Silicon Valley started the digital startup revolution, but first-in rarely wins. Dispatches, which was founded to support the global mobility of talent, has its money on Europe’s startup ecosystem.
A new report says while Silicon Valley remains dominant, challengers are emerging. Unfortunately, they’re in Asia for the most part including Beijing and Shanghai.
The Europeans have spent the last decade predicting which major city in Europe – Stockholm, Amsterdam, Berlin or Barcelona (Barcelona?) – was going emerge as the “Silicon Valley of Europe.”
What everyone missed is that innovation would spread throughout the globe, not be contained by valleys, mountains or city limits.
Everyone but Startup Genome, that is.
Startup Genome is a San Francisco-based startup consultancy that works to advance what they term “the global startup revolution” through data sharing. The org (it’s basically two guys) just released its 2017 Global Startup Ecosystem Report, its third.
The 150-page report has incredible data, great graphics and stunning take-aways including quantifying foundational metrics such as number of startups, global resource attraction and exit values.
Each city is ranked by:
Performance
Funding
Market reach
Talent
Startup experience
So, who are the winners and losers? Let’s just say it’s way more complicated than that.
Yes, Europe has five cities in the overall Top 20, including No. 3 London and No.7 Berlin. But it’s hardly news that London and Berlin have robust startup ecosystems. (Besides, will London even remain engaged with Europe post-Brexit?)
The United States leads the pack with seven spots on the Top 20, though Chicago got hammered, falling 11 places.
It’s forward momentum Startup Genome is looking for, and on that level, the big winner is Beijing, which entered the Top 20 for the first time at No. 4. By the way, Asia has five cities in the Top. 20.
Big Mo
STOCKHOLM
In Europe, it’s Stockholm with Big Mo, entering the survey at No. 14 on the strength of market reach, talent and a solid history of churning out Unicorns including Spotify.
Stockholm gets recognition time and again in the 2017 Global Startup Ecosystems Report for things like STHLM Tech Meetup, the largest monthly tech event in Europe.
Europe’s biggest strength is, not surprisingly, market reach.
But Europe as a whole is held back by several factors, most disturbing of which is talent. Well, disturbing to us because Dispatches is all about the global mobility of talent, a ranking category in which Silicon Valley trails Singapore.
In that ranking vertical, Europe pretty much sucks, with only Berlin and London in the Top 10 for talent. Paris is No. 16, Stockholm is No. 18 and Amsterdam ranks 19th.
Europe struggles with talent because engineers are paid too little, and it takes too long for startups to hire them including the time it takes to get visas, according to the Global Startup Ecosystem report.
Europe most profoundly struggles with funding, ranked at the wrong end of the Top 20. London and Berlin are the exceptions at No. 4 and No. 9 respectively. Paris is No. 14, Amsterdam is No. 17 and Stockholm No. 20 in the conservative European investment culture where sure-thing real estate sucks up most risk capital, making it difficult for startups to get early stage investment capital.
This is a long report, but 70 percent is dedicated to incredibly in-depth profiles of major startup cities including great graphics.
The 2017 Global Startup Ecosystem Report (doesn’t that title just trip off the tongue?) really is worth your time.
Some of the things that bothered us:
• Comparing the vast matrix of “Silicon Valley,” which includes 5 million people from San Francisco to San Jose, against relatively small European cities such as Stockholm and Amsterdam, distorts this study. Though we get it … it would be difficult to break down The Valley into its component communities.
• Tel Aviv, which is a happening startup hub, gets lumped in with Europe. What?
• Berlin gets described as “affordable.” Maybe in 2010.
• Estonia the Country gets included in the section on Europe’s regional powers. We could have sworn there’s a city in Estonia called Tallinn.
Take aways
• Among the Top 20 ecosystems, the Top 10 captured 87 percent of exit values, leaving 13 percent for the rest. Wow.
• Despite Brexit and the nationalistic yammering of the Trump Administration, the startup world is increasingly global, with Europe excelling at reaching out to customers around the world, but less successful at attracting foreign capital.
• London’s ecosystem is huge, with between 4,300 and 5,900 start-ups, the fourth-highest in the world behind Silicon Valley. By comparison, Berlin has less than 2,500 high-tech startups.
• Stockholm ranks second in Europe when it comes to producing unicorns, only behind London. Stockholm is home to Spotify, the most highly valued unicorn in Europe at $8.6 billion, as well as FinTech startup, Klarna, valued at $2.2 billion.
Methodology
Startup Genome conclusions are based on data from 10,000 startups and 300 partner companies. The global survey included data from thousands of startups across 56 ecosystem, as well as data via partnerships such as CrunchBased and DealRoom.
