World-Leaders in Unicorn Production Per-Capita: Size is Not a Determining Factor in Ecosystem Success
The inaugural APEXE Nations Report - G20 Pilot offers an in-depth analysis of the G20 countries’ effectiveness at translating innovation potential into exponential entrepreneurship. Among its key insights, the report finds that unicorn creation is a key factor for national startup ecosystem performance, indicating health and maturity. Examination of unicorn creation within the G20 reveals a fascinating discovery: while the U.S. leads the G20 in overall unicorn production, taking a per-capita view shows a different story, where smaller, highly-innovative nations surpass the U.S. in unicorn production. This lens, where the U.S. ranks fourth globally behind Israel, Estonia, and Singapore, shows that unicorn success isn't just for the economic giants. With these insights and more, the APEXE Report guides policymakers and national ecosystem leaders in fostering environments that nurture high-growth success.
A National Scorecard for Innovation Potential
The APEXE Nations Report - G20 Pilot by Startup Genome and Global Entrepreneurship Network offers national economic and innovation ministries a unique toolkit. Backed by over a decade of primary research across five continents, APEXE introduces practical benchmarks and metrics for assessing national policies and innovation efforts. The inaugural report provides a compass for governments to evaluate the impact of their startup ecosystem policies on a national scale, guiding innovative actions with its balanced scorecard.
Globally, startup ecosystems are now major drivers of job creation and economic growth, having produced five of the 10 largest companies in the world. Tech firms make up almost 50% of the U.S. stock market, a trend mirrored internationally. However, most governments still underinvest in their startup ecosystems, relying instead on traditional economic plans or their legacy R&D advantages, which are increasingly ineffective. Sustaining future economic growth and prosperity depends on substantial and immediate investment in startup ecosystem development.
An Innovative Methodological Approach
To create the APEXE Nations Report scorecard and determine which countries most effectively convert innovation potential into exponential entrepreneurship, we developed an innovative methodological approach that not only measures inputs and outcomes, but examines the gap between them. This method assesses if countries’ startup performance aligns with or exceeds expectations.
To ensure fair comparisons, metrics are normalized to avoid size bias. For skewed distributions like patents and Ecosystem Value, metrics are adjusted by population or GDP or logged to standardize values. A number of sub-factors capture the components that build up startup innovation potential and the leading, current, and lagging variables that measure and explain startup ecosystem performance.
For the purpose of this ranking, we define successful ecosystems as those which are creating economic value from startups. In many instances, Ecosystem Value normalized by GDP (EV/GDP) is a good measure of success. However, as discussed above, this is imperfect in some situations (e.g., where a country has produced a few high-value exits but has little other activity). We therefore developed a combined model of success that captures a wider range of indicators relating to success, including a count of unicorns.
Unicorn Production is a Measure of Ecosystem Maturity
The creation of unicorns – defined as pre-exit startups valued at over $1 billion – is a key indicator for national startup ecosystem performance. Once rare, unicorns have become more common across G20 economies, indicating a maturing global startup ecosystem. Although we use several other metrics to define an ecosystem's performance, the research validates that unicorn production is a valuable metric for evaluating the health and maturity of startup ecosystems.
If we consider the country-level ecosystem’s active unicorns created in the 36 months leading up to year-end 2023, the data reveals significant disparities in unicorn production across the G20:
Active Unicorns, H2 2021 - 2023:
- United States: 595
- China: 76
- India: 67
- United Kingdom: 54
- Canada: 31
These figures highlight the concentration of high-value startups in a handful of ecosystems. However, when we examine active unicorns per million population, a different picture emerges:
G20: Active Unicorns per Million Pop., H2 2021 - 2023:
- United States: 1.8 unicorns
Canada: 0.81 unicorns
United Kingdom: 0.8 unicorns
France: 0.45 unicorns
South Korea: 0.33 unicorns
Global Leaders in Per-Capita Unicorn Production
While the United States leads unicorn production among G20 economies, it's important to consider the global landscape. When we expand our view beyond the G20, we find that several smaller, highly innovative economies outperform the U.S. in terms of unicorns per million population. This per-capita view provides insight into the density of high-value startups relative to population size, offering a measure of how effective different ecosystems are at nurturing unicorns.
