All posts by Joshua Mitcham

The Best Startup Cities 2020

2020 has been an eventful year, to say the least. Yet despite social and economic difficulties, there are a few cities in that world that stand high above the rest when it comes to the congregation of entrepreneurs and the innovation that it creates. In this article, we will take a look at the 10 Best Startup Cities in 2020. Visit the Global Ecosystem Report 2020 by StartupBlink for further analysis of the Startup Ecosystem of 1000 Cities worldwide.

  1. San Francisco Bay, United States
  2. New York, United States
  3. London, United Kingdom
  4. Boston Area, United States
  5. Los Angeles Area, Unites States
  6. Beijing, China
  7. Tel Aviv Area, Israel
  8. Berlin, Germany
  9. Moscow, Russia
  10. Shanghai, China

The Best Startup Cities in the World

If you are an ecosystem developer working in an Economic Development Organisation and looking to build, promote, and grow your ecosystem, take a look at our Ecosystem Partnership.

Best Startup Cities
A Global Map of Startup Ecosystems – StartupBlink

1. San Francisco Bay, United States

In first by a considerable margin, San Francisco Bay is a shining example of what a Startup Ecosystem looks like. The city has produced more unicorns than any other city in the world and has become a mecca for entrepreneurs looking for investment, talent and truly rocketing growth. The region is a truly unique phenomenon – Of the tech that has become a household name in the last 20 years, chances are it was started in Silicon Valley.

2. New York, United States

2nd only to San Francisco Bay, New York has remained a consistent second in our global startup rankings over the last couple of years. The City has been severely affected by COVID-19 in 2020, and New York startups have responded by quickly pivoting and adapting their innovations in order to serve the fight against the pandemic. Such as Room – who have now turned their soundproof office booths into testing booths to help protect frontline workers.

3. London, United Kingdom

The UK is the 2nd ranking nation in the global ecosystem report. Much of its success could be attributed to the strength of its capital – London. The city is the only city in the top 5 that is not a US city. Demonstrating how much of a unique global hub the capital city is.

In the face of Brexit, there have been some worries as to whether London’s Ecosystem will be affected. Many companies have already decided to opt for new offices in other major European hubs of innovation. Despite this, London is likely to continue as an economic powerhouse as it looks to countries outside of the UK for closer business ties.

4. Boston, United States

In 2020, Boston has overtaken Los Angeles as the 4th strongest ecosystem in the world. A high proportion of Boston’s innovations are related to the development of high-quality medical devices (Particularly sought after since the pandemic) and deep tech. This is likely because of its young population and the influence of its major, world-renowned universities.

5. Los Angeles Area, United States

Although it has fallen by one spot, Los Angeles remains in the top 5 ecosystems in the world. In comparison to Boston (4th) LA is more primarily focused on B2C, with major growing sectors in the city including film & media, sports, beauty and aerospace defense. Los Angeles’s tax relief efforts may be one the reasons there has been a rapid period of growth in the quantity of its startups since 2013. LA represents a significant gap between the top 5 and other startup ecosystems. To surpass LA and gain a spot in the top 5 is a difficult feat.

6. Beijing, China

Beijing has moved up by 11 places into the top 10 this year, representing not only its, but China’s rapid growth on a world stage. While part of this can be attributed to an improved algorithm on our part, the increase is justified by the clear growth in quantity and quality of its startups, contributing towards the country’s inevitable rise.

Measuring China’s startup ecosystem is more challenging due to its unique nature, yet the goverment has put a priority on developing technology as a strategicn goal and that can be seen through the success of some of its major startups. Baidu and Tiktok to name a few

7. Tel Aviv, Israel

When considering the size of its population, the strength of the Israeli Ecosystem is clear. Its main city, and a beacon for entrepreneurship – Tel Aviv remains a top ten ecosystem despite falling by one place in the overall rankings. Israel is a great example to other countries because of its ability to become a global hub in spite of its relatively small size and its complicated geopolitical situation. As a city, Tel Aviv has produced success stories such as Wix, Fiverr, eToro and Viber.

8. Berlin

With the UK leaving the European Union, Berlin is now the highest ranking EU city. The city is famed for attracting a young, creative population – as Berlin has a relatively low living cost for a capital city and its nightlife and cultural scene is envied around the world. While Germany has a tradition of producing high quality corporations such as Siemens, Bosch and SAP amongst others, its young succesful startups such as N26, Babbel and Lovoo are set to lead the German economy in the next decade.

