Today, Compass revealed the 2015 Global Startup Ecosystem Ranking. With this report, Compass hopes to “accelerate the development of startup ecosystems around the world by answering critical questions for entrepreneurs, investors, and policy makers that are difficult to answer without the data [it has] gathered and analyzed in this report, as well as to raise the general populace’s awareness of the increasing socioeconomic importance of startup ecosystems.” The index is produced by ranking ecosystems along five major components: Performance, Funding, Talent, Market Reach, and Startup Experience.
The last report was released in 2012, and since then, the global startup sector has grown at a booming pace. US cities continue to dominate the report, with seven (7) out of the top twenty (20) spots, the top four of which include the reigning champion, Silicon Valley (again holding the top position), New York (#2), Los Angeles (#3), and Boston (#4). Chicago (#7), Seattle (#8), and Austin (#14) rounded out the top 15 positions. The top three cities have seen “modest growth” in comparison to the other cities on the list. Compare that to Berlin, which is in “hypergrowth mode” of twenty times the average growth, mainly due to the big IPOs of Rocket Internet and Zalando.
The Rankings Are as Follows:
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Silicon Valley
New York City
Los Angeles
Boston
Tel Aviv
London
Chicago
Seattle
Berlin
Singapore
Paris
Sao Paulo
Moscow
Austin
Bangalor
Sydney
Toronto
Vancouver
Amsterdam
Montreal
Analysis:
Over the coming years, the report expects Silicon Valley to stay in the lead, even while other ecosystems temporarily grow at a faster pace, with the expectation of ultimate convergence towards an equilibrium that looks a fairly conventional 80/20 power law; i.e. Silicon Valley capturing thirty to fifty percent (30-50%) of the total exit pie, the next three startup ecosystems capturing an additional thirty to fifty percent (30-50%) of the pie, and the following top sixteen (16) startup ecosystems capturing the remaining twenty percent (20%) of the total exit pie.
Other Findings of Interest:
The number of foreign workers within a startup has been on the rise: the number of foreign employees within a startup is, on average, twenty-nine percent (29%) for the top 20 ecosystems, and up to forty-five percent (45%) in Silicon Valley alone.
Looking at the relative growth rates of exit value, we see Silicon Valley growing at a forty-seven percent (47%) rate over the last two years, whereas many other ecosystems further down the index are growing at a much faster pace.
London has quadrupled in the same timeframe, and Berlin has grown by a factor of 20 (due primarily to the two big IPOs of Rocket Internet and Zalando).
Gender Equality:
Results showed that lack of gender equality is common across all startup ecosystems. None of the ecosystem came close to an equal share of male and female founders, although psychologists and sociologists continue to debate whether 50/50 is the target to strive for [see this article on gender differences by Florida State Psychology professor Roy Baumeister][1].
Overall, the trend for female entrepreneurs is significantly up, and the number of female founders in the global startup ecosystem has grown by eighty percent (80%) over the last three years. In 2012, only ten percent (10%) of startups had a female founder, as compared to the eighteen percent (18%) global average among the top 20 in 2015. Chicago, with 30% female founders, has the greatest percentage of women entrepreneurs out of the top 20 startup ecosystems.
Goals of the Report:
One of the main goals with this report is to help various stakeholders answer the following kinds of questions:
a) For Entrepreneurs:
“Where should I start my new company?”
“When I’m ready, where should I open up my startup’s second office?”
b) For Investors:
“How can I find new startup investment opportunities around the world instead of simply settling for solely investing in my local startup ecosystem due to familiarity?”
“Given the dearth of information out there about emerging startup ecosystems, how do I evaluate which ones I should focus on for finding new opportunities?”
c) For Policy Makers:
“What initiatives should I prioritize in my startup ecosystem to maximize growth?”
“How should I measure the progress of these initiatives?”
d) For All Stakeholders:
“What is the best way to strengthen the overall vibrancy and entrepreneurial spirit in my ecosystem?”
Download the full report here.
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