The Crucial Factor for Ecosystem Growth

Global connectedness offers an avenue to the frontiers of innovation, supporting international growth.
Marc Penzel
on June 06, 2024

In 2017, I penned a feature for Forbes detailing why startup founders should travel more. Amid the broadened horizons, new cultures, and exciting cuisine, I noted that traveling more — and building relationships with peers in the locations visited — might be one of the best things founders can do for their company.

Connecting to founders in other ecosystems and growing a wider, more global network is a key source for entrepreneurs. Being connected means a greater ability to tap into the global flow of ideas and know-how — it allows a founder to scale his or her knowledge and access.

Introducing the Global Connectedness Factor

In 2017, Startup Genome explored the concept of connections by introducing the Global Connectedness Factor to the Global Startup Ecosystem Report (GSER). We defined Global Connectedness as the degree of international connections between ecosystem stakeholders, originating from the practical observation that startups in globally-connected ecosystems have greater ease in creating leading innovations, accessing global markets, and seizing global category leadership. Global Connectedness provides founders with access to global knowledge and personal connections that can support them in international expansion.

Our feature on The Need for Global Connectedness highlighted the topic further, showing that making global connections raises the likelihood that a startup will sell to global markets. “This is true for two reasons. First, a connection to another country leads to connections with potential customers. Additionally, global connections bring founders into contact with the frontiers of innovation — this exposure raises the ambition of founders as they realize that the problem they are working on is as relevant in Bengaluru as in Boston.

Today, the power of Global Connectedness is more evident than ever. As we have shown in each annual GSER since the 2017 report, this crucial factor correlates with higher ecosystem performance and greater startup growth. In the Startup Genome Scaleup Report, we delved even deeper into the power of connectedness, showing that startups with high levels of Global Connectedness have a 3.25x higher rate of becoming a scaleup, defined as an early-stage startup with a valuation of $50 million or more.

Further research by Startup Genome shows that ecosystems that are more connected to top global ecosystems see their startups expand internationally at a much higher rate than average, and that early-stage startups that go global (defined by having more than 50% of foreign customers) are on a revenue growth curve that is 2x faster than those that do not.

Cultivating Global Growth

At Startup Genome, we are blown away by the expansive potential we’re seeing in markets like South Korea and Japan. Together with our partners and clients, we are working hard to make sure that potential is realized to the betterment of global economies. In March, we launched the late-stage scaling program Global Hypergrowth Tokyo in partnership with Tokyo Metropolitan Government. Hypergrowth provides 21 companies from Tokyo with access to global mentors, expert scaling advice from leading executives, go-to market support, and connections to potential new customers and investors as they significantly increase their international expansion capabilities.

In the GSER 2024, we are adapting our approach to connectedness to highlight the dynamism of its economic impact. In this year’s report, we define it as a key factor for Market Reach, or the measure of early-stage startups’ access to customers, allowing them to scale and potentially go global. Our 2024 ranking of the Top 40 global ecosystems will include Market Reach as a Success Factor Highlight, ranking each ecosystem with a score of 1 through 10, with 10 being the highest. The Factor determines, in part, the ratio of each ecosystem’s local tech startups with international secondary offices to secondary startup offices within the ecosystem and international investors.

This update to our GSER methodology is a result of the crucial fact that if startups and ecosystems are focusing solely on building insular, domestically-focused ecosystems, they are not capturing what they could if they were to expand globally. International connectedness offers not only financial advantages or the possibility of becoming a unicorn – it expands the possibilities of innovation. When there is global need, innovations shouldn’t be stuck in a local context. By connecting on a broader scale, companies can explore the extent of their global impact, benefitting people and societies in distant markets.

To see where your ecosystem ranks in terms of overall performance and its score in Market Reach, sign up to receive the GSER 2024 when it launches on June 10:

Contact Us

Our data shows that collaboration is at the core of the fastest growing startup ecosystems. We work with forward-looking organizations who understand that joining the global startup economy is key to to drive innovation and spur economic growth.