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1 Copyright © 2020 Startup Genome LLC. All Rights Reserved. The Global Startup Ecosystem Report GSER 2020 The New Normal for the Global Startup Economy and the Impact of COVID-19 Learn more and get connected at startupgenome.com 2 Learn more and get connected at startupgenome.com Copyright © 2020 Startup Genome LLC. All Rights Reserved. Table of Contents 3 About Startup Genome and Global Entrepreneurship Network 4 Our Global Network 5 About Our Global Partners 12 Startup Genome Advisory Board 14 State of the Global Startup Economy 26 Global Startup Ecosystem Ranking (Top 30 + Runners-up) 42 Top 100 Emerging Ecosystem Ranking 49 Save Your Startups: Using Policy to Kickstart the Post-Crisis Economy 57 The Meteoric Rise of Seoul’s Startup Ecosystem 59 Understanding Your Startup Eco- system Lifecycle 67 Ecosystem Deep Dives by Lifecycle 68 Activation Phase 70 Atlantic Canada, CA 72 Bahrain, BH 74 Belgrade and Novi Sad, RS 76 Busan, KR 78 Cairo, EG 80 Calgary, CA 82 Curitiba, BR 84 Edmonton, CA 86 Frankfurt, DE 88 Georgia, GE 90 Ireland Mid-East Region, IE 92 Kampala, UG 94 Manila, PH 96 New Zealand, NZ 98 Nur-Sultan, KZ 100 Québec City, CA 102 Sharjah, AE 104 Sri Lanka, SR 106 Taipei City, TW 108 Telangana, IN 110 Western Denmark, DK 112 Early-Globalization Phase 115 Copenhagen, DK 117 Greater Helsinki, FI 119 Kuala Lumpur, MY 121 Melbourne, AU 123 Montréal, CA 125 Rhineland, DE 127 Late-Globalization Phase 128 Austin, US 130 Chicago, US 132 Miami, US 134 Toronto-Waterloo, CA 136 Washington, D.C., US 138 Attraction and Integration Phase 140 Amsterdam-Delta, NL 142 Beijing, CN Copyright © 2020 Startup Genome LLC (startupgenome.com). All Rights Reserved. You agree not to reproduce nor distribute the report, either by email, website download, or any other electronic or physical means without the pri- or written authorization of Startup Genome. This material has been prepared for general informational purposes only and is not intended to be relied upon as professional advice. June 2020, version 1.0 This report cannot be offered for download on any website other than startupgenome.com 144 Berlin, DE 146 Los Angeles, US 148 Paris, FR 150 Seattle, US 152 Seoul, KR 154 Shanghai, CN 156 Singapore, SG 158 Stockholm, SE 160 Tel Aviv, IL 162 Tokyo, JP 164 Boston, US 166 London, UK 168 New York City, US 170 Silicon Valley, US 173 Methodology, Framework, and Acknowledgments 174 Methodology 184 References 202 Acknowledgments and Partners 3 Copyright © 2020 Startup Genome LLC. All Rights Reserved. Learn more and get connected at startupgenome.com Startup Genome is the world-leading policy advisory and research organiza- tion for governments and public-private partnerships committed to accel- erating the success of their startup ecosystem. We have advised more than 100 clients across 38 countries. Startup Genome’s mission is to accelerate startup success and ecosystem performance everywhere, working together with global thought leaders to define and execute robust policies and programs that drive lasting change. Our impact is rooted in over a decade of independent research with data on over a million companies across 150 cities. Working side-by-side with more than 300 partner organizations, our frame- works and methodologies have become instrumental in building foundations for startups to grow. Our efforts earned us the Research Champions award at the Global Entrepreneurship Congress 2019. Many of the world’s leading governments and innovation-focused organiza- tions have joined our knowledge network to cut through the complexities of startup ecosystem development and fuel sustained economic growth. Con- sidered the new science of startup ecosystem assessment, we point to key gaps in startup ecosystems and prioritize actions to take in addressing them. Join us and boost startup success, economic growth, and job creation in your region. Follow our work at startupgenome.com, and follow the company on LinkedIn and Twitter. The Global Entrepreneurship Network (GEN) operates a platform of proj- ects and programs in 170 countries aimed at making it easier for anyone, anywhere to start and scale a business. By fostering deeper cross-border collaboration and initiatives between entrepreneurs, investors, researchers, policymakers, and entrepreneurial support organizations, GEN works to fuel healthier start-and-scale ecosystems that create more jobs, educate individ- uals, accelerate innovation, and strengthen economic growth. Our extensive footprint of national operations and global verticals in policy, research, and programs ensures members have uncommon access to the most relevant knowledge, networks, communities, and programs relative to size of economy, maturity of ecosystem, language, culture, geography, and more. We help celebrate, understand, support, and connect entrepreneurs and those who champion them. Stay up-to-date on news and updates at genglobal.org. About Startup Genome About the Global Entrepreneurship Network 4 Learn more and get connected at startupgenome.com Copyright © 2020 Startup Genome LLC. All Rights Reserved. Existing Members New Members SEBRAE Paraná T-Hub Foundation International Trade Centre, United Nations Georgia Innovation and Technology Agency (GITA) Malaysia Digital Economy Corporation Information and Communication Technology Agency of Sri Lanka Abu Dhabi Global Market Information Technology Industry Development Agency, Cairo Sharjah Entrepreneurship Center Tel Aviv Global Tech Nation Tokyo Metropolitan Government Taiwan Tech Arena Enterprise Singapore Seoul Business Agency, Seoul Metropolitan Government North-Rhine Westphalia State Government Quebec International Ministry of Business, Innovation and Employment, New Zealand NYC Economic Development Corporation; Tech:NYC Ville de Montreal; OSMO; ETS; Real Ventures; Montreal Inc. Meath Enterprise, Mid-East