A Note From a Founder

This year marks a turning point.

After contracting 31% last year, global startup Ecosystem Value grew by nearly 40% from GSER 2025 to 2026. That is cause for optimism. But it demands an honest look at where that growth is actually happening.

The numbers tell a stark story. Global startup Ecosystem Value grew by $2.8 trillion from GSER 2025 to 2026, with Silicon Valley alone capturing $1.1 trillion – nearly 40% – of this growth, Los Angeles adding another $650 billion, and New York City contributing $100 billion. Together, just three U.S. ecosystems claimed roughly two thirds of the world’s growth in EV. The growth is real, but highly concentrated.

We have seen this pattern before. The late 1990s brought a fundamental shift – from the hardware and packaged software era to the web era. Most governments missed that transition entirely. Today, we are living through an equally defining moment as AI reshapes the global economy, and most governments are making the same mistake again.

Across the world, we see governments spending billions on compute infrastructure – as if building local data centers had ever been the engine of startup growth. By investing in infrastructure and incentivizing large corporations to adopt AI, they are not building competitive ecosystems. They are accelerating the import of solutions built in San Francisco and Seattle. 

The trillions in economic value the United States has generated from AI did not come from legacy industrial companies adopting AI. It came from AI startups created in the last few years, and from big tech companies – themselves startups not long ago – that transformed into AI leaders.

Every government faces budget constraints today. The geopolitical and economic environment makes that pressure even more acute. And yet, in this moment of scarcity, we see almost no government meaningfully increasing its investment in startup creation.

This is the wrong bet.

The old innovation model – anchored in corporate R&D and university research – has long lost its ability to drive economic growth at scale. The new engine is the startup ecosystem: from early-stage creation to scaleup growth to the emergence of global tech companies. Governments whose AI and innovation policies are designed by economists who think primarily about large corporations are building strategies for a world that no longer exists.

It is not too late. But it is urgent.

At Startup Genome, we have built a global innovation policy practice to help governments think through exactly these choices. We are now working with forward-looking governments to develop real AI startup strategies – strategies designed to build and export technology, not simply import it. If your government is ready to stop accelerating someone else's growth and start building your own, we are ready to help.