June 10, 2024

Silicon Valley at the Top of the Global Startup Ecosystem in 2023

The 2024 Global Startup Ecosystem Report (GSER) by Startup Genome and the Global Entrepreneurship Network was released at London Tech Week, in collaboration with the Founders Forum, Informa Tech and London & Partners. Presented by Stephan Kuester, Managing Partner at Startup Genome, the GSER analyzes data from over 4.5 million companies across 300+ entrepreneurial innovation ecosystems and features rankings that indicate which ecosystems are currently driving innovation and deep knowledge about startup trends around the world.

Global key findings from the the 2024 GSER include:
  • Top three global ecosystems: Silicon Valley remains at the top, followed by New York City and London tied for #2.
  • The number of new unicorns in 2023 was down 58% from 2022 and 87% from the 2021 peak. With 15 unicorns, Silicon Valley again led all ecosystems for the most new unicorns in 2023, though this was down 80% from 2022. The Tashkent, Lyon, and Rhineland startup ecosystems welcomed their first unicorns in 2023.
  • Series A funding amount in 2023 was down 46% from 2022, and the value of large exits ($50M+) fell 47% over the same period.
  • In 2023, the Series A funding amount share for Top 40 ranked GSER 2024 ecosystems was 65%, down from 79% for these ecosystems in 2019. The share of Series A funding amount for the Top 100 Emerging Ecosystems reached 19% in 2023 vs. 13% in 2019.
  • Q1 2024 has projected higher Series A funding amount and deal count than Q4 2023.
  • Generative AI saw a surge in funding, with nearly 20% of all VC funding in 2023 going to GenAI-focused startups. GenAI VC funding increased 3x in 2023 compared to 2022. Deal counts nearly doubled.
  • In 2023, more than half of new unicorns were in the GenAI and Deep Tech sub-sectors, a higher rate than in 2021.
  • Late-stage Cleantech startups raised 2.5x more funding in H2 2023 than in H1 2020. Europe has outperformed the U.S. and China in terms of Cleantech Series A funding growth from 2021 to 2023.
  • Seoul moved up three spots, now ranked #9, entering the Top 10 ecosystems this year.
  • Tokyo has entered the global Top 10 for the first time, marking the most significant improvement among the Top 10 ecosystems.
  • The top two Chinese ecosystems Beijing and Shanghai, have dropped in the overall rankings to #8 and #11. Shenzhen has shown impressive growth, moving up seven spots to rank #28.
  • Europe is the most represented region in the Emerging Ecosystems Ranking, with a 42% share in the Top 100 Emerging Ecosystems, followed by North America with 27%.
  • Madrid moved up 12 ranks, claiming to #1 in the Emerging Ecosystems Ranking.
  • Barcelona moved up two positions in the Emerging Ecosystems Ranking, reaching #2.
  • Athens has entered the Top 100 Emerging Ecosystems Ranking, reaching the 51-60 range in 2024.
  • Greater Lausanne Region moved up 16 positions, reaching #11 in the Emerging Ecosystems Ranking.
  • Jakarta (#6) and Metro Rhein-Ruhr (#9) both entered the Top 10 Emerging Ecosystems Ranking.
  • Melbourne is ranking as the #32 Global Startup Ecosystem, moving up one spot from GSER 2023.
  • Mexico City has shown impressive growth, reaching the 21-30 range in the Emerging Ecosystems Ranking from the 41-50 range in 2023.
  • The top five ranking sub-Saharan African Ecosystems are Nairobi, Lagos, Cape Town, Johannesburg, Accra.
  • Tel Aviv is the only MENA ecosystem ranking in the Top 40, globally moving up one place to #4 (tied with Los Angeles).

