The Global Startup Ecosystem Report 2020 (GSER 2020)

Ecosystem Lifecycle Analysis

Understanding Your Startup Ecosystem Lifecycle

With the rapid growth of the global startup revolution, more and more regional and national governments are investing to try to accelerate the growth of their startup ecosystem. Startup Genome has developed the science of startup ecosystems and uses it to advise more than 40 governments to increase startup success.

How can policymakers prioritize to achieve maximum impact on a startup ecosystem, the most complex type of industry cluster? Over the years, extensive research and data from our global surveys with almost 100,000 founders (to date) across more than 30 countries have given us the data needed to comprehend this complex system. The Ecosystem Lifecycle Model is an objective model that helps governments measure where their ecosystem is at, prioritize its gaps, and define focused action plans that maximize impact rather than disperse their limited resources. We call it focusing policy and program resources on the right issues at the right time.

Lifecycle Phases

Startup ecosystems develop through four phases, each with a different set of characteristics, challenges, and objectives.

In general, Startup Experience (which includes scaleup experience) increases and drive 1) the growth of the ecosystem’s Startup Output (number of startups) and 2) its resources, and only after it achieves the larger size characteristics of Globalization Phase ecosystems, a predictable and increasing performance at creating scaleups and economic impact.    

  • Activation Phase
    • Characteristics
      • Limited Startup Experience (founder know-how, experienced investors, advisors and mentors, and community behaviors that support startup success)
      • Low Startup Output of around 1,000 or fewer startups
      • Challenges: lack of Startup Experience and resource leakages to later-stage ecosystems make it difficult to grow
    • Objective: Focus on increasing the Startup Output and Early-Stage Funding. Activate entrepreneurial-minded people and grow a more connected local community that helps each other. Pick one or two startup subsectors (e.g. AgTech) that build on local economic strengths and develop focused programs to accelerate ecosystem growth and develop pockets of success leading to sizable exits.
  • Globalization Phase
    • Characteristics
      • Trigger to this Phase: increased Startup Experience led to the production of a series of regionally impressive “Triggers”, usually above $100 million (higher in leading nations)
      • Output of 800 to 1,200 startups (depending on population)
      • Series of exits Trigger National (or Regional) Resource Attraction (startups, entrepreneurs, talent, investors) from earlier-Phase ecosystems, but still leaks resources to top ecosystems globally
    • Objective: Focus on increasing Global Connectedness with founders of top ecosystems, the Success Factor that defines an ecosystem’s scaleup potential, and supporting startups to increase their early Global Market Reach, which realizes an ecosystem’s scaleup potential. Urgently address remaining Success Factors gaps.
  • Attraction Phase
    • Characteristics
      • Usually more than 2,000 startups (depending on population)
      • Trigger to this Phase: a series of globally impressive “Triggers”, usually unicorns and exits above $1 billion (higher in leading nations)
      • Billion-dollar Triggers produce Global Resource Attraction
      • Very few Success Factor gaps remain
    • Objective: use Global Resource Attraction to significantly expand the size of the ecosystem and fill remaining gaps, removing barriers to immigration and directing attraction through well-designed policies programs
  • Integration Phase
    • Characteristics
      • More than 3,000 startups
      • Global Resource Attraction produces a high and self-sustainable degree of Global Connectedness and flow of knowledge into the ecosystem that sustainably keep its startups integrated in the global fabric of knowledge and able to produce leading-edge business models and the skills necessary to achieve high Global Market Reach
    • Objective: Integrate the ecosystem within the global, national, and local flows of resources and knowledge inside and outside of the startup ecosystem, optimizing laws and policies to sustain its competitiveness and growth, and spreading its benefits (e.g. culture, source of competitiveness, capital, innovation) to other sectors of the economy and parts of the nation.


Ecosystem Lifecycle Trends

High Growth Ecosystems

Asia-Pacific leads in the number of top growing ecosystems across phases. Interestingly, most of the high growth ecosystems are outside of the U.S.

*Based on growth in funding and exit

Map of Fastest Growing Ecosystems

    Early-Stage Startup Funding Across Phases

    Total Early-Stage Funding

    Globalization and Attraction phase ecosystems lead growth in early-stage funding experiencing more than 25% annual growth from 2012-13 to 2017-18.

    Median Funding Round Size

    Startup Exits Across Phases

    Globalization and Attraction phase ecosystems lead Activation and Integration phase ecosystems in terms of number of exits ($50 million+)

    Number of Exits

    Share of Large Exits ($100 million+)
    Non-Integration phase ecosystems are catching up in terms of share of large exits and reducing the gap.

    Activation Phase Ecosystems

    Median Seed Funding Rounds

      Ecosystem Growth

      Globalization Phase

      Ecosystems Median Seed Rounds

      Median Series A Rounds

        Ecosystem Growth

        Attraction and Integration Phase Ecosystems 

          Ecosystem Growth

            $B Club and $100M Exit Creation