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The Global Startup Ecosystem Report 2021

Rankings 2021: Top 30 + Runners-up

The Most Comprehensive Research On Startup Ecosystems Globally

Startup Genome’s coverage is growing. Our analysis expanded from 60 ecosystems in 2018 to nearly 300 in 2021. That has allowed us to rank the top 40 global startup ecosystems as well as 100 emerging startup ecosystems.

Our expanded list of ecosystems now includes regions that have traditionally received less coverage, including Central Asia, the Middle East, Africa, and Latin America. Our ranking of emerging ecosystems considers places that—while not yet giants—play a growing role in the global economy.

Key Findings

  • Despite a turbulent year, the same five global startup ecosystems from 2020 remain at the top of our rankings. Silicon Valley is #1 followed by New York City and London, which for two consecutive years have tied for #2. Beijing is #4. Boston is #5.

  • This year’s top performers excel in the Talent & Experience Success Factors. Places like New York City, London, and Boston are able to attract high-quality tech talent to their ecosystems.

  • North America continues to dominate the Global Rankings, with 50% of the Top 30 ecosystems in this region. Asia is next with 27%. Europe has 17%.

  • Tokyo is the sole new entrant to the Top 10, moving up six places to #9. The primary driver: an increase in successful exits contributing to a growth in Ecosystem Value. Three other ecosystems also climbed the ranks. Shenzhen broke into the Top 20, at #19. Philadelphia moved up an impressive 15 spots, rising from #43 last year to #28 this year. Salt Lake-Provo entered the Top 30, at #30.

  • Aside from Tokyo and Philadelphia, this year’s biggest movers are Toronto-Waterloo (up to #14 from #18 in 2020) and Seoul (up to #16 from #20).


Ecosystem Assessment And Reporting
Developing ecosystems can be a fuzzy process. Working with 300 partners, we turned it into a science. Without reliable benchmarks or data, innovation policies and programs often fail to produce the expected economic impact. Our leading entrepreneurship and startup ecosystem assessment methodologies guide policy executives toward sound decisions that produce more talent, startups, and scaleups.


North America continues to dominate the Global Rankings, with 50% of the Top 30 ecosystems in this region. Asia is next with 27% and has the potential to catch up with North America as evidenced by the steady growth in exit value. Exits in the first half of 2021 alone total over $423.5 billion.



Leaders

The top seven global ecosystems have remained the same for three consecutive years. Each leader is worth at least $110 billion in Ecosystem Value, with a median of $157 billion. In aggregate, the seven leaders account for an Ecosystem Value of over $2.2 trillion, up half a trillion dollars from last year. In comparison, the remaining top ecosystems, in aggregate, are worth $942 billion in Ecosystem Value.

London remains a vibrant and growing tech hub. Its position at #2, shoulder-to-shoulder with New York City, largely derives from extremely strong performance in Funding, Connectedness, and Access to Talent. Los Angeles, previously tied at #6 with Tel Aviv, edged ahead this year with an improvement in Funding and Exit Activity, which exceeded $50 million. Tel Aviv, at #7, continues strong, appearing in the top tier across nearly all our Success Factors: Performance, Funding, Experience, Connectedness, and Market Reach.


Major Hubs And Rising Ecosystems

Tokyo has risen steadily over the years. In 2019 it was a Runner-Up; in 2020 it breached the Top 30; and this year it is #9. Tokyo excels in the Funding, Experience, and Knowledge Factors.

Asian ecosystems continue to show substantial progress. Seoul jumped to #20 in 2020 and this year landed at #16, thanks to strength in the Knowledge, Performance, and Experience Factors. Shenzhen and Hangzhou, in China, are following a similar trajectory. Shenzhen is #19 this year, up 28 spots from 2019, buoyed by substantial improvements in Connectedness and Market Reach. Hangzhou, which in 2019 was in the 50s, rose a whopping 37 spots to #25. Another Chinese ecosystem, Shanghai, remains strong at #8, a rank it has held for three consecutive years.


A few ecosystems are back stronger after a slight dip in the 2020 rankings. Toronto-Waterloo rose four spots to #14 based on gains in Performance, Funding, and Experience. Bangalore-Karnataka, at #23, improved enough in Funding, Connectedness, and Knowledge to return to the Top 25 after briefly slipping out. Sydney dropped a few spots in 2020; but this year it is back up to #24.

