Where Is The Best Startup Ecosystem In The World?

Most cities around the world do their upmost to attract startups to them.  They strive to have world class universities, access to ample funding and a sound regulatory environment to support the growth of the companies they believe will drive their economy.

The Global Startup Ecosystem report attempts to understand the best cities in the world for startups to prosper, and this years report has some fascinating trends.

The report is compiled based upon data from over 1 million companies spread across nearly 100 cities around the world.  Whilst the US remains the market leader in terms of share of VC investment, there is a clear shift towards Europe and Asia, with China leading the pack.

A new breed

The report outlined that the new wave of startups are ‘deep tech’ firms that specialize in areas such as AI, blockchain and cybersecurity.  There is also tremendous growth in startups capable of solving real-world problems, with cities themselves becoming platforms for innovation.

“The foundation for startups in this new era of tech comes in no small part due to global growth in research and development (R&D),” the authors say. “Patent applications have grown by an astounding 174% in the past 20 years, with R&D spending as a share of the GDP growing by 13% in the same time period.”

The hottest growth areas for startups were:

  • Advanced manufacturing and robotics
  • Agtech
  • Blockchain
  • Artificial intelligence

The report examines each of these and other topic areas and highlights the leading ecosystems around the world for each area.  For instance, below is the map of AI ecosystems.

Specificity counts

The report highlights the growing potential for smaller hubs to emerge that specialize in specific areas.  This allows them to gain a march on larger hubs that cannot possibly be all things to all people, even with their scale advantages.

“In this new era of tech, one strategy for smaller ecosystems to increase their footprint is to focus on specific sub-sectors in either verticals or deep tech areas where they have existing strengths,” the authors explain.

For instance, Frankfurt has pursued this strategy to develop a burgeoning fintech scene. Indeed, the cluster has the highest concentration of startups in any sub-sector around the world.

In addition to looking at ecosystems around the world, the report also provides some fascinating insights into not only what makes a startup successful, but also what makes an ecosystem successful.  As such, it’s a super read for anyone with an interest in either topic.