Region Ireland Knight Foundation, Miami LaunchVic, Melbourne Department of Trade and Industry, Philippines Jerusalem Development Authority Houston Exponential Helsinki Business Hub TechQuartier, Frankfurt Edmonton Economic Development Corporation Digital Hub Denmark Platform Calgary; Calgary Economic Development Busan Center for Creative Economy and Innovation Digital Serbia Initiative, Cabinet of the Minister for Innovation and Technological Development Tamkeen, Bahrain Innovacorp, Atlantic Canada JSC “Zerde” National infocommunication holding” Ministry of Economic Affairs and Climate Policy, Techleap Global Startup Ecosystem Report 2020 Our Global Network 5 Copyright © 2020 Startup Genome LLC. All Rights Reserved. Global Startup Ecosystem Report 2020 About Our Global Partners TNW is a global brand that informs, inspires, and connects people who love tech through media, events, and spaces. TNW has a track record of attracting startups and talent, as well as helping ecosystems become more visible to the tech world via its custom-made programs. Provides actionable advice on private capital challenges. Combining rigorous academic approaches with real world industry expertise, our expert team focuses on complex, customized projects that require thorough analysis, whether quantitative or qualitative in nature, to help our clients assess or design strategies, improve performance, and chart winning strategies for the future. Crunchbase is the leading platform for professionals to discover innovative companies, connect with the people behind them, and pursue new opportunities. Provides data-driven intelligence on high-growth companies. A global non-profit organization on a mission to unlock the potential of deep technologies to solve the world’s toughest challenges by high- lighting, empowering and connecting the most promising deeptech entrepreneurs across the globe with the right enablers. Learn more and get connected at startupgenome.com Tech Nation (formerly Tech City UK) empowers ambitious tech entrepreneurs through growth programmes, digital entrepreneurship skills, a visa scheme for exceptional talent and by championing the UK digital sector through data, stories and media campaigns. 6 Learn more and get connected at startupgenome.com Copyright © 2020 Startup Genome LLC. All Rights Reserved. Global Startup Ecosystem Report 2020 Note from a Founder A few months ago, we all woke up to a new reality as COVID-19 changed everything. Personally, I shut down one of my startups while one of my portfolio’s startups boomed and a close friend — who had closed a large Series B in January — fired a third of her employees. Then I saw community members rise to the occasion, taking action to help others, and governments acting faster than ever to enact bold and effective policy. Clearly, we are the ones we’ve been waiting for. It’s in our hands as a global community to shape how this will play out. During the first week of lockdown, the Startup Genome Advisory Board (now called the Global Senior Policy- maker Forum) — with leaders from NYC, London, Singa- pore, Africa, South America — met to discuss the crisis, and to share and learn from each other. We realized that while we enacted policy at an accelerated speed locally, we were going to do much better if we learned from each other — our global peers — and candidly discussed what policy worked and what was failing. Startup Genome sprung to action by launching new global research to quantify the impact on startups (here), collecting global policies enacted across more than 50 countries (here), developing in-depth policy recommendations with clear arguments based on a practical analysis of the 2008 crisis (here), and contin- uing research to show what policies have had the most impact vs. what had failed. Since 2011, if there’s one thing we learned as we went from the largest global startup research firm to becom- ing the world’s leading startup policy advisors, it is that most startup policies fail. They fail to have an impact despite the deep expertise and drive of the local public and private leaders. They fail because when we don’t 7 Learn more and get connected at startupgenome.com Copyright © 2020 Startup Genome LLC. All Rights Reserved. learn from others, we repeat the mistakes of others and waste literally millions of dollars. It has been central to the mission of Startup Genome to build a global knowledge platform for you to learn from others, where we discuss real outcomes — includ- ing policies that failed and why they failed — behind closed doors. From research to policy we have now created a global movement, working with The Global Entrepreneurship Network, The World Economic Forum, The World Bank, and other like-minded teams. This movement provides an offer to help you, and it is also an offer for you to help and to spread the benefits of the global startup revolution to more countries. It will have an increasing impact on our economies and our lives. The COVID-19 crisis has only accelerated the transition to a digital economy and, like every crisis, has called entrepreneurs to innovate faster and in new ways. But as I wrote in last year’s GSER, the global startup revolution is not without problems. As a community we need to step up to our responsibilities, as we have become a driving force in nearly every aspect of life. We create wealth but also produce disparity rather than shared benefits. Our platforms can support democracy in countries while hurting it in others. We can only solve these issues by working together. I also know that entrepreneurship and innovation can provide and have been providing solutions to many problems. And it is unstoppable. The economic recov- ery of 2009 was built not in small part upon technology entrepreneurship. In 2020, most political leaders know the recovery depends on our startups, as much as solu- tions to