Data from the latest Global Startup Ecosystem 2022 Report shows what it takes for cities to compete in the race to the top as destinations for startup talent and investment.
The results show that Silicon Valley is the best global ecosystem for startups, followed by New York City and London in second place.
North America continues to dominate the rankings, with 47% of the top 30 ecosystems in this region.
GSER is the world’s most comprehensive, data-driven research on startups with more than 280 entrepreneurial innovation ecosystems and 3 million startups analysed. The report includes a ranking of 140 leading ecosystems, and is published by Startup Genome, an innovation policy consultancy and research firm, and the Global Entrepreneurship Network (GEN).
“Today, the digital economy is the economy — or at least the future of the economy,” the report’s authors said.
The World Economic Forum estimates that 70% of the new value that will be created globally over the next 10 years will depend on digital business models. In 2023, for the first time, more than half of GDP will be driven by “digitally transformed” enterprises, according to Statista.
PWC projects that profit from AI alone will contribute $15.7 trillion to the global economy by 2030.
Despite the early shadow that Covid-19 cast on startups, Covid-19 eventually boosted the sector by accelerating digitization, Startup Genome said. Since the pandemic, tech companies have grown 2.3 times more than their non-tech peers.
While about 90% of startups fail completely, Startup Genome research shows that only 1.5% of startups—or about 15% of companies that survive—produce a successful exit of $50 million or more across the eight largest startup ecosystems in the world. United State.
Since 2012, the global average of A tours has tripled to over $18 million. Post-coin valuations have increased, on average, by 239% over 10 years, with the largest growth in subsequent rounds.
As for the key innovation trends, rising numbers tell the story: Web3, Industry 5.0 and Supply Chain 4.0. And of course 5G. Innovations in – among many other sectors – digital finance, AI-discovered particles, and climate change mitigation are reshaping not only business, but also the social and physical worlds.
As the Startup Genome said, two decades ago, Silicon Valley reinvented the culture of place with open offices and enhanced spaces for collaboration, so today’s startups are driving our new culture of instability.
“In the Covid-19 pandemic, technology companies have facilitated and created new ways of working, including the first virtual model, popularized by companies including Dropbox, making virtual remote control. The investment is also no longer tied to the location, as some owners use Venture capitals Zoom to perform due diligence on remote investments, expanding their geographic reach.”
However, by making talent and capital more flexible, the report’s authors said technology has made, paradoxically, geography more important than ever. “Now that founders, talent, and investors are anywhere, polar stars like Silicon Valley, London and Beijing must compete with hundreds of expanding constellations, each with their own legal, economic and lifestyle advantages.”
The report showed that the startup landscape has changed dramatically, with India lagging behind the United States and China. The country has seen a rapid rise in the number of large exits and early stage tours, and a significant increase in the value of the ecosystem. India minted 44 rhinos in 2021, raising a total of $72 billion in exits (up from $1.8 billion in 2020).
Hot spots are everywhere
India and China may be important stories in 2021, but dozens of other intriguing novels have spread across the globe, according to Startup Genome. Continuing a trend of declining share of funding that began in 2016, North America accounted for less than half of early stage funding in 2021, with Europe and Asia each taking a portion of the total.
Venture capital activity in Latin America nearly doubled from the previous year.
A record 540 companies achieved unicorn status in 2021, with 113 ecosystems generating at least a billion plus giants. Twenty-two ecosystems – including Brisbane, Luxembourg, Santiago Valparaiso and Ho Chi Minh City – made their first unicorns in the period examined for GSER.
GSER 2022 ranks startup ecosystems on seven success factors, including performance and talent, and for South Africa, the report highlights Cape Town and Johannesburg.
Highlights of Cape Town
Startup Genome says the startup scene in Cape Town is worth $2.8 billion.
The 450 tech companies in Cape Town, including giants like Takealot, Amazon and early stage companies, employ more than 40,000 people. And more companies are moving into the South African ecosystem. Cape Town is one of the fastest growing regions in the world in terms of foreign investment, according to a report by fDi Intelligence.
- Knife Fund III is a new fund managed by Cape Town-based Knife Capital. The fund invests in high-growth sectors in South Africa with strong potential for expansion within Africa and internationally.
- Swiss investment firm Crypto Valley Venture Capital (CV VC) has set up its first African office in Cape Town to invest in African startups focused on Blockchain technology. CV VC and its partners are looking to invest in 100 startups over the next four years. The new office will also act as a hub for the transfer of knowledge and expertise from the Swiss Crypto Valley to the Cape Town ecosystem.
- The SuperReturn Africa 2022 Private Equity and Venture Capital Conference is scheduled to take place in Cape Town in December.
- Notable recent funding deals include a 7 million rand ($500,000) raise for adtech startup Adbot in November 2021, and game publisher Carry1st with a $20 million Series A raise in January 2022.
Highlights of Johannesburg
Startup Genome says the startup scene in Joburg is worth $962 million.
More than 70% of South African companies are located in Johannesburg, as is Africa’s largest stock exchange, and the city generates 15% of South African wealth. Johannesburg is taking advantage of its position as the country’s financial capital to build an ecosystem for startups to rival Cape Town’s most famous scene,
- Ericsson South Africa, the local arm of the Swedish telecoms company, has set up an office in the fast-growing waterfall development project in Johannesburg, as the region is attracting increased interest from technology companies.
- Vantage Data Centers, a US-based data center company, announced in 2021 that it plans to build what it claims will be Africa’s largest data center campus in Johannesburg.
- A group of startup support organizations nurture the startup community, including the Seed Academy and WDB Growth Fund accelerator for women, the J&B Hive Accelerator for creative entrepreneurs, and a host of co-working and manufacturing spaces such as Workshop17 West Street and JoseHub. 22 ON SLOANE is the largest emerging university campus in Africa.
- Johannesburg is also home to many active investors, including Dazzle Angels, Edge Growth, Grovest, SA SME Fund, People Fund and Kalon Venture Partners.
Online payments solutions provider Ozow raised $48 million in Series B in November 2021.