Global: Active Unicorns per Million Pop., H2 2021 - 2023:
Israel: 5.6 unicorns
Estonia: 3.0 unicorns per
Singapore: 2.4 unicorns
United States: 1.8 unicorns
Luxembourg: 1.6 unicorns
This global ranking reveals that the United States, despite its dominance within the G20, actually ranks fourth worldwide in unicorn production per capita. Notably, some G20 countries, including South Africa and Russia, have not produced any active unicorns in the period from H2 2021 to 2023. This stark contrast in unicorn production points to deeper systemic differences in how various G20 nations support and nurture high-growth startups.
Key Insights
Small, Innovation-Driven Economies: The top three positions are held by relatively small nations known for their strong focus on innovation and technology.
Israel's Dominance: With 5.62 unicorns per million, Israel significantly outperforms all other countries, including the U.S., showcasing its exceptional startup ecosystem.
Estonia's Tech Success: Estonia's second-place ranking highlights the success of its digital-first policies and startup-friendly environment.
Singapore's Strategic Position: Singapore's high ranking reflects its strategic positioning as a global financial hub and its government's active support for startups.
Scale vs. Density: While larger economies like the U.S. may produce more unicorns in absolute numbers, smaller nations can achieve higher density of unicorn creation relative to their population.
Implications for G20 Economies
The success of these nations in fostering thriving startup ecosystems offers valuable lessons for G20 countries. Countries like Israel, Estonia, and Singapore have demonstrated that size is not a determining factor in startup ecosystem success. Instead, these nations have excelled through strategic specialization and focus. Israel, for instance, has become a global leader in cybersecurity startups, leveraging its unique geopolitical situation and military expertise to create a niche in which it holds a significant competitive advantage. Similarly, Estonia has positioned itself as a pioneer in digital government solutions, building on its early adoption of e-governance to create a fertile ground for Govtech startups.
Moreover, these countries have shown the importance of government-led innovation and a global market orientation from the outset. Estonia, Singapore, and Israel have implemented comprehensive policies that have significantly boosted their startup ecosystems. Estonia's e-Residency program and digital-first approach have made it incredibly easy to start and run a business remotely, while its startup visa program attracts global talent. Singapore has focused on strategic government investments in key technologies like AI and 5G, coupled with generous grant schemes such as the Startup SG initiative, which provides funding and support for early-stage companies. Israel, known as the 'Startup Nation,' has fostered innovation through substantial R&D investments, strong ties between academia and industry, and programs like the Israel Innovation Authority that provide funding and resources to startups.
While the analysis of unicorn creation within G20 economies provides valuable insights, placing this data in a global context offers a more comprehensive understanding of the startup ecosystem landscape. It highlights that even the top performers among large economies can learn from the focused, innovative approaches of smaller nations. This global perspective underscores the dynamic and competitive nature of the global startup ecosystem, encouraging continuous improvement and adaptation in policies and support structures for high-growth startups.
Unicorn Production on a Global Landscape
The analysis of unicorn creation across G20 economies highlights the complex interplay of factors that contribute to a thriving startup ecosystem. While some economies have established themselves as unicorn powerhouses, others are still developing their potential. The United States leads unicorn production among G20 economies, but it's important to consider the global landscape. When we expand our view beyond the G20, we find that several smaller, highly-innovative economies outperform the U.S. in terms of unicorns per million population.
This global ranking reveals that the United States, despite its dominance within the G20, actually ranks fourth worldwide in unicorn production per capita. It also illustrates that unicorn production is not the preserve of large economies. Understanding these disparities can help policymakers and business leaders create environments more conducive to nurturing high-growth startups and, ultimately, unicorns.