the climate crisis do. Join our global knowledge platform to learn the proven policies and programs that will accelerate the growth of your ecosystem, produce scaleups and be an engine of economic recovery and growth for your population for the next decade. It is time to invest in the right way. To coincide with our launch of the GSER 2020, on June 25, 2020, we are bringing together the leading policy- makers and ecosystem leaders in the world to talk and share during the Ecosystems Couch Conference we produced with The Financial Times, The Next Web and FDI Intelligence. Next, we will be organizing a set of policy workshops that will go deeper, where a global community of poli- cymakers and ecosystem leaders will discuss policy and JF Gauthier Founder and CEO of Startup Genome learn from one another. Reach out to join us and your peers, and let’s work to achieve a much bigger impact together. 8 Copyright © 2020 Startup Genome LLC. All Rights Reserved. Learn more and get connected at startupgenome.com Foreword In the first half of 2020 we have witnessed how fragile and exposed our global systems and structures are to a major global crisis. As we come to terms with the global pandemic and look to the future, we have an oppor- tunity for a global reset — to build a better, greener, and more resilient and inclusive future. Innovation, new technologies, and scientific discoveries are critical components in this reset. If we want to take advantage of this opportunity, we need to make sure advanced technologies produced through innovation form not only the cornerstones of national economic competitiveness, but also embody the social shift toward digital and entrepreneurial life- styles. They create a wealth of possibilities, inspiring generations, enhancing growth and providing critical solutions to pressing issues from healthcare to climate change. At the same time, innovation ecosystems, like any ecosystem, needs support to flourish and grow. The regulatory environment, access to resources, true multi-stakeholder involvement, public-private collabo- ration, and mentorship networks that nourish innova- tors are all key to a healthy innovation ecosystem. The World Economic Forum, as the International Or- ganization for Public Private Collaboration, is commit- ted to improving the state of the world by providing the platform for multi-stakeholder engagement and impactful action that shapes global agendas for a sus- tainable and responsible future. In the midst of the pandemic we launched a COVID-19 action platform, and we created Industry and Regional Action groups to support the agenda for a global reset which can pave the way for a better future. The World Economic Forum continues to support inno- vation ecosystems across the globe, through initiatives like Digital ASEAN, Digital Europe, and the Schwab Social Entrepreneurs community. Digital Europe, for example, promotes a pan-European approach to innovation, Global Startup Ecosystem Report 2020 The continued urgency for public-private collaboration 9 Copyright © 2020 Startup Genome LLC. All Rights Reserved. Learn more and get connected at startupgenome.com Martina Larkin Head of Regional Strategies, Europe and Eurasia; Member of the Executive Committee, World Economic Forum building bridges between founders, investors, and ac- ademics as well as policymakers and corporate execu- tives, enabling hubs to thrive from Berlin to Bratislava. Europe hosts ecosystems of varying maturity, with some of the world’s most advanced locations just a short flight from those still catching up on develop- ment. This creates a unique opportunity to observe ever-changing dynamics and to promote both local and global connectedness, which Startup Genome research shows as critical to success. Now is the time to support such development. In the months following COVID-19 lockdowns, Startup Genome research showed that only 28% of startups have seen their funding proceed as normal, and over 74% have had to terminate full-time staff. These effects are even more palpable where connectedness is lower, and government support not be as readily available and accessible. Public sector support, in close alignment with private investment, will be critical to restoring the vitality of startup ecosystems around the globe, as seen by the hefty stimulus packages already announced by some governments. In Europe, the unwavering commitment of the European Commission under President Von der Leyen to both the digital and green agenda has aimed to preserve the flourishing innovation which the 2019 Global Startup Ecosystem Report (GSER) praised for growth prior to the pandemic. But there is also hope — no crisis comes without opportunity, and over half of today’s Fortune 500 companies were created during a bear market, with 50 tech unicorns founded between 2007-2009. The Global Startup Ecosystem Report (GSER) provides an important barometer of development across 100+ cities globally, which, for the first time, are all facing the common challenge of rebuilding as strict lockdown measures subside. Some of these hubs will see new digital companies coming out on top, with sectors pre- viously in decline, like gaming and online education, resuming unparalleled growth. Others may struggle, and realise they need to take decisive action to avoid being left behind as the whirlwind of change sweeps away antiquated and analog routines. Above all, it is critical that each hub and its startups, regardless of where they may fall in the ranking, remain connected, vibrant communities that can play a critical role in this reset. As startups are a main driver of job creation and in- novation, their survival will be essential to both the social and economic COVID recovery. The World Eco- nomic Forum is pleased to support the work of Startup Genome in ensuring that startups continue to create prosperity and employment, contribute to sustainabili- ty, and, with their talent for innovation and inspiration, build a more resilient world. 