[Report] Startup ecosystems around the world fast challenging Silicon Valley
Compelling research into 50,000 startups from the Startup Genome and Telefónica Digital provides tangible evidence and insight for investors, entrepreneurs and policy makers
Research launched by Telefónica Digital (@tefdigital) and the Startup Genome (@startupgenome) reveals that while Silicon Valley is still the world’s largest and most-influential start-up ecosystem, it no longer wields the power and influence it once did. Flourishing communities in Latin America, Europe, the Middle East and Asia have grown considerably over recent years and are now beginning to challenge Silicon Valley’s domination in technology innovation.
The Startup Ecosystem Report 2012 argues that this trend suggests that countries are shifting from service-based economies to become increasingly driven by a new generation of fast-moving software and technology organisations.
The report finds that Tel Aviv, a highly advanced ecosystem, is the leading alternative to Silicon Valley, while on Silicon Valley’s doorstep, flourishing communities in New York and Los Angeles mean the USA is home to three of the largest ecosystems in the world.
Across the Atlantic, London is by far the largest startup ecosystem in Europe, although its output is still just a third of that of Silicon Valley. Outside of the more traditional markets, the startup ecosystem in Sao Paulo is growing rapidly and creates more jobs for the local community than Silicon Valley does for its own.
The report identifies the ecosystem factors which have contributed to the success of Silicon Valley and uses it as a baseline to compare how well suited other cities are to fostering entrepreneurs.
In-depth research provides tangible findings for entrepreneurs, investors and policy makers
The Startup Genome, in partnership with Telefonica Digital, engaged with more than 50,000 entrepreneurs across the world to understand how well placed different ecosystems are to support the development and success of startups. Users of StartupCompass.co – a business intelligence tool for startups – submitted information on their organisations based upon a range of factors, including financial, sales, marketing, product, business model, team, and market information.
Some of the key findings of the report are as follows:
- Even well-developed ecosystems such as New York and London are suffering from a funding gap: they each have more than 70% less ‘risk’ capital available for early-stage, pre-product-market fit startups
- Silicon Valley’s success to date can be attributed in part to the attitude of its entrepreneurs. Founders in Silicon Valley work longer than anywhere else, with an average day lasting 9.94 hours. Motivationally, they tend to be driven by impact rather than product
- New York can claim to be the global capital for female tech entrepreneurs. Nearly a fifth of New York’s entrepreneurs are women and it is home to twice as many female-run startups as Silicon Valley
- Santiago is a great example of an ecosystem kick-started by policy makers, with 4.81 mentors on average (nearly 25% more than Silicon Valley)
- Silicon Valley has left its imprint on all global startup ecosystems. Berlin (4%) and Sao Paulo (7%) have the least founders that lived in Silicon Valley, Singapore (33%) and Waterloo (35%) have the most entrepreneurs that were previously based in Silicon Valley
- Even though Singapore has a relatively well-established funding environment, the risk tolerance of founders is the lowest within the top 20 ecosystems
(above video) Telefonica Digital’s Gonzalo Martin-Villa and the Startup Genome’s Bjoern Lasse Herrman explain some of the thinking behind the report.
Mapping key startup trends around the world
“I am really excited to reveal these insights around how global technology startup ecosystems stack up. Our hope is by completing the first data-driven, comparative study of this global phenomenon we will help to facilitate a constructive public dialogue,” explained Bjoern Lasse Herrmann, CEO of the Startup Genome.
“We created this report for three reasons: firstly, to put a spotlight on the emerging hotspots of technology entrepreneurship that will be responsible for powering a massive global socio-economic structural shift; secondly, to further democratise the knowledge necessary to help spread the merits of Silicon Valley; and thirdly, to give actionable insights to entrepreneurs, investors, corporate development departments and policy makers.”
Gonzalo Martin-Villa, CEO of Wayra, Telefónica Digital’s global startup accelerator, said: “These results tangibly demonstrate how entrepreneurship is flourishing all over the world. We are now seeing emerging ecosystems beginning to act as real viable alternatives to the traditional centres of technology innovation. This is incredibly exciting, since it suggests that, increasingly, the necessary support infrastructures are in place the world over for bright minds to turn their ideas into reality.”
Download the full report from the Telefonica Digital Hub or Startup Compass. There is also a shorter press summary here. The authors can be engaged with by tweeting about this report using #startupecosystem and mentioning @tefdigital and @startupgenome.
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Notes to editors: report methodology
The Startup Ecosystem Report 2012 is a correlational study based upon data points taken from 50,000 users of StartupCompass.co. Global trends have been identified by completing linear and probit regression analyses. A full methodology is available within the report.
About the Startup Genome
The Startup Genome (http://blog.startupcompass.co) was inspired by the global explosion of entrepreneurship and Kauffman’s landmark study from 2010 that showed U.S. job growth was driven almost entirely by startups. In 2011 the company set out to help address the continuing very high failure rate of startups and to accelerate the pace of innovation by transforming the business world from gut-driven to data-driven.
The Startup Genome’s business intelligence product, Startup Compass (http://startupcompass.co), is now being used by tens of thousands of software businesses around the world, providing benchmarks and recommendations to help entrepreneurs and executives to make decisions and allocate resources under conditions of high uncertainty. Since its inception the Startup Genome, together with researchers from UC Berkeley, Oxford, and Stanford, and entrepreneurial thought leaders like Steve Blank, has also released a number of well-regarded reports on the startup lifecycle, the success and failure of startups, and startup ecosystems, that have been adopted into the curriculum of more than 100 universities, incubators and accelerators.
About Telefónica Digital
Telefónica Digital is a global business division of Telefónica. Its mission is to seize the opportunities within the digital world and deliver new growth for Telefónica through research & development, venture capital, global partnerships and digital services such as cloud computing, mobile advertising, M2M and eHealth. It is also driving innovation in over the top communications under a new umbrella brand called TU and in Big Data through Telefónica Dynamic Insights. Telefónica Digital will deliver these new products and services to Telefónica’s 311 million customers as well as entering new markets.
It is headquartered in London with regional centres in Silicon Valley, Sao Paulo, Spain and Tel Aviv. Jajah, TokBox, Terra, Media Networks Latin America, 48 and giffgaff are all managed under the Telefónica Digital umbrella. For thought leadership on startups, Silicon Valley trends and more from Telefónica Digital, visit www.telefonica.com/digitalhub and track them on Twitter @tefdigital
Nick Wilkins, Director of Media Relations, Telefonica Digital: email@example.com
(Note: This release was initially published on 20 November 2012)