startups II

Amongst experts there seems to be widespread consensus that a bad economy is a good (financial) climate for a start-up. Indeed, in light of the on-going start-up boom which some are dubbing the ‘start-up economy’ this may well prove true.

A start-up can be defined as a newly formed company, the purpose of which is to develop new, usually innovative products or services in uncertain circumstances. If it satisfies a new need, locally but preferably in a broader up to a global area, it also has great growth potential. Startup entrepreneurship is crucial because of innovations, new jobs and bringing competitive dynamics into the business environment.

Research by the 2012 Global Entrepreneurship Monitor South Africa concluded that one third of dynamics of a country’s economic growth can be attributed to the dynamics of start-up entrepreneurship. They also contribute to the promotion of the research and innovation system and introduce values of proactivity into the society.

A feature of start-ups is that they first test different possible business models in order to find the right one. But for this, they need a suitably developed support start-up ecosystem.

Talking about start-up ecosystems, I came across an interesting study by Compass, which company released in November 2012 their first Start-Up Ecosystem Index and in July 2015 published their second report, which enables to compare how start-up environment around the globe has moved on.

I am kicking in an open door when I say that in the three years after the 2012 Startup Ecosystem Report was released (in November Key 2012) the start-up sector has grown at a booming pace.

The centrepiece of the 2015 Startup Ecosystem Ranking is Compass’s updated and revamped component index, which ranks the top 20 start-up ecosystems around the world. Twenty years ago, almost all tech start-ups were created in start-up ecosystems like Silicon Valley and Boston. Today, technology entrepreneurship is a global phenomenon, with start-up ecosystems similar to Silicon Valley rapidly emerging all around the world. An interconnected, global start-up landscape is taking shape.

The following table shows the 2015 index, which is produced by ranking ecosystems along five major components: Performance, Funding, Talent, Market Reach, and Startup Experience. I have also mentioned the 2012 ranking:

CITIES

Population

2015

2012

Silicon Valley

3.500,000

1

1

New York City

8.600,000

2

5

Los Angeles

3,900,000

3

3

Boston

650,000

4

6

Tel Aviv

430,000

5

2

London

8,700,000

6

7

Chicago

2,700,000

7

10

Seattle

660,000

8

4

Berlin

3,500,000

9

15

Singapore

5,660,000

10

17

Paris

2,240,000

11

11

Sao Paulo

11,900,000

12

13

Moscow

12,190,000

13

14

Austin

930;000

14

Bangalore

11,550,000

15

19

Sydney

4,920,000

16

12

Toronto

2,800,000

17

8

Vancouver

610,000

18

9

Amsterdam

813,000

19

Montreal

1,750,000

20

Newcomers on the list are Austin (USA, Texas), Amsterdam (NL) and Montreal (Canada). Just outside the top 20 this year are: Atlanta (USA), Delhi (India), Denver-Boulder (USA), Dublin (Ireland), Hong Kong, Mumbai (India), Stockholm (Sweden), and Waterloo (Canada – 2012 #16).

The top 20 feature 10 North American cities (7 USA and 3 Canada), 5 European cities, 3 from APAC countries, 1 from the Middle East and 1 from Latin America.

According to the report the rise of the start-up ecosystems all around the world should be seen in the context of the larger socioeconomic structural shift taking place. Information Era businesses have become the dominant source of economic growth, significantly automating or altering much of the industrial and service businesses of the previous economic era.

Given technology start-ups’ critical role in the information economy, the importance of healthy start-up ecosystems only stands to increase in the future. With this report the researchers want to accelerate the development of start-up ecosystems around the world by answering critical questions for entrepreneurs, investors, and policy makers that are difficult to answer without the data we have gathered and analysed in this report, as well as to raise the general populace’s awareness of the increasing socioeconomic importance of start-up ecosystems. The full report is available on request.

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