10 Copyright © 2020 Startup Genome LLC. All Rights Reserved. Learn more and get connected at startupgenome.com A Word from GEN Global Startup Ecosystem Report 2020 Our mission at the Global Entrepreneurship Network (GEN) has always been to build — through program- ming in 170 countries and 80 GEN affiliate national operations — one global entrepreneurial ecosystem that makes it possible for anyone anywhere to start or scale a business. In the wake of the coronavirus crisis this work has never been more important. The pandemic was a global crisis tailor-made for a global response. Astoundingly, it never got one. When it comes to rebuilding our economies in the wake of this crisis, we must work collectively rather than in iso- lation. You may not hear it very often from our elected leaders, but all boats rise, or sink, together. We’ve all seen national borders are porous to viruses. They are equally porous to innovation. Most net new jobs come from firms less than five years old. Regenerating jobs after COVID-19 depends on eliminating structural barriers that make it harder for more entrepreneurs to iterate ideas and figure out better ways of doing things. As governments focus on economic recovery, they are looking to ecosystems around the world for models and guidance. Entrepreneurs are the leaders. The rest of us — gov- ernments, universities, corporations, investors, accel- erators, nonprofits — are here to support them. To do that effectively, we must understand what entrepre- neurs really need from us and what interventions are effective. That’s why as one example GEN is building the Startup Nations Atlas of Policies (SNAP), a knowledge portal that gathers next generation policies govern- ments are deploying to unleash their entrepreneurial capacity. It’s also why the 2020 Global Startup Ecosys- tem Report (GSER), which illuminates what levers to pull and what trends to act on, is so vital. 11 Copyright © 2020 Startup Genome LLC. All Rights Reserved. Learn more and get connected at startupgenome.com Make no mistake, we’ve had a massive shake up not just to the global economy, but to the structure of life. There will be winners and losers. Tough adjustments will need to be made. Some business models will no longer be viable. But this crisis has also shown systemic change is possible. Changes that once seemed impos- sible due to politics or inertia now look possible in a matter of weeks. That disruption isn’t to be feared. It’s to be embraced. I thank Startup Genome and all our report partners for helping us learn and improve together at a time when the performance of the global entrepreneurial ecosystem has never been more vital to the future of all citizens around the world. Jonathan Ortmans President, Global Entrepreneurship Network (GEN) 12 Copyright © 2020 Startup Genome LLC. All Rights Reserved. Learn more and get connected at startupgenome.com Global Startup Ecosystem Report 2020 Startup Genome Advisory Board North America • Cheryll Watson, YEG Innovation Leader, Former Head of Innovate Edmonton, Edmonton, Canada • Dan Herman, Co-founder MyJupiter Inc. and former Head of Strategy, Innovation Canada, Toronto, Canada • Justin Kreamer, Senior Vice President, New York City Economic Development Corporation, New York, United States • Patrick Gagné, CEO, OSMO & Co-Founder, Bonjour Startup Montréal, Montreal, Canada • Raul Moas, Director, Knight Foundation, Miami, United States LATAM • Felipe Matos, Founding Board Member, Dínamo-Bra- zilian startup advocacy group, São Paulo, Brazil UK & Europe • Gerard Grech, CEO, Tech Nation (fka Tech City UK), United Kingdom • Ruben Nieuwenhuis, Co-Founder, StartupAmster- dam, The Netherlands • Santtu von Bruun, Vice-Director of Economic Devel- opment, City of Helsinki, Helsinki, Finland The Advisory Board is made up of leading ecosystem development experts from our Members across the world, with a mix of officials from different levels of government and leaders of public/private innovation and ecosystem development agencies. Africa & Middle East • Eytan Schwartz, CEO, Tel Aviv Global, Tel Aviv, Israel • Fabian Vandenreydt, Advisor to the Chairman, Abu Dhabi Global Market, Abu Dhabi • Jean Phil Nsengimana, CEO Idex Africa Former Min- ister of ICT, Rwanda • Karim Sy, President, Digital Africa, Senegal • Yogavelli Nambiar, CEO, Allan Gray Orbis Founda- tion, South Africa Asia-Pacific Region • Edwin Chow, Asst. CEO & Director, Enterprise Singa- pore, Singapore • Kate Cornick, CEO, LaunchVic, Melbourne, Australia • Surina Shukri, CEO, Malaysia Digital Economy Cor- poration, Malaysia 13 Learn more and get connected at startupgenome.com Copyright © 2020 Startup Genome LLC. All Rights Reserved. 14 Copyright © 2020 Startup Genome LLC. All Rights Reserved. Learn more and get connected at startupgenome.com Global Startup Ecosystem Report 2020 State of the Global Startup Economy 1. 2017 to first half of 2019 2. https://news.crunchbase.com/news/the-q4-eoy-2019-global-vc-re- port-a-strong-end-to-a-good-but-not-fantastic-year/ 3. https://startupgenome.com/reports/global-startup-ecosystem-re- port-2019 4. https://www.bloomberg.com/opinion/articles/2020-05-18/the-uni- corns-fell-into-a-ditch The global startup economy remains large, creating nearly $3 trillion in value, a figure on par with the GDP of a G7 economy.1 Seven out of the top 10 largest com- panies in the world are in technology — the highest concentration of any industry sector among the top global companies — and 2019 saw close to $300 billion in venture capital investments around the world.2 Nonetheless, even at the end of 2019, not all was well. Inclusion remained a fundamental challenge for tech ecosystems, with only 14.1% of founders globally being female, as our Startup Genome research shows.3 Value