because the solution came from entrepreneurs who lived with the dysfunction daily.

"The biggest gap in most countries is not founders, ideas, or local opportunities for growth businesses," Ressi says. "It's capital to scale them."

Great ideas are everywhere. Capital isn't. And until that changes, the world's innovation potential remains drastically underutilized.

Only about 20 cities globally have true venture capital ecosystems, where multiple funds serve every stage of company development with competitive terms. That's roughly 4% of major cities worldwide.

"96% of major global cities are competing for economic relevance in the 21st century without the infrastructure that drives modern economic growth," Ressi says.

The concentration isn't just bad for the 96%. It's bad for everyone. Homogeneous thinking leads to blind spots. Local problems go unsolved. Talent that could be building companies instead migrates to the few places with capital, draining their home regions.

For governments watching this unfold, the prescription is clear:

"As a government today, you want to be thinking: how do I get to a double-digit percentage of my GDP going into VC very quickly so that I can remain competitive?" Ressi says.

Not fractional percentages. Double digits. That's what it takes to build an ecosystem that can sustain itself and compete globally.

The alternative is grim.

"You're going to be farming with a sickle when people in the United States will have robots and automated machines doing all the work," Ressi says. "I'd rather be on one side of the equation than the other."

The world can't afford to have all its innovation eggs in one basket. For the sake of global resilience, regional self-determination, and basic economic competitiveness, venture capital ecosystems need to flourish far beyond Silicon Valley.