Now in its 12th year, the GSER provides insights into the world's leading startup ecosystems, emerging trends, and key challenges facing entrepreneurs. As explained in Startup Genome's press release, "The 2024 edition ranks the top 40 global ecosystems, a ranking of emerging ecosystems, and expanded regional rankings. The report, driven by a consortium of representatives from 40+ countries, looks at the current state of startup activity and related investment. It also highlights startup communities from a regional perspective, separately ranking ecosystems in Asia, Europe, Latin America, MENA, North America, Oceania, and sub-Saharan Africa. Contributions from thought leaders further enrich the report's extensive, evidence-based findings, which are the product of over a decade of Startup Genome's independent research and policy work."

I appreciate how the GSER is designed to provide valuable perspective on the global startup landscape and actionable recommendations for entrepreneurs, investors, policymakers, and other stakeholders looking to drive innovation and economic growth even in these challenging times.

What are your thoughts about GSER's key findings?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

June 5, 2024

Growth Is Proving Surprisingly Resilient in the Face of High Interest Rates and Geopolitical Risks, Says EIU Report

In its latest global economic outlook report, the Economist Intelligence Unit (EIU) "forecasts more fragmentation and regionalization in the world economy in 2024-28 as alliances tighten and competing blocs form." What is more, "The return of industrial policy, including sanctions and the provision of new incentives, will push firms to adopt more inefficient supply chains, stoke trade tensions in strategic sectors and make it difficult to compete across the global marketplace. These developments will drag on growth potential." The EIU expects "global real GDP will expand by 2.8% a year on average over the next five years—below the 3% of the 2010s, which was hardly a stellar decade for the global economy."

The UK-based organization adds that "In the near term, however, the global economy is showing resilience in the face of international conflict and higher interest rates. This mainly reflects the remarkable strength of the US economy, which is driven by strong household finances, a rising trend in manufacturing investment and a booming technology sector. Elsewhere, the picture is less dynamic but short of a downturn." Moreover, "Momentum in Europe will build gradually in 2024. Modest government stimulus in China is helping the economy to in the Middle East as the conflict in Gaza continues. Russia's invasion of Ukraine, now in its third year, shows no sign of resolution. Flash points in Asia, such as in relation to the South China Sea and Taiwan, will pose a persistent threat to the fragile stability that has developed in US-China relations. The diffusion of global power and uncertainty over the direction of US foreign policy underpins this rise in geopolitical risk."

Other key findings from the report include:
  • 2.5% global real GDP growth in 2024 (compared with 2.4% previously), meaning growth will be unchanged rather than slowing from 2023. Growth is proving surprisingly resilient in the face of high interest rates and geopolitical risks.
  • The change in global growth reflects another upward revision for US growth in 2024 to 2.2% (from 2% previously), upward revisions for several European economies that have pushed euro area growth to 1% (from 0.8%) and an upward revision for Brazil to 2.1% (from 1.8%).
  • Reduction of expectations for future monetary policy loosening, removing one 25-basis-point cut from the loosening cycles of both the Federal Reserve (the US central bank) and the European Central Bank in 2024-25. In contrast, the EIU now expects the Bank of England (the UK central bank) to cut quicker than previously forecast, lowering its rate to 3.5% by end-2025 (compared with 4.25% previously).
  • The US dollar effective exchange rate is now forecast to appreciate for a third consecutive year in 2024—the EIU previously expected a mild depreciation. This reflects a stronger depreciation in the yen's value than previously forecast and the fact that the EIU is no longer forecasting euro appreciation.

On the topic of how climate change and AI may threaten global convergence prospects, the report says:
The green transition and technological change will be among the major trends shaping global economic prospects over the next five years. In both cases, they seem set to diminish convergence prospects for developing economies. Poorer countries will be disproportionately affected by climate change and will struggle to secure financing to mitigate its impact. Although we are skeptical about the scale of productivity gains from artificial intelligence (AI), those improvements that do emerge will accrue mainly to developed economies; this will create challenges for countries aiming to move up the manufacturing and services value chains. We still expect some emerging markets to stand out, however, helped by being fairly insulated from geopolitical tensions and rising trade barriers. India is forecast to expand the fastest of any major economy in 2024-28, and Mexico will benefit from nearshoring trends.
Do you agree with the report's findings? How are you preparing your business for a rise in geopolitical risk?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.