creation by ecosystems remains concentrated, with about 74% of all value produced being concentrated in the top 10 performing cities globally. Tech giants like WeWork and the stable of unicorns funded by Softbank began to falter — ranging from major crises, as in the case of WeWork; to a capital crunch for others.4 But despite these challenges, we did not expect the major threat of the COVID-19 crisis to global ecosys- tems. Since the crisis hit: • Layoffs among startups are rampant, with just over a third of startups globally not laying off staff nor cutting hours, and with the typical startup with full- time layoffs letting go an average 33% of the staff; and • Startups are facing a double whammy with a drop in consumer demand at the same time VC investments are dropping, leading to a crunch for capital. In fact, 15 Copyright © 2020 Startup Genome LLC. All Rights Reserved. Learn more and get connected at startupgenome.com four out of every 10 startups have 3 months or fewer of capital runway, meaning they will die if they do not raise additional money and their revenue and expenses remain the same. While we see early signs of a rebound in Asian ecosys- tems — nothing like a return to normal, but a slowdown of the drop — the startup economy is going through a major transition. In 2020, the State of the Global Startup Economy can be seen through two main angles: the calm before the storm, up to Dec. 2019, and the consequences of the COVID-19-triggered crisis. 5. https://www.investopedia.com/terms/u/unicorn.asp#:~:text=Uni- corn%20is%20the%20term%20used,by%20venture%20capitalist%20 Aileen%20Lee 6. https://techcrunch.com/2013/11/02/welcome-to-the-unicorn-club/ 7. https://startupgenome.com/reports/global-startup-ecosystem-re- port-2019 8. https://hbr.org/2018/03/what-breaking-the-4-minute-mile-taught- usabout-the-limits-of-conventional-thinking The $4 Billion Barrier In 1964, Roger Bannister became famous as the first person to ever run a 4-minute mile — break- ing a barrier that had stood for decades and many thought humanly impossible to reach.7 Once he showed it could be done, the same barrier was broken by John Landy, an Australian runner, only 46 days later. And as Bill Taylor relates in a Harvard Business Review article, just a year later three runners broke the barrier in the same race.8 Once Bannister showed the possibility, that level of performance that had never been done for decades became achievable. Since then, over 1,000 runners have completed a 4-minute mile. As more cities around the globe become viable startup ecosystems, we think a similar thing might be happening, as we wrote in the 2019 Global Startup Ecosystem Report. As of 2020, we have identified and studied nearly The Calm Before the Storm In the lead up to the crisis, the dominating trend for ecosystems globally has been the growing democrati- zation of tech across geographies. Democratizing the Tech Economy Despite the concentration of value in tech ecosystems, access to the tech economy is increasingly democra- tized. In 2013, tech unicorns became a phenomenon, with the term popularized by Aileen Lee from CowboyVC.5 6 The name alludes to the rare and nearly mythical quality of these companies. But while still powerful they are not so rare anymore. When we analyzed com- panies in the billion-dol- lar club — exits or private companies in technology with over $1 billion in val- uation — in 2013-2019 we see that in 2013 only four ecosystems produced unicorns or billion-dollar exits. Today, a cumula- tive 80+ ecosystems have done so, astoundingly. 16 Copyright © 2020 Startup Genome LLC. All Rights Reserved. Learn more and get connected at startupgenome.com 70 ecosystems creating over $4 billion dollars in Ecosystem Value — a measure capturing the value of startups funded and exited in an ecosystem over two and a half years (2017 to first half of 2019).9 This is 48% more ecosystems than we identified last year, and nearly double what we identified three years ago. While historical data on this is tricky, it is hard to imagine more than a few startup ecosystems cre- ating that level of Ecosystem Value in the 1990s. As Pitchbook data shows, Boston had about $900 million in VC investments in 1998, New York City had $800 million, and both Seattle and London had only about $200 million in investments in the same year.10 In 2019 we predicted that 100 cities would cross the $4 billion threshold in Ecosystem Value by 2029. It looks like we might hit that milestone even earlier. There Will Be No “Next Silicon Valley.” There Will Be 30 “Instead of one new center or two new centers (of entrepreneurship, besides Silicon Valley), there will be 30, and there will be clusters in different places that don’t quite get to the density of the Bay Area but get beyond critical mass.” Sam Altman, Y Combinator and OpenAI In the 2019 Global Startup Ecosystem Report we wrote about our belief that in the future, there will be no “Next Silicon Valley,” but instead at least 30 global centers of entrepreneurship that are either: regional (e.g., Sao Paulo in South America or Jakarta in Southeast Asia) or sub-sector leaders (e.g., Shenzhen, with its world-class performance in Advanced Manufacturing and Robotics). In last year’s report, we published the ranking of the top 30 global ecosystems and also highlighted 12 Challeng- er ecosystems: those ecosystems that were not part of the Top 30 at the time but had the potential to become so in the future. Of the 12, seven (or 58%) are now part of the Top 30 Global Ecosystems and Runners-up lists, and three (25%) are among the top five Emerging Global Ecosys- Ranking 2020 Change from 2019 Change from 2017 Silicon Valley 1 0 0 New York City 2 (tie) 0 0 London 2 (tie) 0 0 Beijing 4 0 0 Boston 5 0 0 Tel Aviv 6 (tie) 0 -1 Los Angeles 6 (tie) 0 3 Shanghai 8 0 0 Seattle 9 3 1 Stockholm 10 1 4 Washington DC 11 8 NEW Amsterdam 12 3 7 Paris 13 -4 -2 Chicago 14 3 4 Tokyo 15 NEW NEW Berlin 16 -6 -9 Singapore 17 -3 -5 Toronto-Waterloo 18 -5 -2 Austin 19 -3 -6 Seoul 20 NEW NEW San Diego 21 -1 NEW Shenzhen 22 NEW NEW Atlanta 23 5 -1 Denver-Boulder 24 -3 -3 Vancouver 25 -1 -10 Bangalore 26 -8 -6 Sydney 27 -4 -10 Hangzhou 28 NEW NEW Hong Kong 29 -4 NEW Sao Paulo 30 NEW NEW 31-35 and 36-40 are alphabetical order Bern-Geneva -12 NEW Dallas NEW NEW Miami -5 NEW Munich -5 NEW Salt Lake-Provo NEW NEW Copenhagen NEW NEW Delhi NEW NEW Dublin -10 NEW Melbourne NEW NEW Montreal NEW NEW 31 (ties) 36 (ties) Top 30 Global Startup Ecosystems and Runners-Up 9. 