[Country highlights] The Startup Ecosystem Report 2012



Here’s an at-a-glance view of key findings from the Startup Ecosystem Report 2012 – produced by the Startup Genome and Telefonica Digital – for select countries.

Take a look at the full report here, play with the interactive infographic or watch the video. There is also a shorter press summary here.

1. UNITED STATES (Silicon Valley, New York, Los Angeles, Boston)

Headline: The US has the most advanced startup ecosystem in the world. However, while US ecosystems are growing, they are being caught up by fast developing environments in Tel Aviv and London, and by new upstarts in Sao Paulo and Berlin.

Silicon Valley (SV)

Global rank: 1

  • The startup ecosystem and culture is still strongest in Silicon Valley compared to any other part of the world

- SV has 20% more mentors compared to the average ecosystem

- The rate of serial entrepreneurs is 35% higher in SV compared to the average ecosystem

  • The culture in Silicon Valley breeds successful attitudes amongst entrepreneurs

- They work slightly longer hours daily

- They are slightly more committed to work full time

- Entrepreneurs would rather cause disruption and create impact – 19% higher would rather create impact rather than create a great product

- They are 30% less likely to tackle ‘niche’ markets

- They tackle 28% bigger market sizes with their startups

New York (NYC)

Global rank: 5

  • NYC is the global capital for women tech entrepreneurs

- Nearly a fifth of entrepreneurs are female. This is twice as many as Silicon Valley.

  • While it has a strong and growing ecosystem, it has a long way to get even close to SV as the total output / number of startups is 51% less than SV
  • The NYC ecosystem has the highest proportion of non-technical founders in North America – 22% of startup founders in NYC are non-technical. This shows a high level of business minded founders:

Silicon Valley – 16%

LA – 21%

New York – 22%

Toronto – 17%

Boston – 15%

Vancouver – 9%

Waterloo – 13%

  • NYC has a strong market for consumer tech start-ups with a particular focus on e-commerce. This is helped by the location of the fashion, ad and media industries
  • NYC has a funding gap (70% less in the second stage compared to SV) for early stage startups before product market fit, probably due to a lack of Super Angels
The Startup Ecosystem Report 2012

 

Los Angeles (LA)

Global rank: 3

  • Startups and the scene are overshadowed due to other prominent industries such as Hollywood

- 27% less mentors per startup in LA than in SV

  • LA has a healthy funnel of startups moving through the startup lifecycle and is still bigger than most other ecosystems.
  • LA has the most experienced and oldest entrepreneurs in the world – at an average entrepreneur age of 38.2
  • LA has no funding gap compared to SV. It has a healthy mix of capital sources

- Funding sources in LA differ from SV. LA startups are more family/friends and self-funded and 16% less VCs funded compared to SV

Boston

Global rank: 6

  • As a startup hub, Boston is declining dramatically. Boston has lost its previous leading position as the innovation and high-technology entrepreneurship centre on the East Coast
  • There’s a lack of open innovation in Boston and entrepreneurs protect intellectual property instead of open collaboration
  • Highly academic and experienced

- 287% more entrepreneurs with a PhD than in SV

  • Motivation is significantly different to SV

- Boston entrepreneurs are 100% less likely to create a quick flip

- 87% less likely to want to get rich

- 16% less likely to want to change the world

- 37% more likely to want to build a great product

  • Boston entrepreneurs are not focused on consumer / web products

- They are twice as likely to focus on non-web software and 56% less likely to focus on mobile than their peers in SV

2. ISRAEL (Tel Aviv)

Headline: World’s number 2 startup ecosystem and serious contender to Silicon Valley

Global rank: 2

  • Highly advanced ecosystem and bustling with tech companies

- In 2009, 63 Israeli companies were listed on the tech-orientated NASDAQ – more than from Europe, Japan, Korea, India, and China combined

- Almost every major tech company today has some kind of subsidiary in Israel: Intel, Microsoft, Google and Cisco etc.

