The Global Startup Ecosystem Report 2020 (GSER 2020)
Rankings 2020: Top 30 + Runners-up
The Top Global Ecosystems of Today and Tomorrow
Key Findings
The top five global startup ecosystems remain the same, although with some movement within them. Silicon Valley maintains its #1 position. New York remains at #2, although now London is up and tied with it. Beijing is at #4 and Boston is at #5. Among the top five global startup ecosystems, only London was not in the top five in the 2015 ranking. Tel Aviv - Jerusalem and Los Angeles follow, both tied at #6.
The 2020 rankings have seen the growth of many R&D powerhouses: those ecosystems growing largely building upon their strengths on research and patent production. Tokyo (#15) and Seoul (#20) are the prime examples of this, with both ecosystems scoring the max in the Knowledge Factor — a measure of R&D activity. Shenzhen (#22) and Hangzhou (#28) also fit this ecosystem archetype.
The Rise of Asia is more visible this year, with 30% of the top ecosystems coming from the region, compared to 20% in 2012. Of the 11 new ecosystems that made it to the top ecosystems list, six are out of Asia-Pacific.
There are two new entrants in the top 20 global startup ecosystems: Tokyo (#15) and Seoul (#20). They displace Bangalore (which fell primarily due to low levels of Funding) and San Diego.
In addition to Tokyo and Seoul, new entrants among the top 30 include Shenzhen (the advanced manufacturing hub, at #22), Hangzhou (home to Alibaba, at #28), and São Paulo (#30, returning to the top ecosystems list after falling off in 2017).
- Six ecosystems debuted in the list of runners-up of top global ecosystems: Salt Lake-Provo and Dallas (tied at #31 with other ecosystems); as well as Copenhagen, Melbourne, Montreal, and Delhi, tied at #36 with Dublin.
The Most Comprehensive Research of Startup Ecosystems Globally
Startup Genome’s coverage of ecosystems is growing. Our analysis — which expanded from 60 ecosystems in 2018 to 150 in 2019 and to nearly 300 today — has allowed us to rank the top 40 global startup ecosystems as well as 100 emerging startup ecosystems. In the past, our ranking included only the top 30 startup ecosystems.
We have expanded our list of ecosystems and it now includes regions that have traditionally received less coverage, including Central Asia, Middle East, Africa, and South America. We have also expanded our list to talk about the top 100 Emerging Ecosystems. Although these ecosystems are outside the list of highest performing ecosystems, their impact and importance is significant in the global economy.
Global Startup Ecosystem Ranking (Top 30 + Runners-up)
Ecosystem Assessment and Reporting
Developing ecosystems can be a fuzzy business. Together with 300 partners, we made it a science. Without reliable benchmarks or data, innovation policies and programs often don't result in expected economic impact. Our leading entrepreneurship and startup ecosystem assessment methodologies guide policy executives toward sound decisions to develop more talent, startups, and scaleups.
Leaders
For a second year running, the top seven ecosystems have remained the same. These ecosystems are in a league of their own and command a combined Ecosystem Value of $1.5 trillion, 1.7 times the remaining top ecosystems. Silicon Valley maintains the status quo, ranked at #1, a position it has held since 2012 when we released our first rankings.
Within these top seven ecosystems, there has been some movement, with London moving up to #2 (tying with New York). Given an abundance of capital and investment, and being a magnet for global talent, London has risen to its current position of #2 from #8 in 2012.
Majors Hubs and Rising Ecosystems
Amsterdam and Stockholm have also demonstrated strong improvement over the years. Amsterdam was ranked #19 in 2015 ranking and since then it has continued to rise to #15 in 2019 to #12 in 2020. Amsterdam ranks very high in Connectedness, gaining from Netherlands’ logistical and social connectedness to the world. The country was ranked #1 in DHL’s Global Connectedness Index. In June 2018, payment processing firm Adyen listed one of Europe’s largest tech IPOs in recent times, with a value of $8 billion. On the first day of trading, shares shot up 90% and the market value of the firm was well over $30 billion in June 2020.