9. Moscow

Although Russia as a nation ranks at 17 in the global report, its capital Moscow holds a top ten cities spot. Relatively unknown in the west, Russia’s ecosystems a growing, boosted by a massive pool of highly qualified, talented founders.

Russia has a large market, so its founders can build substantial revenue through domestic sales only. However, if founders want to expand they may feel restricted by the geopolitical situation in which the country finds itself – leaving its major cities open to brain drain. To remain a strong ecosystem, Russia will need to decide between global integration with other markets, or a domestic closed garden model similar to China. Hopefully, it will choose the former.

10. Shanghai, China

In the top ten for the first time, Shanghai – Moving up by 21 spots in this year’s ranking, is a clear product of transition that China has made from a low-tech developing country to a cutting-edge technological power. Many chinese entrepreneurs consider the city an alternative to Beijing, with success stories including Jianshu and Italki.

The geopolitical situation in China is changing, and tensions seem to be building up, but we hope that the Chinese startup ecosystem will be more integrated globally

StartupBlink

This list was compiled based on the results of Global Startup Ecosystem Rankings Report 2020 that ranked 1,000 cities and 100 countries worldwide.

Compiling the list for the best startup cities in the word was made simple with the help of the PRO account, and Ecosystem Partners

COVID-19 Innovation Report: HIEx by UNAIDS

At StartupBlink, together with Health Innovation Exchange (HIEx) by UNAIDS and the Moscow Agency of Innovations, we have launched the Coronavirus Innovation Map including more than 1,000 projects created in response to the COVID-19 pandemic. In this crisis-ridden environment, innovators have stepped up to help in the best way they know: solving problems. Organizations working in different areas have adapted solutions and forged alliances with the aim of defeating COVID-19 and its consequences.

Through modification of our proprietary algorithm, we ranked countries and cities by number and types of innovations, with extra points given for selected outstanding initiatives, identified as the Champions. The COVID-19 Innovation Report, showcases the rankings of the best performing 32 countries and 80 cities, as well as selected innovations for each of those countries.

Main Insights of the Report

At the country level, we see some similarities between the leaders of the COVID-19 Innovation rankings and our Global Ecosystem Rankings. The United States leads global COVID-19 innovation efforts, while Israel and Canada ranked 2nd and 3rd respectively (both beating their general rank by one spot).

In the Top-10, we see important successes from Belgium, Switzerland, Estonia, Italy and Ireland, where local entrepreneurs have undergone an impressive mobilization in the face of the pandemic. Outside of Europe and North America – which dominated the Top-10, we see 5 countries from the Asia Pacific region in the Top-20 (Singapore, China, Taiwan, South Korea and Australia), as well as Kenya (23rd) and Brazil (30th) as the best placed African and Latin American countries, respectively.

There is an urgent need to invest in innovation ecosystems to carry them through this crisis – Pradeep Kakkatil (UNAIDS Director of Innovation)

On a  city level, cities such as New York, Milan, Brussels and Barcelona, have been overperforming despite being badly hit by the pandemic. Cities largely unscathed like Taipei and Singapore, also hold strong positions. The Top-3 cities in the ranking are all from the United States: San Francisco, New York and Boston, while the 4th and 5th spots are held by Toronto (greatly overperforming in comparison to its Global Ecosystem Ranking) and Tel Aviv. The second half of the Top-10 is also dominated by American cities (Seattle 7th, San Diego 8th and Los Angeles 9th) while London features at 6th spot and Taipei at10th.

Conclusion

In our map and report, we can see that there has been an extraordinarily innovative response from Startups, Corporations, NGOs, Public Sector and other organizations around the world. And we believe that the cooperation and solutions developed during this pandemic, as well as the lessons learned, can be helpful in the fight against future global health crises. But the virus hasn’t been defeated yet, and as Pradeep Kakkatil (UNAIDS Director of Innovation) says about health systems, there is “an urgent need to invest in innovation ecosystems to carry them through this crisis”. StartupBlink is here to help.

COVID-19 Innovation

What is a startup? The definition

At StartupBlink, we have made it our mission to evaluate Startup Ecosystems around the world, considering closely the quantity and quality of startups, which is why it is crucial for us to have a clear definition for the term. 