Some U.S. ecosystems, such as San Diego and Washington, D.C., have held steady in the global rankings. Philadelphia got a big boost, thanks largely to its strong Life Sciences ecosystem. However, a few mid-tier U.S. ecosystems risk falling behind as some of their global counterparts experience an influx of investment and international interest. Chicago, Austin, Atlanta, Seattle, and Denver-Boulder—while still in the Top 40—need to pick up the pace with investment and policy decisions that support tech entrepreneurs. In Europe, Berlin previously showed promising growth and remains in the Top 30. But this year it has been overtaken by other startup ecosystems with higher growth.

Top 30 And Runners-Up

As in 2020, six countries boast two or more top startup ecosystems. The United States has 15 of the top startup ecosystems: one more than last year. China, India, Canada, Germany, and Australia all maintained their top ecosystems.

This year’s Runners-Up (#31 to #40) include Dublin and the Research Triangle, which moved up the ranks; and São Paulo, which fell out of the Top 30. Other Runners-Up that have experienced impressive growth are Montreal, Dallas, and Delhi. Those ecosystems have seen an increase in early-stage funding, positioning them to become top performers. To the extent Runners-Up display gaps, it is generally in the Performance, Knowledge, and Experience Factors.


Understanding The Model 

Why You Should Care About Measuring Your Startup Ecosystem

The goal of the Global Startup Ecosystem Report is to answer three key questions asked by founders, investors, and policymakers around the globe:

  • Where are the world’s top-performing ecosystems: the places early-stage startups have the best shot at building global success?
  • Why are some ecosystems rising while others lag?
  • How can ecosystems increase their chances of winning in the global startup revolution?

 

Startup Genome began in 2011 as a research project with Steve Blank, the father of the Customer Development Methodology, and Prof. Chuck Eesley at Stanford University. Since then we have been on a mission to codify and understand the Success Factors of ecosystems so that more places can create and capture value generated by the global startup revolution.

We have made—and continue to make—tremendous progress. This report represents by far the deepest and most comprehensive startup ecosystem research ever done by Startup Genome, the Global Entrepreneurship Network, and our field in general. Among other things, this year’s report has:

  • Nearly doubled the number of ecosystems studied since our last published rankings. This year we assessed more than 275 ecosystems across more than 100 countries to rank both the 40 top performing and also the 100 top emerging ecosystems. This expansion allowed us to cover more ecosystems in Africa and Latin America.
  • Published our first ranking of the Top 100 Emerging Ecosystems, which follow the Top 40 in terms of performance. For the emerging ecosystems we weighted Success Factors slightly differently than for the top performers, emphasizing Factors that contribute most to ecosystems that are just beginning to grow. (For more information, please see Methodology.)
  • Incorporated into our model several real-time data sources, including Google Trends (to track public discourse on startups); GitHub (to identify active programmers); and Meetup (to measure the number and frequency of local tech events).

Beyond the ranking, Startup Genome’s broader Ecosystem Assessment Framework includes more than 100 metrics, which comprehensively capture and assess those Factors driving startup performance. For the 2021 rankings, we measured six Success Factors. (For more information, please see Methodology.) They are:

  • Performance
  • Funding
  • Market Reach
  • Talent & Experience
  • Connectedness
  • Knowledge

We began this section with three strategic questions related to identifying the most fertile ground for startups and how governments can help founders grow businesses there. From those questions emerge others, all of which our Ecosystem Assessment Framework can help answer. For example:


For Founders And Startup Executives:

  • Where should I launch my tech startup to maximize my chances of success?
  • Where should I open a second office?
  • Where can I get the most bang for my buck in terms of startup costs?

For Investors:

  • Where do startups have the best odds of raising additional funding?
  • Which high-performing ecosystems have a gap in experienced local investors from which I might benefit?

For Policymakers:

  • How should I change local policies to support our startup ecosystem during the COVID-19 crisis?
  • How should I measure the progress of our startup ecosystem?
  • What are the biggest gaps in our startup economy that we should address first?

Key Concepts

Ranking The ranking compares ecosystems based on where early-stage startups will most likely build globally successful companies.

Startup Steve Blank defines a startup as a “temporary organization designed to search for a repeatable and scalable business model.” We use this definition to look at new businesses in Sectors and Sub-sectors that include Software, Hardware, Health, and Energy.