Stockholm, which debuted in the 2017 report at #14, climbed four places to #11 last year and managed to break into top 10 in this year’s ranking. Stockholm’s performance was driven by a high volume of substantial exits. For the ranking time frame, Stockholm placed second in Western Europe after London in terms of exits greater than $50 million, including Spotify’s IPO of $26.6 billion.
Last year, we had showcased these two ecosystems along with Shanghai as the Risers, ecosystems that stand out for their growth over the last decade and their rapid movement up the rankings.
Traditional tech centers improved significantly in this year’s ranking. The Seattle ecosystem made its debut in the top 10, rising two places from last year. Washington, D.C. is another standout case, moving up eight places in the ecosystem rankings to #11 due to its strong tech talent pool (scoring 8 out of 10 on the Talent Factor) and vibrant Life Sciences community.
Momentum
Through changes in the ranking and through the expansion of our list, we see eleven ecosystems that appeared in the top 30 and runners-up global ecosystem list for the first time:
For most of these ecosystems, the spurt in the ranking is driven by billion-dollar club startups (unicorns and companies with billion-dollar exit rounds). There are, however, some differences in the underlying reasons for these success stories.
Technology innovation centers in Asia — Tokyo, Seoul, Shenzhen, and Hangzhou — made it to the top ecosystem ranking for the first time. All four ecosystems rank among the top 10 ecosystems in Knowledge, a key driver for improvement in their ranking.
São Paulo, Salt Lake-Provo, and Montreal saw a sudden jump in big-ticket deals in the past two years. In 2018 and 2019, eight billion-dollar club deals emerged out of São Paulo compared to no such deals from 2012 to 2016. The Salt Lake-Provo ecosystem saw a jump in billion-dollar club startups in the past two years with a total of four such deals, including Nikola Motors’ $250 million Series D funding round that values the company at more than $3 billion. For the Montreal startup ecosystem, 2019 was an exceptional year that witnessed the emergence of two unicorns: Sonder and Nuvei, and the listing of Lightspeed POS Inc., which became the largest IPO by a tech firm in Canada.
Delhi has produced a steady stream of billion-dollar club startups with at least one such deal every year since 2014. The ecosystem is buoyed by international investors such as SoftBank, Sequoia, and Tiger Global, all of which are actively investing in the market and push it close to the top 20 ecosystems in terms of Funding.
Melbourne ranks very high in Connectedness and Talent. It also boasts a high percentage of founders and technical talent from overseas — almost 20% of founders are from outside the ecosystem. The city produces more technology talent than any other Australian city while Monash University and the University of Melbourne are among the top three Australian universities for engineering and technology according to the Times Higher Education ranking.
Dallas and Copenhagen’s push into the top global list is assisted by their above-average Market Reach scores. Copenhagen’s startups have been impressively able to target markets beyond mainland Europe. Major players like Zendesk, Trustpilot, and Tradeshift targeted global markets from the onset and set up offices across the globe.
Next 30
In the 2019 report, we discussed the Top 30 and the Next 30 startup ecosystems. We predicted that these Next 30 ecosystems would see continued growth and could move among the top ecosystems in the near future. We specifically highlighted Challenger Ecosystems, which we expected to break into the rankings before others. In only one year, we have seen as many as five of these Challengers — namely, Tokyo, Seoul, Shenzhen, Hangzhou, and São Paulo — move to the Top 30 rankings.
Top 30 and Runners-up
As we expand our ranking to top 40 ecosystems, with a top 30 and the runners-up (#31 to #40), we observe more and more democratization of the startup economy (as discussed in State of the Global Startup Economy). The global startup ecosystem map now includes more ecosystems and countries. Six countries have two or more top startup ecosystems.