68 ecosystems have hit this benchmark as of 2019 10. 2019 Global Startup Ecosystem Report 17 Copyright © 2020 Startup Genome LLC. All Rights Reserved. Learn more and get connected at startupgenome.com tems — a new ranking Startup Genome is debuting this year that includes 100 ecosystems in total — those outside the top 30 and runners-up global that are none- theless seeing impressive performance and growth. The Rise of Asia-Pacific A major beneficiary of this democratization of tech is the Asia-Pacific region, which has gone from having 20% of top ecosystems in 2012 to 30% of them today. 18 Copyright © 2020 Startup Genome LLC. All Rights Reserved. Learn more and get connected at startupgenome.com When it comes to the rise of Asia-Pacific, there are five key findings to highlight: 1. Seoul and Tokyo have broken into the top 30 global startup ecosystems, in no small part due to their strength as R&D powerhourses. We cover more about the story of Seoul and their massive investments of $1.6 billion in the next three years in a special feature on this report. 2. Melbourne joins the select group of top global eco- systems as a runner-up, getting closer in perfor- mance with Sydney over the years. While Sydney is still ahead of Melbourne, in some key metrics Mel- bourne is catching up. For example, Sydney was the first city in Australia to have a unicorn, but now Melbourne has two: Airwallex and Judo Capital (a challenger bank). 3. Continental China has gone from having two of the top 30 global startup ecosystems in 2017 to having four of the top 30 in three years: Beijing, Shanghai, Shenzhen (the robotics and advanced manufacturing powerhouse), and Hangzhou (home to Alibaba). 4. Delhi joins Bangalore in the list of top ecosystems, bringing the number of Indian cities represented up to two. 5. Singapore and Hong Kong continue to perform well, but now have more regional competitors than they had before. If we were publishing this report in December 2019, our reporting on the state of the global startup economy might have stopped there. But the COVID-19-triggered economic crisis has hit — the worst global downturn since 1929 — and the startup economy is being severely affected by it.11 The Post-COVID-19 Crisis and the Impact on Global Ecosystems Risk of a Mass Extinction Event for Startups 11. https://blogs.imf.org/2020/04/14/the-great-lockdown-worst-eco- nomic-downturn-since-the-great-depression/ 12. The figures by continent exclude Sri Lanka from the Asian average, which was an outlier in terms of survey responses As the COVID-19 crisis hit across the world, startups have found themselves in a double bind, being hit hard from two main shockwaves: capital shock and demand. Shockwave #1: Capital On the capital side of the equation, there is a crunch for capital across the world. This capital crunch manifests itself in three key statistics: First, four out of every 10 startups today are in the red zone: they have three months or fewer of capital runway. This means that they will collapse if they do not raise additional capital and their revenues and ex- penses remain unchanged, risking a mass extinction event for startups globally.12 19 Copyright © 2020 Startup Genome LLC. All Rights Reserved. Learn more and get connected at startupgenome.com If we focus on startups on Series A+ only, we see that 35% of startups have 6 months or fewer of capital — a troublesome figure given how long it takes to raise a Series B or later round, especially in the current envi- ronment. Second, the fundraising process has been dramat- ically disrupted. Even for startups that already had term sheets from investors before the crisis, signed or unsigned, three out of every four startups have had the fundraising process disrupted. A dramatic 18% of those startups with term sheets have had a funding round canceled by the investor, and 54% have had their funding round delayed or the lead investor become unresponsive. Third, total VC funding has dropped dramatically across every single continent. Globally, it is down by 20% in the three months of 2020. In some regions of the world it dropped even more sharply. China, the first country hit by the crisis, had funding drop by over 50% relative to the rest of the world, as we have written for the World Eco- nomic Forum.13 While the country is experiencing a rebound in investments in March, it still faces lower activity than it had in De- cember 2019.14 13. https://www.weforum.org/discom?bobulate=e%2B9TU9KHU- xwgQdkVl69g64ckL4%2Bj9RblNs46g96WtfDYzGwDxELg- J87Q9v2s%0A1U9CyK9N8n38QQWBcEbReLlP1g%3D%3D%0A 14. https://startupgenome.com/reports/global-funding-im- pact-covid-19-startup-ecosystems 20 Copyright © 2020 Startup Genome LLC. All Rights Reserved. Learn more and get connected at startupgenome.com Shockwave #2: Demand The other side of the equation on the shocks affecting startups is we have seen demand drop like a rock for most companies. About 72% of startups saw their revenue drop since the beginning of the crisis, with the average startup experiencing a decline of 32%. Shockingly, almost 40% of companies of the companies saw their revenue drop by 40% or more, and only about 12% are experiencing significant growth. The impact is uneven between different sectors and regions, as we show below. 