Note From a Founder

“The world of tech startups is changing. More importantly, tech startups are changing the world.”

This is the 10th anniversary of Startup Genome’s ambitious mission, and how the world has changed! In 2012, we published our first Global Startup Ecosystem Report (GSER). It was the beginning of a collaboration with hundreds of ecosystem leaders and supporters, intent on identifying the drivers of entrepreneurial success. That year, Western and English-speaking cities dominated the top 20. Not a single Chinese ecosystem and just one each from India and the Middle East ranked high. The 2022 report, by contrast, reveals thriving ecosystems in every part of the world. We may need a new name for unicorns, which today proliferate on six continents.

The COVID-19 pandemic accelerated both the growth and importance of startups, as companies rushed to digitize and sought virtual solutions to physical problems. Artificial Intelligence has become the playdough of progress, incorporated by roughly 40% of tech startups in their products. With a few fluctuations, all this change is permanent. Even when the danger recedes, no business will give up its newfound reach and efficiency.

Tech startups don’t just provide tools for digital transformation; they also embody it. Software firms have led the dispersion of talent around the globe. Startup ecosystems attract people from everywhere but also enable their departure for other cities. That is the case with Silicon Valley, which has shed a lot of high-quality talent, with many engineers and others returning to their home countries. This has further elevated Silicon Valley as the most globally connected ecosystem and the nexus of the global startup ecosystem. With fewer employees on-site, Silicon Valley has more space — its #1 constraint is to accommodate more founders, startups and supporters, whose interactions and collisions are the catalysts of innovation. This has happened — albeit to a lesser degree — in every top startup ecosystem.

So, the world of tech startups is changing. More importantly, tech startups are changing the world.

Startups as Agents of Change

The Arab Spring of 2011 demonstrated how the products of tech companies connect resisters of oppression and amplify their messages. And startups themselves always empower those with fewer economic opportunities. Visiting Saudi Arabia a few years ago, I was pleased to see accelerators with more female founders than male ones. While the government has made progress in modernizing the economy and has reduced workplace segregation, the best option for women desiring true independence is often to launch their own companies. Not only do those entrepreneurs create offices more hospitable for themselves and their female employees, they also, in some cases, develop products that promote the empowerment of women. WSM (formerly Fixtag) is one example. That out-of-the-gate success is a mobile-phone repair service targeting women, who previously discarded their devices rather than risk men viewing their photos and other private data.  

More broadly, tech startups model many of the values we admire in democratic governments. And 10 years from now, their founders may have the power to disseminate those values within autocracies, while their growing wealth and reputation earn political influence. Imagine if instead of its oligarchs, who owe their fortunes to the Kremlin, Russia produced 20,000 tech millionaires dedicated to flat organizations, cooperation, and meritocracies. Then imagine those founders funding opposition candidates and fighting the system. But while entrepreneurs are among the world’s most effective change agents, they can’t do it alone. We supporters of tech startups must show up for founders especially in countries where change is most needed. It is our responsibility to assist them with investment, collaboration, mentoring, and other means to make them drivers of change.

Tech’s Role in Fighting Climate Change

In addition, innovations by tech companies may be our best bet to prevent global disaster, given countries’ failure to negotiate or legislate their way out of climate change. But those innovations will succeed only if Cleantech startups scale. That requires, among other things, demand-side policies to overcome market fragmentation and capital that is comfortable with the industry’s long-term horizons. Startup Genome’s leadership on this issue includes launching Entrepreneurship for Climate with partners, and working with them on global hypergrowth programs in Canada, Sweden, and China.

Ecosystem leaders appear to feel less urgency about a different issue: diversity and inclusion. A common excuse is that they must focus on creating billion-dollar businesses and the associated jobs before worrying about who holds those jobs. But with the industry booming and IT vacancies high, it is time to invest real money in recruiting and developing under-represented talent. TechConnect is one organization tackling this problem. Its ambitious program is upskilling or reskilling 50,000 people from under-represented groups so they can each get a tech job. Similar programs have been taking shape in New York City and Israel. It is time for all of us to develop and fund such reskilling and upskilling programs.  

In addition to our first GSER report, 10 years ago we also published foundational research on what drives the success and failure of startups. While the global startup revolution has matured and changed the world, those underlying conclusions remain true. We invite our partners and government and business leaders to apply those lessons as they build the engines that will power their economies and — I hope — transform their societies for decades to come.