The runners-up (#31 to #40) include a mix of ecosystems — a few that have fallen out of the top 30 rankings such as Munich, Miami, and Bern-Geneva, and a few that have moved up such as Dallas and Delhi. These ecosystems have identifiable gaps like Connectedness, Market Reach, and Knowledge that, if closed, along with focusing on strengths, can help catapult them into the top 30 startup ecosystems in the next few years.
Deep Tech Rising and R&D Powerhouse Ecosystems
Our research and in-depth knowledge has allowed us to classify ecosystems as Ecosystem Archetypes based on their primary dimensions. One of the key trends this year has been the accelerated growth of R&D powerhouse ecosystems.
Specifically, we saw Tokyo and Seoul making it to our Top 20, and Shenzhen and Hangzhou making it to the top 30 startup ecosystem lists.
Tokyo, Seoul, Shenzhen, and Hangzhou all have few things in common. These ecosystems have all had many unicorns and billion-dollar exits emerge in the past two years, and they are innovation hubs with exceptionally strong R&D and tangible IP generation.
In our last two global reports, we talked about the rise of Deep Tech and how all the fastest-growing startup sub-sectors, namely Artificial Intelligence & Big Data, Advanced Manufacturing & Robotics, Agtech & New Foods, and Blockchain, belonged to the Deep Tech field. We had predicted that the next Silicon Valley will not be like Silicon Valley but will instead grow from completely different innovations and Deep Tech would be a key to that.
During the time frame 2010-2011 to 2017-2018, Deep Tech-related sub-sectors saw stunning growth in the number of startups. The concentration of Deep Tech-related startups has increased to twice the share in the said time period.
Leveraging their exceptional tech talent and knowledge infrastructure, these startup ecosystems have managed to power their way through to the top ecosystems. However, to become truly globally-leading ecosystems they need to integrate more thoroughly developing their Connectedness and focus on business-model innovation.
Asia-Pacific Ascending
Asia’s stature continues to rise among global startup ecosystems. Initially driven primarily by Chinese ecosystems, this year's report saw new entrants among the top global cities from Japan (Tokyo), South Korea (Seoul), India (Delhi), and Australia (Melbourne). The share of Asia-Pacific cities in top global ecosystems has increased from 20% in 2012 to 30% in 2020.Earlier, most successful startups and exits in the region came from Chinese ecosystems, representing about 74% of the billion-dollar club deals -- including both unicorn valuations and exits -- in the region in 2015. However, in 2019, the share of Chinese Billion-Dollar Club deals in the Asia-Pacific region fell to about 46% thanks to successful startups in places like Seoul, Tokyo, Singapore, Taipei City, and Melbourne, among others.
However, despite the uptick, there is still some clear untapped potential for Asia-Pacific as a region. Asia-Pacific’s contribution to global Ecosystem Value has risen to 33% in this year’s ranking, but it is still less than the region’s contribution to global GDP, which stands at 38%.
Understanding the Model: Why You Should Care About Measuring Your Startup Ecosystem
The underlying drive for the Global Startup Ecosystem Report is to answer three key questions founders, investors, and policymakers have been asking all over the globe:
Where are the top-performing ecosystems in the world? Put differently, where do early-stage startups have the best shot at building global success?
Why are some places on the rise while others are falling behind?
How can ecosystems increase their chances of winning in the global startup revolution?
Since 2011 — starting as a research project with Steve Blank, the father of the Lean Startup movement, and Prof. Chuck Eesley at Stanford University — we have been on a mission to codify and understand the Success Factors of startup ecosystems so more places have a chance of creating and capturing their fair share of value created by the global startup revolution.
We have made tremendous progress since then and continue to do so. What you are looking at is by far the deepest, most comprehensive startup ecosystem research ever done — by Startup Genome, the Global Entrepreneurship Network, and our field in general. Among other things, this year our research has:
Nearly doubled the number of ecosystems studied since our last published rankings — assessing over 270 ecosystems across over 100 countries to rank the top 40 globally and produce the top 100 emerging ecosystems rankings. By extensively expanding our list of ecosystems covered, we made inroads in increasing our coverage to cover more places in Africa and South America as well.