- 39% of Israeli high-tech employees work in the R&D departments of multinational companies

  • Closing fast on Silicon Valley due to risk-taking nature

- Tel Aviv has created 58% less startups than SV – which is a lower proportion than other ecosystems and it is closing fast

- Tel Aviv has a healthy funnel of startups moving through the startup lifecycle

- Israel is a country of immigrants — there are over 70 nationalities represented in the country. Two out of every three Israelis are newcomers, or the children or grandchildren of newcomers. Immigrants are natural risk takers since they were willing to uproot themselves and start over

  • Developed and professional funding network

- Funding Sources are slightly more focused on angels, and less on family/friends than in SV

  • But Tel Aviv may never take over Silicon valley due to a lack of entrepreneur ambitions and lack of mentors / shared knowledge

- Israeli startups tackle 46% smaller market than their peers in SV. They are 5% less likely to tackle $1B – $10B, and 33% less likely to tackle $10B+ markets

- They are 9% less committed to work full time before product market fit

- 49% less support from mentors for startups. Israeli startups have 2.05 mentors on average meaning they have 1.95 less mentors compared to SV

The Startup Ecosystem Report 2012

3. UNITED KINGDOM (London)

Headline: London is the largest start-up ecosystem and female entrepreneur capital in Europe, yet lags behind leading ecosystems due to a funding gap.

Global rank: 7

  • London is by far the largest startup ecosystem in Europe, even though SV is three times larger
  • London has been slow in adopting mobile as a new trend. It has 30% less startups than SV or NYC in the mobile space
  • Despite London being the first-choice for US Valley companies to base their European headquarters, there is the danger it could be supplanted by the rapidly emerging Berlin ecosystem
  • London has a funding gap (81% less capital raised in the second stage compared to Silicon Valley) for early stage startups before product-market fit. This is likely due to a lack of Super Angels / VC funds
  • London is the female tech entrepreneur capital of Europe. It has the highest proportion of female tech entrepreneurs in Europe:

London – 9%

Madrid – 3%

Paris – 7%

Berlin – 3%

Moscow – 7%

  • London entrepreneurs are the most experienced and oldest in Europe. The average ages are:

London 35.98

Paris 33.21

Berlin 31.86

Moscow 27.9

  • London entrepreneurs are less ambitious and more risk averse as their counterparts in SV

- London startups tackle 31% smaller markets than their peers in SV. They are 6% less likely to tackle $1B – $10B, and 32% less likely to tackle $10B+ markets

- They are more motivated by building a great product than by changing the world compared to SV entrepreneurs

  • London entrepreneurs focus 81% more on consulting as side activity than SV entrepreneurs

4. BRAZIL (Sao Paulo)

Headline: Sao Paulo startup ecosystem growing rapidly but hampered by funding gap and lower ambitions of entrepreneurs

Global rank: 13

  • Sao Paulo is by far the largest and most advanced startup ecosystem in Latin America
  • There are few female tech entrepreneurs in Brazil – only 4%. Santiago, the other leading Latin American startup ecosystem, has five times more female entrepreneurs
  • Sao Paulo startups have been slow to catch on to the mobile opportunity – mobile startups are nearly 6x more pursued in SV than in Sao Paulo (3% vs. 17% in SV)
  • The ecosystem is still very raw and needs further developing

- Compared to SV, it has created 80% less startups over time

-59% less serial entrepreneurs in Sao Paulo than in SV

- Sao Paulo startups have 37% less support from mentors than SV startups. On average, startups in Sao Paulo have 2.51 mentors

- Only 23% are serial entrepreneurs, this is half of SV. This shows the immaturity of entrepreneurialism and the ecosystem in Sao Paulo

- Sao Paulo has a significant funding gap. Before and after product/market fit Sao Paulo startups raise 86% less capital than SV startups

  • Sao Paulo entrepreneurs are highly educated. They are the most educated in the region and 90% of entrepreneurs in Sao Paulo have a masters or PhD, compared to 56% in Santiago
  • Sao Paulo startups are less ambitious than SV startups

- Sao Paulo startups tackle 60% more smaller market than their peers in SV. They are 2% less likely to tackle $1B – $10B, and 52% less likely to tackle $10B+ markets

- Sao Paulo entrepreneurs are more driven by creating a great product than making impact

- Sao Paulo entrepreneurs are 13% less likely to commit full time before finding product market fit than their peers in SV

- Sao Paulo work 8.86 hours on average per day resulting in 1.08 hours less than entrepreneurs in SV.