In today’s world, the word “Startup” has entered everyday language due to hugely successful and influential technological companies. It’s a romanticized word (the story of college kids building world-changing technologies from a garage can be very inspiring), but it can also have negative connotations in a world ever more suspicious of Big Tech – are Amazon or Google still to be considered startups?

Defining “startup” 

Investopedia defines a startup as “a young company” established by one entrepreneur (or a group of them) with the aim of bringing a new product or service to market, which will be unique or better than previously existing ones. At StartupBlink, we believe that it is essential we have a deep understanding of startup characteristics in order to define exactly what they are.

What is a Startup

The 4 Key Characteristics of Startups 

  1. Small size, big impact

Emerging startups usually begin their journey with a small team (1 to 20 employees) working in the development of a minimum viable product (MVP) or a prototype of a product, service, or platform to see whether their idea indeed offers a value proposition to users, and has the potential of profitability. Generally, it is only after this stage, that the startup can actually gather more investors, customers and thus be able to grow.

It is agreed that a basic characteristic of a startup is that it is a small business, however, being small in size does not automatically make a company a startup. The ambition to generate a big impact, scale up and grow is another characteristic of startups, critically differentiating them from traditional SMEs. In order to be able to grow fast, a startup team should be much more flexible and adjust faster to change than regular businesses, allowing them to rapidly adapt to technological advancements, an increased number of competitors in the market, and of course, failures…

  1. High risk of failure 

“If you are not embarrassed by the first version of your product, you’ve launched too late”Reid Hoffman

Startups have a high risk of failing, especially due to the lack of resources and ambiguities in the business model. Eric Ries, an American entrepreneur and author of The Lean Startup, defines a startup as “a human institution designed to create a new product or service under conditions of extreme uncertainty”.  

Uncertainties are one of the factors that lead to breakdowns. Nevertheless, it is a failure that should become a turning point to push startups forward. So, it is natural for startups to face and deal with failures to improve themselves. 

  1. Being a talent bank  

Attracting and hiring talented people with different backgrounds who are inclined to work hard and do not give up while facing difficulties should be seriously considered after establishing a startup. Thus, a startup team should consist of motivated employees, deeply identified with the culture of the company.

“We’re never in lack of money. We lack people with dreams, who can die for those dreams” – Jack Ma

The team members should feel that they create a positive impact on the work process and are among those that drag success to the company. With a strong organizational culture and supportive team, the startup founders can diminish the chance of breakdowns and increase the speed of growth.

  1. Use of non-traditional financing structures to achieve scale

Most early-stage startups (as well as many businesses) are Bootstrapped businesses, with founders (as well as friends and family) pitching in. And given that startups’ most valuable assets are usually non-tangible (ideas, team, patents, among others), and profitability is a long-term goal, the doors of traditional financial institutions remain closed until much later in the life-cycle of the company.

This reality has created non-traditional, high-risk and high-return financing structures for startups, including Angel Investing, Venture Capital and Venture Debt, in which besides funding, founders benefit significantly through the mentoring and advice that experienced investors can provide.

Yes, there are successful startups that never used any of these financing vehicles, deciding instead to use their own cash flows to finance growth. But for a company to receive this kind of funding means that at the very least, the startup shows potential of significant growth and impact.

What is and is not a “startup” for StartupBlink?

As specified in the Startup Ecosystem Rankings Report 2020, StartupBlink’s definition, besides considering the characteristics mentioned above, gives special emphasis to innovation as a fundamental term for startups. This innovation can be technological or a unique business model, depending on what startups aim at achieving in the long term. Therefore, service providers and local directories such as real estate listings will not be regarded as startups, and will not appear on our map. 

StartupBlink also reflects on what is not considered a startup. The most common case is, of course, the failure or bankruptcy of the startup. There are, nevertheless, positive reasons for which we stop considering a company a startup, the most common being the following three: becoming a Unicorn (reaching a value greater than $1b while still a private company), becoming a publicly traded company, or getting acquired by another entity (before reaching the $1b mark)

These success stories are deleted from our list of startups. Even so, they are crucial elements to determine the quality of a given startup ecosystem, and for this reason they are considered in a unique way in our map and rankings, as Exits, Unicorns or Pantheons.

Find out more about our the most innovative cities and countries around the world through our Startup Ecosystem Rankings Report 2020.


Tamara Aslanova and Ghers Fisman

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