The Global StartUp Ecosystem

The 2017 report by Startup Genome recently came out (April 5, 2017) You can find it here “Global StartUp Ecosystem Report 2017” which provides a 150-page review of the global state of startups. It is a really good resource to understand that not everything “starting up” is just coming from Silicon Valley, there are some vibrant startup ecosystems emerging all around the world, some most certainly near you.

The report goes into some depth of the top 20 places and then deep dives into others in America, Europe, Africa and Asia-Pacific. In all 45 cities around the world are nurturing startup ecosystems that are worth reading up about.

The report is copyright to the Startup Genome but I am sure they will not object to me quoting them in their goals for this

“Every city has the right to participate in the global startup revolution and reap the benefits of job creation, innovation, and economic growth. As this report documents, however, too many places are currently excluded from this revolution”

The aim of the report is to provide data-driven insights for startup leaders, investors, and the other ecosystem stakeholders like city leaders to capture and access policies and practices so they can learn from this research on what does and does not work, to build these startup ecosystems.

This report is presenting an evidence-based policymaking engine to guide and accelerate theses startup ecosystem efforts. The authors JF Gauthier, Marc Penzel and Max Marmer are all founders of Startup Genome and have pulled together an impressive project team to provide this great, insightful report with a whole host of Ecosystem Partners around the globe- thanks from this reader.

This report captures 10,000 founders across more than 100 cities and 50 countries who contribute into the survey and specifically 300 organizations that support startups in these cities with 40 odd city members who contributed research funding, along with a growing list of partners, all with a vested interest to make this global ecosystem of startups thrive and prosper. These global partners include CrunchBase, Dealroom.co, Global Entrepreneurship Network, Orb Intelligence and Angle Resource Institute and a number of regional partners

The report establishes the criteria that drive the startup ecosystem in a ranking methodology of Performance (30%), Funding (25%), Market Reach (20%), Startup Experience (15%) and Talent (10%). They look at the ecosystem lifecycle model of 1) Activation, 2) Globalization, 3) Expansion and 4) Integration as a guiding model to determine the right actions and support at the right times for maximum impact and acceleration. This does begin to place an evaluation structure to compare and contrast.

The money and startup mecca called Silicon Valley

StartUp Genome has been building and improving this report journey since 2011 and progressively we all will get ‘weaned’ off the idea that successful startups can only happen in Silicon Valley as the must go and do pilgrimage all aspiring entrepreneurs and start-ups must visit. Silicon Valley happened due to a steady stream of investments since the end of the 2nd world war.

Today it is reportedly full of “unregulated free enterprises” but it has been progressively shaped through proactive policy and concerted private programs and massive infusions of venture capital funding and a highly entrepreneurial spirit of experiment and drive and it is all these lessons that require a deeper evaluation to measure success. Often others seem to want to just lift up (selected) parts instead of completing a more rigorous assessment of what works today, why, the circumstances (and serendipity involved),   what happened over time to get to this point but the lessons, once learnt can be applied everywhere, if this assessment is a good one.

Some of the really important takeaways for me:

  • Early-stage startups are highly dependent on their surroundings
  • Original ideas emerge from unexpected places in unanticipated ways
  • There is a clear lifecycle to the development of startup ecosystems
  • There needs to be a shared sense of urgency about developing vibrant startup ecosystems
  • New and young businesses grow economies
  • Entrepreneurial ecosystems are multi-dimensional in their performance in driving startup success, we should know what these are.
  • The world gravitates to the ecosystem that has the best change (conditions) of global success
  • Technology today is creating winners and losers and that gap is widening at a rapid pace
  • Startups are a key vehicle by which a region and their citizens can take advantage of technological change
  • The places that fail to boldly and immediately invest in startup ecosystems and thus fail to produce startups will experience economic stagnation over time
  • The tech sector is growing at twice as fast as the global economy
  • The trend of the old-line industrial corporations like Boeing, Ford, GE, John Deere, Schindler Lifts, Bosch are all turning large parts of their business int software-as-a-service (SaaS) the world of technology and software is dominating.
  • The concentration of startup ecosystems is highly concentrated with 11 of the 55 ecosystems studied actually account for 78% of global Ecosystem Value with these 11 ecosystems found in seven countries.
  • It is suggested it is taking 20 years for a vibrant entrepreneurial ecosystem to develop in a city or region
  • In the next 15 years, global economic value from technological change will double so who will miss out are those that do not aggressively invest in startup ecosystems

The whole vibrancy surrounding startup ecosystems transfers itself in so many more economic ways for a region or city. It builds partnerships with larger, more established organizations within the region and allows for increasing exchange, it can infuse and inspire local universities with providing better choices for careers, learning new skills and forming partnerships that both can benefit from, defraying costs of being “stand alone”.

With a world becoming more mobile, ideas flow across boundaries, people are far more mobile than ever before and capital is attracted to ideas and people to help build these entrepreneurial ecosystems. Entrepreneurs should not be geographically constrained with vibrant ecosystems building in Asia, Africa, Europe, the Middle East and in the Americas.

The recognition that the industrial era is rapidly being replaced by the information era adds to this sense of a need to establish vibrant startup ecosystems for capturing the value creation.

I like where JF Gauthier, Founder, and CEO of Startup Genome talks fo the culture that builds from these startup ecosystems, he calls it “the revolution offered in the generosity and pay-it-forward mentality found in the startup culture”.

A growing problem for Switzerland

One note of concern for me there is no mention of Startup Ecosystems found in Switzerland. For a country claimed to be the leading innovation country, this is a glaring problem or has it some but not at any critical mass or just simply fragmented across the country.

This lack of recognition of the vibrancy that comes from a startup cluster must be a constraint. I come back to one observation “the places that fail to boldly and immediately invest in startup ecosystems and thus fail to produce startups will experience economic stagnation over time“.

Switzerland has been known for its poor support for startups and this seems to be borne out by a lack of a mention in this report. Something is wrong? Reliance on large corporation’s R&D being based here and filing patents is an older model that Switzerland needs to address, before it is facing a sudden crisis.

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