Published the top 100 emerging ecosystem rankings for the first time. Emerging ecosystems are those ecosystems following the top 40 global ecosystems in performance. The factor weights used to rank these ecosystems are slightly different from those used with top ecosystems (detailed in our methodology section) to reflect their emerging status and emphasize the factors that influence more in ecosystems that are just beginning to grow.
Incorporated several real-time data sources to our broader model, from Google Trends to track public discourse on startups, to GitHub to identify active programmers, to Meetup data for measuring local tech events.
Conducted in-depth research on how the COVID-19 crisis is impacting startups and startup ecosystems. Through our COVID-19 impact survey, the first ever on the topic, we were able to draw numerous insights that provided the first learnings about the crisis and its impact on startups and startup ecosystems.
Collected information on public policy actions taken by governments to support startup ecosystems during the COVID-19 crisis. Our audit of public policy responses taken by the governments created a knowledge base with 200+ COVID-19-related policy measures.
Bringing it together, beyond the ranking, this means Startup Genome’s broader Ecosystem Assessment Framework includes more than 100 metrics, which better capture the ecosystem factors that drive startup performance.
For the 2020 rankings specifically, we measured a total of seven Success Factors, listed below (see the Methodology section for more details).
- Performance
- Funding
- Market Reach
- Talent
- Connectedness
- Knowledge
- Infrastructure
The three main questions we start this section with unfold into many strategic questions Startup Genome’s ecosystem assessment framework can help answer. For example:
For founders and startup executives:
- Where should I create my tech startup to maximize my chances of success?
- Where should I open a second office?
- Where can I get the most bang for buck in terms of cost?
For investors:
- Where do startups have the best odds of raising additional funding?
- Which high-performing ecosystems have a gap in experienced local investors that I might be able to benefit from?
For policymakers:
- How should I change local policies to support our startup ecosystem during the current COVID-19 crisis?
- How should I measure the progress of our startup ecosystem?
- What are the biggest gaps in our startup economy I should focus on addressing first?
Key Concepts
Ranking The ranking is primarily driven by one question: In which ecosystems will an early-stage startup have the best chance of building global success?
Startup Steve Blank defines a startup as a “temporary organization in search for a repeatable and scalable business model.” We use this definition to look across sectors and sub-sectors, including software, hardware, health, energy, and others.
Ecosystem Defined around the concept of a shared pool of resources, generally located within a 60-mile (100-kilometer) radius around a center point in a given region, with a few exceptions based on local reality.
Ecosystem Success Factor Model Our principal analytical tool, this measures different dimensions of what supports the performance of local startups. We look at nine factors for our rankings: one measuring actual performance, with eight Success Factors associated with performance, and each comprised of sub-factors and metrics. These factors are highlighted in our Methodology section, as well as in each rankings section.
Success Factor Highlights
Performance
Key Findings- Silicon Valley remains the top performer in value creation and exits, with ecosystems like Boston, London, New York City, and Beijing also performing strongly.
- Chinese ecosystems do exceptionally well in the measurement of Startup Success, showing how Chinese startups are able to move onto the next stage of funding with relative ease -- for instance, going from Series A to B.
- São Paulo, Salt Lake-Provo, and Delhi punch above their weight in translating successful startups into subsequent high valuation funding rounds.
The Performance Success Factor Assesses:
- Ecosystem Value — a measure of the economic impact of the ecosystem, calculated as the total exit valuation and startup valuations over a two-and-a-half-year time period.
- Exits — the number of exits over $50 million and $1 billion, as well as the growth of exits.
