here’s no way to sugarcoat it: The technology sector is in the midst of an unprecedented slowdown,” writes JF Gauthier, founder and CEO of Startup Genome, in “The State of the Global Startup Ecosystem Report 2023” (GSER 2023). Produced by Startup Genome and the Global Entrepreneurship Network, the report is based on extensive research and analysis of data from 3.5 million startups across 290 global ecosystems.
Some of those leading ecosystems are seeing inflated valuations punctured and dramatic market corrections, Gauthier observes.
“Some critics have been rooting for the crisis to take Silicon Valley down a peg or two,” he writes. “But anyone vested in entrepreneurial innovation should root for a Silicon Valley that can continue to lead and strengthen the global startup revolution by investing in and partnering with great people and organizations all around the world.”
It appears Silicon Valley is doing just that.
The 2023 rankings find the top three ecosystems have maintained their positions since 2020, with Silicon Valley remaining at the top, followed by New York City and London tied at No. 2. That victory comes even as deals and company headcounts have contracted heavily in Silicon Valley over the past two years.
“Tech companies have laid off hundreds of thousands of the tech workers they hired in 2021’s boom time in recent months — in March, Crunchbase put the number so far in 2023 at around 135,000 workers in U.S.-based tech companies (or tech companies with a large U.S. workforce),” says the report. “While state governments, especially California’s, are reeling from loss of revenue and face budget deficits after years of surpluses, the spark of these layoffs could create an explosion of startups. There is a new level of availability of top-notch talent with tech know-how and industry expertise looking for new projects.”
Signs are strong those new projects are coming around.
“In mid-2023, Silicon Valley is undergoing a rebirth moment with signs of renewal including Atomic Semi bringing semiconductors back to the ecosystem and the constellation of AI startups emerging from the region, in part driven by OpenAI’s recent success,” the report states. “However, Silicon Valley as the cutting-edge frontier has dissipated and diffused across the U.S. and the world, thanks in part to the very success of the technologies that came out of its previous cycle allowing remote work, outsourcing and automation.”
Indeed, concludes one section of the report, “Reflecting AI’s increasing use and intersection with other sub-sectors, AI & Big Data is the sub-sector with the highest count of total VC deals, making up 28% of the global share in 2022. It also has the highest growth in number of exits, at 74%, from 2017–2018 to 2021–2022, and experienced a 34% increase in Series A count for the same period. As Deep Tech innovations become more integrated into the startup world, Deep Tech’s exit amount has grown faster than other technologies from 2017–2018 to 2021–2022, at 326% vs. 225%.”
Top 30 & Runners-Up
By arrangement with Startup Genome, here are other findings from the 112-page report, which identifies the top 30 global ecosystems and 10 runners-up. “These ecosystems,” the report says, “are more mature than other ecosystems globally, featuring more exits over $50 million and more funding activity.”
Boston and Beijing have both slipped out of the top five to No. 6 and No. 7 respectively, losing two positions each. This has paved the way for Los Angeles to rise to No. 4 and Tel Aviv to No. 5, both gaining two spots.
Hot Spots & Rising Ecosystems
Singapore has entered the top 10 ecosystems for the first time, moving up an impressive 10 places from No. 18 last year. The ecosystem increased 100% in the count of exits over $1 billion to a total of four. Grab was the highest valued exit at $40 billion. The number of unicorns increased from 11 to 18, including Coda Payments, which raised a $690 million Series C round in April 2022. The ecosystem also experienced a 33% increase in the count of early-stage deals.
Melbourne has also seen notable progress, climbing six places from the GSER 2022 to No. 33. A 43% increase in Ecosystem Value comes thanks in part to increased exits over $50 million and above $1 billion. The unicorn count increased by one to three total, with Fintech company Airwallex the highest valued at $5.5 billion.
In Miami, the number of $1 billion+ exits increased from two to five from the GSER 2022, and the number of $50 million+ exits from 11 to 19. In large part due to MSP Recovery’s $32 billion IPO/reverse merger, Ecosystem Value increased by 160%. The count of early-stage deals also increased by 64.3% and the number of unicorns from five to seven, all helping take Miami up an impressive 10 places from the GSER 2022, to No. 23.
Helping to demonstrate India’s increasing strength as a tech startup nation, Mumbai has risen five places to No. 31 since last year (tied with Salt Lake-Provo). Its number of exits over $50 million increased by 60%, with the highest valued online marketplace Nykaa’s 2021 IPO at $7 billion. The number of unicorns has increased from six to 15, contributing to a 57% boost in Ecosystem Value.
Zurich’s recent performance has also been impressive, rising a remarkable 10 places from last year and making it to the runners-up, at No. 36. Exits over $50 million have grown a massive 300%, with Healthtech Pharvaris exiting at a valuation of $636 million. The unicorn count has increased from two to six, including Blockchain company Dfinity, which is valued at $9.5 billion, all contributing to a nearly 60% increase in Ecosystem Value from the GSER 2022.
Emerging ecosystems are startup communities at earlier stages of growth. The methodology for this ranking of the top 100 emerging ecosystems is intended to reflect this, showcasing the ecosystems displaying high potential to be top global performers in the coming years. The factor weights used to rank these ecosystems are slightly different from those used with the top ecosystems to reflect their emerging status and emphasize the factors that have more influence in ecosystems that are just beginning to grow. Less weight is given to the number of exits over $50 million and startup activity is more focused on early-stage funding than in the top 40 ecosystems. Among the findings: