Research launched couple of days back by the Startup Genome and Telefónica Digital reveals that while Silicon Valley is still the world’s largest and most-influential start-up ecosystem, it no longer wields the power and influence it once did. Flourishing communities in Latin America, Europe, the Middle East and Asia have grown considerably over recent years and are now beginning to challenge Silicon Valley’s domination in technology innovation.
The Startup Ecosystem Report 2012 argues that this trend suggests that countries are shifting from service-based economies to become increasingly driven by a new generation of fast-moving software and technology organisations.
The report finds that Tel Aviv, a highly advanced ecosystem, is the leading alternative to Silicon Valley, while on Silicon Valley’s doorstep, flourishing communities in New York and Los Angeles mean the USA is home to three of the largest ecosystems in the world. Across the Atlantic, London is by far the largest startup ecosystem in Europe, although its output is still just a third of that of Silicon Valley. Outside of the more traditional markets, Sao Paulo’s startup ecosystem is growing rapidly and creates more jobs for the local community than Silicon Valley does for its own.
The report identifies the ecosystem factors which have contributed to the success of Silicon Valley and uses it as a baseline to compare how well suited other cities are to fostering entrepreneurs. On this basis the top 20 start-up ecosystems in the world are:
1. Silicon Valley
- Tel Aviv
- Los Angeles
- New York City
- Sao Paulo
- Waterloo (Canada)
In-depth research provides tangible findings for entrepreneurs, investors and policy makers
The Startup Genome, in partnership with Telefonica Digital, engaged with more than 50,000 entrepreneurs across the world to understand how well placed different ecosystems are to support the development and success of startups. Users of the StartupCompass.co – a business intelligence tool for startups – submitted information on their organisations based upon a range of factors, including financial, sales, marketing, product, business model, team, and market information.
Some of the key findings of the report are as follows:
- Even well-developed ecosystems such as New York and London are suffering from a funding gap: they each have more than 70% less ‘risk’ capital available for early-stage, pre-product-market fit startups
- Silicon Valley’s success to date can be attributed in part to the attitude of its entrepreneurs. Founders in Silicon Valley work longer than anywhere else, with an average day lasting 9.94 hours. Motivationally, they tend to be driven by impact rather than product
- New York can claim to be the global capital for female tech entrepreneurs. Nearly a fifth of New York’s entrepreneurs are women and it is home to twice as many female-run startups as Silicon Valley
- Santiago is a great example of an ecosystem kick-started by policy makers, with Start-up Chile creating a strong support network for entrepreneurs. Santiago startups have 4.81 mentors on average, nearly 25% more than Silicon Valley
- Silicon Valley has left its imprint on all global startup ecosystems. Berlin (4%) and Sao Paulo (7%) have the least founders that lived in Silicon Valley, Singapore (33%) and Waterloo (35%) have the most entrepreneurs that were previously based in Silicon Valley
- Even though Singapore has a relatively well-established funding environment, the risk tolerance of founders is the lowest within the top 20 ecosystems
Mapping key startup trends around the world
“I am really excited to reveal these insights around how global technology startup ecosystems stack up. Our hope is by completing the first data-driven, comparative study of this global phenomenon we will help to facilitate a constructive public dialogue,” explained Bjoern Lasse Herrmann, CEO of the Startup Genome. “We created this report for three reasons: firstly, to put a spotlight on the emerging hotspots of technology entrepreneurship that will be responsible for powering a massive global socio-economic structural shift; secondly, to further democratise the knowledge necessary to help spread the merits of Silicon Valley; and thirdly, to give actionable insights to entrepreneurs, investors, corporate development departments and policy makers.”
Gonzalo Martin-Villa, CEO of Wayra, Telefónica Digital’s global startup accelerator, said: “These results tangibly demonstrate how entrepreneurship is flourishing all over the world. We are now seeing emerging ecosystems beginning to act as real viable alternatives to the traditional centres of technology innovation. This is incredibly exciting, since it suggests that, increasingly, the necessary support infrastructures are in place the world over for bright minds to turn their ideas into reality.”
Steve Blank, a Silicon Valley serial entrepreneur and contributor to the report, said: “The democratisation of entrepreneurship from Silicon Valley and from Startup Ecosystems all over the world is creating new strategies and structures for innovation and disruption. The strategy lessons that we learn from these startups will light the way for a massive restructuring of all corporate organisations in the next 40 years. Only then will we look back and realise that we were just beginning the economic revolution of the wired world.”