 

Ecosystem A cluster of startups and related entities that draw from a shared pool of resources and generally reside within a 60-mile (100-kilometer) radius of a central point in a particular region. The goal of the ecosystem is to launch and grow companies. 


Ecosystem Success Factor Model Our principal analytical tool measures the dimensions that contribute to startup performance. Our rankings are based on six factors, highlighted in our Methodology section, as well as in each rankings section.
 

Success Factor Highlights

Performance

Key Findings

The Performance Success Factor Assesses:

  • Ecosystem Value: the economic impact of the ecosystem, calculated as the total exit valuation and startup valuations over two-and-a-half-years
  • Exits: the number of exits over $50 million and $1 billion, as well as growth in the number of exits
  • Startup Success: the number of successful startups in an ecosystem. Contributing metrics are early-stage success (ratio of Series B to Series A companies), late-stage success (ratio of Series C to Series A companies and the number of billion-dollar-club startups), and speed to exit (IPO and other).


Funding

Key Findings

The Funding Success Factor Assesses:

  • Access: a function of early-stage funding volume and growth
  • Quality and Activity: the number of local investors; those investors’ experience (average years investing and exit ratio); and their level of activity (percentage of investors active in the first quarter of 2021 and the number of new investors).


Market Reach

Key Findings

  • Of the Top 30 ecosystems, seven score high for the presence of globally leading companies. Hong Kong, Estonia, and Singapore are catching up quickly, hatching more of these companies in their ecosystems.
  • New York City, Philadelphia, and Pittsburgh perform well on both local and global Market Reach.
  • Many Chinese ecosystems appear to have stronger local than global Market Reach. The inverse is true in Japan.

The Market Reach Success Factor Assesses:

  • Global Leading Companies: a function of scaleups and unicorns in the ecosystem. Measured in terms of the ratio of companies valued at over $1 billion to GDP; the ratio of $1 billion exits to GDP; and the ratio of large exits to funding (exits over $50 million to Series A rounds)
  • Local Reach: size of local markets, proxied as a function of country GDP
  • IP Commercialization: an indicator of how much policy encourages the commercialization of tangible IP, measured at the country level


Connectedness

Key Findings

The Connectedness Success Factor Assesses:

  • Local Connectedness: a function of the number of tech meetups in the ecosystem.
  • Infrastructure: A Life Sciences-focused metric that considers the number of accelerators and incubators, research grants, and R&D anchors (for example, top research hospitals and corporate R&D labs) in the ecosystem


Talent

Key Findings

The Talent Success Factor Assesses:

Tech Talent
  • Access: the percentage of engineers and employees with at least 2 years of startup experience at time of hiring.
  • Quality: a function of the number and density of top developers on GitHub, English proficiency, and history of exits. Quality is also a proxy for experienced scaled teams in the ecosystem.
  • Cost: Above this is referred to as cost efficiency average software engineer salaries. (Higher salaries lead to lower scores.)

Life Sciences Talent
  • Access: number of STEM students and graduates, number of Life Sciences-focused universities and degree programs.
  • Quality: a function of Life Sciences quality of instruction and research at local universities as measured by the Shanghai Rankings.

Experience
  • Scaling Experience: the cumulative number of significant exits (over $50 million and over $1 billion) over 10 years for startups founded in the ecosystem
  • Startup Experience: the cumulative number of early-stage companies started and funded at the Series A stage.


Knowledge

Key Findings

  • Chinese ecosystems dominate the top tiers of Knowledge. Seoul, Tokyo, Bangalore-Karnataka, and Silicon Valley compete with China for the top spots.
  • Despite their higher overall performance in Knowledge, Beijing, Shanghai, Brisbane, and Zurich rank low on the H-Index, which measures publications and research in Life Sciences.
  • Top North American ecosystems like New York City and Boston; and up-and-coming ecosystems like Portland, San Diego, and Phoenix, have high H-Index scores but rank low on patents. That likely indicates a focus by founders on business model innovation rather than on leveraging tangible IP production.

The Knowledge Success Factor Assesses:

  • Research: based on the H-Index, a measure of publication impact, this metric looks at the production of Life Sciences research at the country level.
  • Patents: the volume, complexity, and potential of Life Science patents generated in the ecosystem

Next article

Rankings 2021: Top 100 Emerging Ecosystems

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