Urban-tech investment 2016-2018

The largest sector of urban tech is mobile tech, which includes behemoths like Uber, Lyft, and Didi Chuxing, and has generated more than $40 billion in venture investment between 2016 and 2018—more than 60 percent of all urban-tech investment.

Leading urban-tech sectors 2016-2018

The United States is the dominant player in urban tech, with more than 45 percent of all venture-capital investment in this sector.  China comes next with roughly a third (although China has far fewer urban-tech startups than the U.S., 200 versus nearly 800). Singapore is third, with almost 6 percent of investment, followed by India (4 percent), and the UK and Germany (roughly 2 percent each). South Korea, the United Arab Emirates, France, the Netherlands, and Canada round out the top 10 with about half a percent each.

Leading nations for urban tech 2016-2018

But startups and venture capital are incredibly spiky—geographically clustered in a relatively small number of global cities. The San Francisco Bay Area leads with roughly 30 percent of all global venture-capital investment in urban tech. Beijing follows close behind with 26 percent of funding. New York City is third, with 10 percent, followed by Shanghai, with nearly 7 percent. (That said, San Francisco and New York have produced far more urban-tech startups than Shanghai and Beijing.)

Leading global cities for urban tech 2016-2018

The rise of urban tech reflects the growing role of cities and urbanism in the global economy. Cities have become the basic platforms for global innovation and economic growth, supplanting the corporation as the fundamental organizing unit of the contemporary economy.

But in this regard, cities remain terribly inefficient. They are indeed the last great frontier of inefficiency in capitalism.

A century or so ago, agriculture underwent a transformation. In 1900, more than half of U.S. workers worked in agriculture. Today, after huge leaps in agricultural technology and management, less than 1 percent of the workforce does. Farms have become incredibly efficient enterprises, with advanced technology and self-driving tractors.

Likewise, in 1950, more than half of the American workforce labored in manufacturing. Now only about 5 or 6 percent of the workforce is engaged in a direct production occupation. Factories are highly automated, managed on the principles of lean production, and can run 24-7 with little waste.

Contrast that to cities, where offices and homes sit vacant much of the time, where cars sit idle, and where congestion is rampant. The third great economic transformation, which we are going through today, is a shift to a knowledge economy that is concentrated and based on cities. Just as farms and factories of previous epochs were optimized for efficiency, the offices, apartments, cars, and other elements of cities that sit unused much of the time will be adapted for greater productivity.

This is the nexus for the rise of urban tech, which is unleashing a new round of creative destruction on cities. Like previous economic transformations, the rise of urban tech and the emergence of the city as the primary platform for economic organization will not be without growing pains. It will be up to urban leaders and the struggles of workers and citizens to channel this transformation in a democratic way, so that it respects the needs of all city dwellers and creates prosperity for all.