- Startup Success — how much startups succeed in the ecosystem. Measured in early-stage success (ratio of Series B to Series A companies), late-stages success (ratio of Series C to A companies and number of billion-dollar club startups), and speed to exit (both to IPO and other exits).
Funding
Key Findings
- San Diego, Sydney, and Hangzhou all stand out for low quality of Funding, demonstrating the relatively low number of local, experienced VCs when compared to other top ecosystems
Paris, Singapore, and Bangalore all stand out for high access as well as quality and activity of Funding.
Seattle, Seoul, San Diego, and Atlanta all perform worse in overall funding compared to their rank.
The Funding Success Factor Assesses:
- Access — a function of early-stage funding volume and funding growth.
- Quality and Activity — a combination of the number of local investors, investors’ experience (average years of experience and exit ratio), and investors’ activity (percentage of active investors in the first quarter of 2020, and the number of new investors).
Market Reach
Key Findings
- Tel Aviv - Jerusalem, Amsterdam, and Stockholm all do well thanks to their startups’ ability to tap global markets.
- Beijing and Shanghai have poor quality of global market reach, showing that their startups typically do better locally.
- Chicago, Austin, and Shenzhen don’t appear to create globally leading companies, with more successes focused locally.
The Market Reach Success Factor Assesses:
- Global Leading Companies — a function of scaleups and unicorns in the ecosystem. Measured in the ratio of companies valued over $1 billion (number of unicorns + $B exits to GDP), ratio of $B exits ($B exits to GDP), and large exits to funding (exits over $50M to Series A rounds).
- Local Reach — size of local markets, proxied as a function of country GDP.
- IP Commercialization — indicator of how much the policy environment encourages the commercialization of tangible IP, measured at the country level.
Connectedness
Key Findings
- Shanghai, Tokyo, Seoul, and Shenzhen all rank quite low on Local Connectedness, something that could hurt long-term potential in these ecosystems.
- Beijing, Stockholm, Hangzhou, and Salt Lake-Provo all rank low in Infrastructure for their rank, showing a clear addressable gap area in their ecosystems.
- Compared to their rankings, Bern-Geneva and Copenhagen appear to do well in Local Connectedness and Infrastructure, showing potential in the future.
The Connectedness Success Factor Assesses:
- Local Connectedness — a function of the number of tech meetups in the ecosystem.
- Infrastructure —a Life Sciences-focused measure of accelerators and incubators, research grants, and R&D anchors in the ecosystem (e.g., top research hospitals and R&D corporate labs).
Talent
Key Findings
- Among ecosystems in the top 10, Silicon Valley and Seattle are much more focused on tech than Life Sciences versus the rest of the pack.
- Melbourne’s ecosystem does especially great in tech and Life Sciences talent, followed by Dublin and Montreal.
- Hong Kong, Seoul, and Toronto-Waterloo all lag in scaling experience, mostly in technology.
The Talent Success Factor Assesses:
Tech Talent
- Access — the percentage of engineers and growth employees with at least 2 years of startup experience at the time of hiring.
- Quality — a function of the number and density of top developers on GitHub, English proficiency, and historical exits, as well as a proxy for experienced scaled teams in the ecosystem.
- Cost — average software engineer salaries, whereas more expensive salaries lead to lower scores.
Life Sciences Talent
- Access — a count of STEM students and graduates, number of Life Sciences universities, and degree programs in an ecosystem.
- Quality — a function of Life Sciences quality at local universities and their programs.
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 in the ecosystem at Series A stages.
Knowledge
Key Findings
- Dallas, Montreal, Munich, Miami, and Delhi all rank high in Knowledge score despite relatively lower ranks in the top 40.
- Tel Aviv - Jerusalem, Beijing, and Shanghai all rank low in the H-Index, which shows lower-than-average publications and research in Life Sciences.
- New York City, Washington D.C., Amsterdam, and Chicago all rank low in Patents, showing a focus of their founders on business model innovation rather than 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 patents in Life Sciences created in the ecosystem.