An increasing number of cities around the world have developed viable tech ecosystems pushing up the value of the global start-up economy to more than $3tn, according to a new report by Silicon Valley-based research project Startup Genome.
The latest Global Startup Ecosystem Report (GSER) was launched at TNW’s Ecosystems Couch Conference on June 25. The report – which has tracked the growth of start-up ecosystems since 2012 – ranks the top 30 global start-up ecosystems based on metrics such as performance, funding, connectedness and talent.
According to the report, 85 ecosystems have now produced companies or exits valued at a billion dollars or more (compared with just four ecosystems in 2013).
The Asia-Pacific region has risen in prominence and now boasts 30% of the world’s leading start-up ecosystems, compared with 20% in 2012. Tokyo, Seoul, Shenzhen and Hangzhou all now boast robust research and development clusters, according to the GSER.
Silicon Valley still top
Despite new ecosystems rising up the ranking, the top seven ecosystems are the same as last year. Silicon Valley has maintained top spot, followed by New York and London in joint second. (The UK capital topped the European tech city ranking in fDi’s and TNW’s recent collaboration).
In the GSER, Beijing’s start-up ecosystem came fourth, followed by Boston, and Tel Aviv-Jerusalem and Los Angeles in joint sixth.
The seven leading ecosystems have ballooned to a collective value of $1.5tn – equivalent to 1.7 times the value of the remaining 23 ecosystems in the top 30 ranking.
Notable improvers were Washington DC, which climbed 8 places to rank 11th, Stockholm which broke into the top ten for the first time, and Amsterdam which ranked 12th, having moved up seven places since 2015.
In addition to the top 30, the GSER included ten runner-up and 100 emerging start-up ecosystems – the latter spread across 49 countries and valued at about $348bn.
While the tech economy has been democratised in recent years, start-ups are facing a dual challenge of capital shock and demand constraints because of coronavirus.
A Startup Genome survey included in the GSER found that about 41% of global start-ups have three months or less of capital to play with, while 72% of start-ups have seen their revenue fall since the beginning of the crisis. The average start-up has lost almost a third of their revenue.
Despite the uncertain outlook, start-up experts are optimistic about the potential for start-up ecosystems weather the crisis.
“Start-ups have been used to working in an environment of unpredictability... let’s embrace that,” said Jonathan Ortmans, president of the Global Entrepreneurship Network, at the Ecosystems Couch Conference on June 25.
As key drivers of innovation and economic development, start-up ecosystems will need targeted support to ride the post-Covid recovery. Startup Genome suggests that governments should inject capital and consider innovation procurement programmes to address problems that arise from the Covid-19 crisis.