On June 15th, at The Next Web Conference in Amsterdam, JF Gauthier, the Founder and CEO of Startup Genome, introduced the Global Startup Ecosystem Report 2023 (GSER 2023), a collaborative effort between Startup Genome and the Global Entrepreneurship Network (GEN). This report leverages the most comprehensive and meticulously curated dataset on startup ecosystems worldwide.
Drawing insights from information about over 3.5 million startups across more than 290 global ecosystems, the GSER offers fresh and captivating perspectives on the trajectory of startups, encompassing themes such as the influence of inflation, regulations concerning AI, the attraction of talent, shifts in global venture capital funding, and detailed analyses of sub-sectors.
These findings are contributions from proficient thought leaders and influential local figures, amplifying the wealth of evidence-based discoveries within the report.
The culmination of over ten years of Startup Genome’s self-directed exploration and policy initiatives, this report stands as a testament to their dedication to researching and comprehending startup dynamics.
In the ever-evolving entrepreneurship landscape, startup founders constantly seek insights that can give them a competitive edge. In 2023, the global startup ecosystem has reached new heights of innovation and disruption.
For those aspiring to build successful companies, the Global Startup Report 2023 emerges as a beacon of knowledge, offering a comprehensive overview of the startup world’s current state.
This report is an invaluable resource, providing data, insights, and advice that can empower startup founders to make informed decisions about their ventures.
Comprehensive Overview
Key global insights from the Global Startup Ecosystem Report 2023 (#GSER2023) are as follows:
- During a recession, investing in startups becomes advantageous due to higher interest rates, channeling resources and talent into ventures that generate value. Startups funded during the Great Recession yielded slightly better exit multiples over total investment compared to those funded during economic expansions.
- Global venture capital (VC) funding entered a declining phase in Q1 2022, with a 13% drop from Q4 2021. The overall decline in 2022 was 35% compared to 2021.
- Despite a decrease in the number of funded startups globally in 2022, the amounts received were larger. While the number of deals was reduced by 18%, the deal amounts dropped by 17%, resulting in a 2% growth in average deal size.
- The most significant tech exit in 2022 was Miami-based MSP Recovery’s $32.6 billion IPO, dwarfed by 2021’s largest exit, Beijing-based Kuaishou’s $150 billion IPO, which was nearly five times larger.
- 2022 witnessed a slowdown in unicorn creation, with a global decline of 40% from 2021’s 595 to 359. However, seven ecosystems still welcomed their inaugural tech unicorn in 2022.
- The AI & Big Data sub-sector led in total VC deals in 2022, constituting 28% of the global share, reflecting AI’s growing integration with other domains. It also saw the highest increase in exits, at 74%, between 2017-2018 and 2021-2022.
- As Deep Tech innovations became more integrated into startups, their exit amounts surged by 326% between 2017-2018 and 2021-2022, surpassing the 225% growth of non-Deep Tech technologies.
- The top three ecosystems retained their ranks from 2020: Silicon Valley held the first place, followed by New York City and a tied position for London at #2. Silicon Valley remained dominant, albeit with reduced market shares, as Series A deal amounts contracted by 75%, and Series B+ by 73% from 2021 to 2022.
- Eight Chinese ecosystems, including Beijing, Shanghai, and Shenzhen, dropped in rankings, leading hubs.
- Seven Indian ecosystems climbed the rankings, with Delhi and Bengaluru-Karnataka entering the top 30, and Mumbai tied at #31.
- Boston and Beijing slipped out of the top five to #6 and #7, respectively, each losing two places. This shift allowed Los Angeles to ascend to #4 and Tel Aviv to #5, gaining two positions.
- The top 100 Emerging Ecosystems collectively hold a value exceeding $1.5 trillion in Ecosystem Value, marking a 50% increase from GSER 2022.
- Istanbul secured the top spot in the new Strong Starters ranking, highlighting the 25 Emerging Ecosystems with the most robust early-stage funding activity.
Top 10 Startup Ecosystems (Based on GSER 2023 Rankings)
1 Silicon Valley
2. New York City
3 London
4 Los Angeles
5 Tel Aviv
6 Boston
7 Beijing
8 Singapore
9 Shanghai
10 Berlin.
Brief Insights from the Report
1. Funding Trends: A key takeaway from the report is the projected slowdown in startup funding in 2023. While this might initially seem discouraging, the report also highlights that opportunities still exist for well-positioned startups with innovative ideas. This insight underscores the importance of honing one’s pitch and ensuring the startup’s value proposition is compelling enough to attract potential investors.
2. Global Funding Powerhouses: While the United States has traditionally been the epicenter of startup funding, the report reveals an emerging trend – China is rapidly catching up. Startup founders must take note of this shift, as it implies an expanded landscape of potential investors and collaborators. Building international networks and understanding different markets can play a pivotal role in the success of startups looking to grow beyond their home base.
3. Thriving Sectors: Healthcare and fintech startup sectors shine particularly bright in 2023. These sectors are experiencing substantial activity, driven by technological advancements, changing consumer behavior, and regulatory shifts. Startup founders looking for fertile ground should consider these sectors when formulating their business ideas, as they offer ample opportunities for growth and innovation.
4. Sustainability and Risk Aversion: With investors becoming increasingly risk-averse, the report underscores the importance of startups focusing on building sustainable businesses. While taking calculated risks is inherent to entrepreneurship, emphasizing a solid business model and a clear path to profitability can instill confidence in potential investors. This shift in investor sentiment prompts founders to strike a balance between ambition and pragmatism.
5. Expert Insights: The Global Startup Report 2023 is not just a compilation of data; it also features interviews with startup founders and industry experts. These interviews provide a human touch to the report, offering firsthand accounts of challenges, triumphs, and lessons learned. Aspiring entrepreneurs can gain valuable insights from these narratives, learning from the experiences of those who have navigated the startup journey before them.
You can find the full report here https://startupgenome.com/reports/gser2023