21 Copyright © 2020 Startup Genome LLC. All Rights Reserved. Learn more and get connected at startupgenome.com The Downstream Effects of the Corona- virus Crisis The downstream results of these two shocks are dra- matic: Over 60% of startups have laid off employees or reduced salaries. For startups reducing FTEs, an average of 33% of jobs were cut, as the Startup Genome COVID-19 Impact Insights survey shows. This is also reflected in crowdsourced data about startup layoffs globally, with the number of employees laid off identified in these crowdsourced lists growing 5x between March and May 2020. Some of the types of job cuts are exactly what you would expect given drop in demand and even operational availability of selling: jobs in Direct Sales (36% of com- panies with job cuts) and in Marketing (29%). But a sig- nificant number of jobs cut are particularly troublesome because they hurt a company’s long-term innovation capacity. Roughly 31% have cut jobs in R&D, and 32% have cut jobs in Product (e.g., software engineers). This is a major problem not only for the post-crisis prospects of startups, but also for their ecosystems. As tech talent is laid off, they might be absorbed by large corporates, leaving the startup ecosystem altogether. And for tech hubs that are less mature, such as the ones we cover in our Emerging Ecosystems Ranking, these scientists and Cost-Cutting and Expectations Relatedly, 71% of startups have reduced their expenses, for an average cost cutting off 22%. When we look at what founders expect for their com- panies in the next two months, 31% expect they will have to do salary cuts, and 13% of startups expect they will have to terminate more employees. In terms of revenue, only 10% of startups expect their revenue will grow a lot. 40% expect it will stay about the same or grow a little, and a dramatic 28% think their revenue will still drop a lot further. The combination of drop in expenditures, salary cuts, and layoffs have downstream effects for the rest of society, not just today but also tomorrow’s potential for economic growth and innovation capacity. When startups suffer, the whole economy suffers. Tech Economy Will Be Crucial for the Recovery The unstoppable march of the economy becoming in- creasingly reliant on digital and technology products got accelerated by the crisis triggered by COVID-19.15 This means that, even more than in the previous crisis, the tech economy will be fundamental for recovery. engineers might end up leaving the city altogeth- er for the more robust startup labor markets in places like Silicon Valley, London, and New York. 15. https://startupgenome.com/reports/global-startup-ecosystem-re- port-2019 22 Copyright © 2020 Startup Genome LLC. All Rights Reserved. Learn more and get connected at startupgenome.com First, as about a decade of research has shown, most of the net job creation in the economy comes from new young companies, especially those that scale.16 17 Second, when we compare dollar for dollar, startup jobs are cheaper to save than traditional small business jobs by government programs — about 41% cheaper, as we cover in a recent funding policy paper.18 Some govern- ments even believe these investments can generate positive returns on taxpayer money, as does Israel now. Third, in addition to creating most of the net new jobs, tech companies have impressive job multipliers. The best estimates we have suggest that for every high-tech- nology job, five other jobs are created in the economy.19 16. https://www.kauffman.org/wp-content/uploads/2019/12/state_of_ entrepreneurship_address_report_2017.pdf 17. https://www.gsb.stanford.edu/faculty-research/publications/ rise-fall-startups-creation-destruction-revenue-jobs-young-compa- nies 18. https://startupgenome.com/reports/well_designed_funding_policy_ crisis 19. https://sloanreview.mit.edu/article/the-multiplier-effect-of-innova- tion-jobs/ 20. https://startupgenome.com/reports/global-startup-ecosystem-re- port-2017 This is not only because these jobs pay high wages, but also because they create new products, innovations, and are such big exporters for the economy.20 Notice that the tech jobs are cheaper to save through govern- ment action even without taking into consideration the employment multipliers and the higher average wages (and contribution to tax base) of tech jobs. Fourth, in the wake of the Great Recession, startups contributed strongly to the economic recovery. By 2011, employment in the “Computer Systems Design and Related Services” industry was growing by 2.6% per year, while in job creation the overall economy was neg- ative, at -1.2%. In fact, between 2007-2011, job growth in Computer Systems (a subset of the larger “Professional Services” sector) was larger than job growth in all major sectors of the economy, including Healthcare. 23 Copyright © 2020 Startup Genome LLC. All Rights Reserved. Learn more and get connected at startupgenome.com New Normal for Economic Development As the Financial Times’ fDi wrote based on Startup Genome’s policy advisory, governments need to act to support startups and bail them out in the same way they are doing for traditional industries and small businesses.21 We need a new normal for economic de- velopment, where we are supporting the technology economy just as much as we were supporting tradi- tional small businesses and traditional industries like airlines. This is especially true for ecosystems that are not at the very top and do not have the decades of experience, talent, and capital to draw upon during times of crisis. One of the reasons acting now is particularly critical is that startup ecosystems have increasing returns to scale due especially to network effects. As the number of startups in the ecosystem grows, the whole economic community related to the ecosystem — talent, universi- ties, startup support organizations — produces more value. An ecosystem that is 3x larger creates about 5x more economic value. This also means that if you lose about 20% of startups, you can expect to lose about 27% in value. If you lose 40% of them, which is the figure for startups in the red zone globally, and you’re risking shaving off over 50% of economic value produced by your ecosystem. *Computer Systems Design and Related Services classification (NAICS 5415) refers to “establishments pri- marily engaged in planning and designing computer systems that integrate computer hardware, software, and communication technologies”. Numbers for the U.S. labor market Economic Impact of Startup Ecosystem Accelerates with Ecosystem Size Ecosystem Value by Number of Tech Startups in Ecosystem 21. https://www.fdiintelligence.com/article/77701 22. https://startupgenome.com/reports/well_designed_funding_policy_ crisis 24 Copyright © 2020 Startup Genome LLC. All Rights Reserved. Learn more and get connected at startupgenome.com Ecosystem Policy Is the New Industrial Policy The reality is that, once we are through with this crisis, top startup ecosystems will remain high performing. Places like Silicon Valley, New York, London, and Beijing will continue to produce tremendous innovations and create astounding value. They have depth of talent, experience, and capital in the ecosystem; which might retract but will remain there post-crisis. That is not the case in emerging ecosystems, where failures now will leave deep scars. Talent that gets laid-off might make a permanent switch to working for big corporates or move to another city altogether.23 The same is true for founders who might have to close their businesses. Ecosystems need to invest now to not lose the progress made in the past 10 years. The Next Great Generation of Compa- nies and Ecosystems Every crisis creates opportunities, and this crisis is no different. For instance, over half of Fortune 500 compa- nies started during a contraction, as our colleague Dane Stangler has written, and over 50 unicorns were created in the Great Recession alone, as Startup Genome data shows. The list of companies funded during the Great Recession is impressive. It includes Facebook, LinkedIn, Palantir, and Dropbox — all of these based in the Bay Area. In the same way opportunities are unlocked for com- panies, they are also unlocked for ecosystems. The current crisis has accelerated the digitization of the offline economy, making tech companies even more important. The actions of ecosystems today will help determine how they will be positioned in the global stage tomorrow. At the same time, this is a unique op- portunity for all of us to rebuild our economic commu- nities with a lower negative impact on the environment and a stronger focus on inclusion and fair access to the amazing value that tech ecosystems create. Just like the rise of both London and New York City came at the heels of the 2007-2009 Great Recession — in their attempt to diversify from reliance on their traditional strengths in finances — the post-COVID-19 recovery will see new ecosystems rising. 23. https://startupgenome.com/blog/prevent-disintegration-start- up-ecosystem-talent-pool 25 Learn more and get connected at startupgenome.com Copyright © 2020 Startup Genome LLC. All Rights Reserved. 26 Copyright © 2020 Startup Genome LLC. All Rights Reserved. Learn more and get connected at startupgenome.com Global Startup Ecosystem Report 2020 Global Startup Ecosystem Ranking 2020 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 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% 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 ecosys- tems 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 per- forming ecosystems, their impact and importance is significant in the global economy. of the top ecosystems coming from the region, com- pared 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 manu- facturing 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 Co- penhagen, Melbourne, Montreal, and Delhi, tied at #36 with Dublin. 27 Copyright © 2020 Startup Genome LLC. All Rights Reserved. Learn more and get connected at startupgenome.com Ranking Performance Funding Connectedness Market Reach Knowledge Talent Growth Index Silicon Valley 1 10 10 7 10 10 10 7 New York City 2 (tie) 10 10 10 9 5 10 7 London 2 (tie) 9 10 10 10 7 10 7 Beijing 4 10 9 1 10 10 10 9 Boston 5 9 9 9 9 5 9 7 Tel-Aviv - Jerusalem 6 (tie) 9 9 8 10 4 9 6 Los Angeles 6 (tie) 9 10 4 9 7 9 6 Shanghai 8 10 8 1 8 10 9 9 Seattle 9 8 6 9 8 7 8 6 Stockholm 10 8 5 5 8 3 7 4 Washington DC 11 5 7 7 7 1 8 6 Amsterdam 12 6 7 10 7 1 7 6 Paris 13 4 9 9 1 1 8 4 Chicago 14 5 6 6 6 1 8 7 Tokyo 15 7 8 1 3 9 7 8 Berlin 16 7 7 10 2 1 7 7 Singapore 17 4 8 7 8 1 4 7 Toronto-Waterloo 18 5 8 8 6 2 6 8 Austin 19 5 6 7 5 7 6 8 Seoul 20 7 3 1 9 10 5 4 San Diego 21 6 2 3 7 6 6 6 Shenzhen 22 7 6 1 1 9 5 9 Atlanta 23 4 1 4 6 1 6 6 Denver-Boulder 24 3 5 6 5 4 5 5 Vancouver 25 6 1 5 5 2 4 7 Bangalore 26 4 7 8 1 8 2 5 Sydney 27 3 3 8 1 1 5 6 Hangzhou 28 8 2 1 1 9 3 9 Hong Kong 29 3 4 1 7 1 1 6 Sao Paulo 30 6 1 4 2 1 1 9 Bern-Geneva 31 (tie) 2 1 1 3 1 1 6 Dallas 31 (tie) 1 1 1 4 3 1 3 Miami 31 (tie) 3 2 1 1 1 1 6 Munich 31 (tie) 2 4 6 1 3 1 8 Salt Lake-Provo 31 (tie) 8 1 1 5 1 1 7 Copenhagen 36 (tie) 1 1 2 4 1 2 5 Delhi 36 (tie) 1 5 1 1 1 1 4 Dublin 36 (tie) 1 3 5 1 1 4 5 Melbourne 36 (tie) 1 1 6 4 1 1 5 Montreal 36 (tie) 1 1 1 1 1 2 6 31-35 and 36-40 are alphabetical order Global Startup Ecosystem Ranking (Top 30 + Runners-up) 28 Copyright © 2020 Startup Genome LLC. All Rights Reserved. Learn more and get connected at startupgenome.com 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 con- tinued to rise to #15 in 2019 to #12 in 2020. Amster- dam ranks very high in Connectedness, gaining from Netherlands’ logistical and social connectedness to
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