Throughout the globe, there are cities that are traditionally thought of when it comes to startup epicenters. Whether it’s San Francisco, New York City, London or Hong Kong, each of these areas have become well-known for developing and implementing innovative ideas.
In an effort to better understand the startup environment around the world, global collaborative company Startup Genome conducted a study that surveyed 10,000 founders from 100 cities in 50 countries. In its seventh administering of this research, dubbed the “Global Startup Ecosystem Report 2017,” Startup Genome was able to uncover the current state of the globalization of startups and their ecosystems. This research goes beyond the traditional larger startup cities like the ones mentioned above to better understand what’s fueling the rest of the world’s entrepreneurial spirits.
Startup Genome’s CEO and Founder, JF Gauthier, commented on the evolving startup scene that’s been changing over the past few years: “There is a revolution going on — the global startup revolution. We are changing the world together. All of us startup leaders and all of us working in different parts of the ecosystem. We are challenging the status quo, putting new ideas to work and holding fast to the belief — the knowledge — that anyone, anywhere should be able to participate in the revolution. The work of startup leaders in spreading this culture of meritocracy and equality is never finished, and we are all helping each other, paying it forward and expanding the boundaries of startup culture.”
This report purports that technology is the game changer when it comes to bridging the gap between the startup-heavy places, like Silicon Valley and Boston, and the rest of the world. The technology industry currently sits at 4.5 percent of the $100 trillion gross domestic product (GDP), whereas it was just 2 percent of it in 1992.
Research shows that if the technology industry continues to develop at this rapid rate, the window of growth time will speed up to 15 years, with technology’s piece of the GDP pie doubling to 8 percent. While global growth is only at 2.6 percent, this means the technology industry is growing twice as fast as the worldwide economy.
With the technology startup landscape drastically changing every few years due to new innovations, the report underlines how difficult it can be for regions outside of larger cities to catch on and stay afloat. To help navigate the complexities of the tech startup arena, Startup Genome has developed its Lifecycle Model of ecosystems. Through its utilization, “leaders can use this Lifecycle Model to identify the right actions to take at the right times for maximum impact. This is the only way for smaller ecosystems to accelerate and capture a share of the new economy within the next 10 to 20 years, rather than be left behind.”
The Lifecycle Model identifies four stages that every startup must undergo in order to succeed, which includes activation, globalization, expansion and integration.
It should come as no surprise that the more connected a startup ecosystem is, the more successful it will be. This goes for both the people known by the startup teams and its global connectedness, according to this research.
“These ecosystems tap into a worldwide circulation of ideas, knowledge, talent and capital. Through global networks that are rooted in relationships between entrepreneurs, startups in these ecosystems can access global customers at a very early stage and develop global-leading products and business models. This is the foundation of unicorns and, as seen in the Lifecycle Model, the trigger of ecosystem evolution and accelerated growth through attraction of international resources — and more global connections. Conversely, ecosystems that are not well-connected do not experience fast growth.”
The top 20 in Startup Genome’s 2017 Global Startup Ecosystem Ranking include the following cities:
Out of these areas, the research highlights that nine are in North America, while six are in Europe and five are in Asia. While Stockholm and London moved up in the list from last year’s research, Los Angeles and Chicago both moved down. The analysis of each global ecosystem includes metrics based on performance, funding, market reach, talent, startup experience and resource attraction.
For the three areas in the research’s top 20, there were key findings for each area. While most of Europe’s customers come from outside, American startups give their employees the most stock options, and Asia uses more advisors with equity than everyone else.
Given all of Startup Genome’s research, it appears that those areas looking to be successful in startups likely need to invest in technology, global networks and partnerships.
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