August 26, 2015
The list puts a heavy emphasis on whether startups in the region are exiting: selling or going public and earning big chunks of money. This may not be every entrepreneur’s goal, but it is what VCs are looking for when they fund a company.
“Since we are investors, we took a more top-down approach and focused more on the viability of startups becoming successful. What are the exit potentials of a startup in a region?” explains cofounder and partner Bernard Moon. A region with big exit potential will have plenty of Series A investors and lots of companies actively acquiring startups.
It will also have “unicorns”: companies worth $1 billion or more (whether they’re private and were valued at or acquired for $1 billion, or public with a market capitalization of $1 billion). SparkLabs looked at more modest exits, too.
“Even though Tel Aviv (or even Israel overall) doesn’t have many unicorns . . . they have had many $100M+ and $500M+ exits. They are almost an exit factory. So we ranked them a 7 out of 10,” Moon explains.
Other criteria used in the list include engineering talent, the presence of entrepreneurs and mentors, the technical infrastructure, the startup culture, the legal and policy infrastructure, the economy, and government policies and programs.
Another startup ecosystem ranking came out earlier this year by Compass, but Moon disagrees with some of their choices – like putting Singapore at #10 and not including Stockholm.
“As a firm that is active in Asia, we wouldn’t rank Singapore in the world’s top 10 ecosystems because of the lack of Series A funding and exit activity,” says Moon. (He should know – SparkLabs has offices in Singapore, as well as London, Tel Aviv, Seoul, and Silicon Valley.) As for Sweden’s capital? “Stockholm probably has the second-most unicorns per capita after Silicon Valley,” he adds.
Compass’s ranking also didn’t include China, Taiwan, Japan, and South Korea – they hadn’t collected enough data yet – while SparkLabs’s list features Beijing and Seoul. Here are their top 10 global startup scenes (not in ranked order):
Population: 7.4 million
Number of unicorns: 69 (Pandora, Facebook, Uber, Airbnb)
New York City
Population: 20.1 million
Number of unicorns: 16 (Sprinklr, Blue Apron, WeWork, MongoDB)
Population: 13.6 million
Number of unicorns: 10 (Shazam, PokerStars, TransferWise, Zoopla)
Population: 2.1 million
Number of unicorns: 6 (Mojang, Klarna, Skype, Spotify)
Population: 4.2 million
Number of unicorns: 5 (Delivery Hero, Home 24, Rocket Internet, Zalando)
Population: 3.4 million
Number of unicorns: 3 (ironSource, Infinidat, Waze)
Population: 24.9 million
Number of unicorns: 9 (Alibaba, Meituan, Lakala, Koudai)
Population: 25.7 million
Number of unicorns: 6 (Coupang, 4:33 Creative Lab, Line, Kakao Talk)
Population: 18.5 million
Number of unicorns: 5 (Snapchat, SpaceX, NantHealth, Honest Co)
Population: 7.6 million
Number of unicorns: 8 (HubSpot, SocialFinance, Simplivity, Moderna)
Image credits: Flickr / Patrick Nouhailler (Silicon Valley – cropped); Pixabay (NYC); DAVID ILIFF (CC-BY-SA 3.0) (London) / “GamlaStan from Katarinahissen Stockholm Swe” by Oke – Own work (CC BY-SA 3.0) / Bleppo (CC0) (Berlin) / Gilad Avidan (CC BY-SA 3.0) (Tel Aviv) / Flickr / Dimitry B. (CC BY-SA 2.0) (Beijing) / Evilbish (CC BY-SA 3.0) (Seoul) / Flickr / Marshall Astor (CC BY-SA 2.0 (Los Angeles); Flickr / Eric Kilby (CC BY-SA 2.0) (Boston); Featured Image: Flickr / Olof Senestam (Stockholm)
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