Demystifying Silicon Valley: Unequal entry thresholds between entrepreneurial ecosystems

Abstract

Silicon Valley is widely recognised as a leading entrepreneurial ecosystem as it provides a plethora of key resources that promote entrepreneurship. Although the existing ecosystem debate implicitly assumes that entrepreneurs have equal access to resources, we argue that this is not necessarily the case. We explore how entrepreneurs access ecosystem resources, specifically risk capital, and compare Silicon Valley with Berlin. We find that each ecosystem has a different ecosystem entry threshold at which start-ups become investable and can access financial resources. Entrepreneurs share an understanding of investors’ criteria: in Silicon Valley, start-ups must demonstrate venture traction, meanwhile in Berlin a strong founding team is sufficient. Consequently, they undertake legitimizing activities to fulfil these anticipated investment criteria accordingly prior to fundraising. Therefore, our study demonstrates how Silicon Valley is a highly selective and demanding ecosystem, and argues that it excludes many entrepreneurs, fosters inequality, and leads to homogeneity among start-ups.