  • Sao Paulo is likely to grow continuously by attracting more capital and talents locally. At the bridge of a huge economy, Sao Paulo can serve a large home-grown market to test their ideas and go global.
  • Sao Paulo creates more jobs than SV. Sao Paulo startup ecosystem creates a significant number of jobs and contributes to the overall nation’s economy by creating societal value. Policy makers might want to support the ecosystem’s efforts to reach the next stage of development: self-sufficiency

5. GERMANY (Berlin)

Headline: German startup ecosystems are the most hyped in the world and developing rapidly

Global rank: 15

  • Berlin ecosystem is the most hyped in the world
  • Berlin is ranked on place #15 and has produced -88% less startups than SV over time
  • The ecosystem in Berlin is still immature and so to scale entrepreneurs may need to look to other, more advanced ecosystems such as London

- There is a funding gap:

a) 80% less funding raised by Berlin startups compared to SV startups

b) There is a specific significant funding gap before and after product/market fit in Berlin. In total, Berlin startups raise -87% less capital in the validation stage and -79% less in the scale stage than SV startups

c) Funding Sources (self-funded, friends/family, incubators, angels, super angels, VC) in Berlin are relatively high on banks and low on accelerators, and VCs.

- 45% less support from mentors in Berlin than in SV

- 28% less serial entrepreneurs in Berlin than in SV

  • Berlin entrepreneurs need to develop higher ambitions:

- Berlin startups tackle 54% more smaller market than their peers in SV. They are 10% less likely to tackle $1B – $10B, and 51% less likely to tackle $10B+ markets

- Berlin entrepreneurs tackle almost 100% more niche markets than SV entrepreneurs

- Berlin startups embrace consulting as a side line (157% more than SV startups)

  • Berlin entrepreneurs are highly educated. They are among the most educated in Europe and 86% Berlin entrepreneurs have a masters or PhD, compared to:

London – 75%

Moscow – 69%

Madrid – 89%

Paris – 96%

  • Berlin has the joint-lowest proportion of female tech entrepreneurs in Europe:

Berlin – 3%

Madrid – 3%

London – 9%

Paris – 7%

Moscow – 7%

6. CHILE (Santiago)

Headline: Santiago start-ups – among the youngest and most ambitious in the world

Global rank: 20

  • One of the youngest average entrepreneur age in the top 20 – 28.42 years old (youngest apart from Moscow)

- Santiago entrepreneurs are 6.22 years younger than Valley entrepreneurs

  • High proportion of women entrepreneurs

- Nearly a fifth of entrepreneurs at female. This is twice as much as SV and the average global ecosystem and the joint-highest percentage in the world alongside NYC

  • The ecosystem is a great example of how policy makers can help to kick-start a startup ecosystem

- Startup Chile helped created a strong network

- Santiago startups have 4.81 mentors on average – this is nearly 25% more than SV

  • At 8% of non-technical founders, Santiago has the lowest level in the world. This may help the technical product development but the business development may suffer
  • Only 25% are serial entrepreneurs, this is almost half of SV. This shows the immaturity of entrepreneurialism and the ecosystem in Santiago
  • Santiago startups are arguably the most ambitious on the world
  • They are 55% less likely to tackle $1B – $10B, and 1% more likely to tackle $10B+ markets than SV

- 36% of entrepreneurs in Santiago are focused on trying to make an impact

- Santiago entrepreneurs are 7.3% more likely to commit full time than their peers in SV

  • Funding is a significant problem. Santiago relies on accelerators, incubators and much less on angels and no capital from VCs

- There is an overall funding gap in Santiago. 96% less funding raised by Santiago startups compared to SV startups

- There is a significant funding difference before and after product/market fit in Santiago. In total, Santiago startups raise 97% less capital in stage 2 – validation- and 94% less in stage 3 – efficiency – and 90% less capital in stage 4 – scale – than SV startups