The Asian startup ecosystem is by far the largest and most populated in the world, with a fast-growing economy and the highest continental GDP. 

The ethos of the Asian startup ecosystem is influenced by its vast geographical area that spans more than 45 countries, and a steadily increasing middle class. This is especially evident in China and India which are set to dominate future market trends but also the overall staggering 87% of the emergent middle class by 2030 that is expected to come from Asia.  

It is evident that the startup ecosystems in Asia are steadily growing and showing massive potential for future growth even if they are not currently ranking at the top. 

This article will discuss the key features of the startup ecosystem in Asia, with an overview of the strongest countries and cities in the region, as well as the broad limitations and strengths of the ecosystem. 

Are you interested in startup innovation and entrepreneurship? You can access more reports on global and regional economic development as well as our new Coronavirus Innovation Map that shows the best countries fighting the pandemic and facilitating new developments in the pandemic era.

Best Startup Countries in Asia 

The diversity of the thriving startup scene in Asia is reflected by the heterogeneity of the countries and ecosystems present in our latest 2020 Global Rankings Report. It includes 118 startup ecosystems represented in the Top 100 from 19 different countries. The top-ranking players comprise the billion population countries of China and India, the high-income nations of Australia, Singapore, and Japan, as well as smaller economies in Southeast Asia that are booming. Here are some of the countries that are consistently ranking at the top and growing in movement and momentum. 

China 

China is a category of its own, with an inward-looking market that is in contrast to most other top-ranking ecosystems whose growth is attributed to their global network. With a strong focus on its consumer market, China has also become an attractive and lucrative option for foreign investors that want to base their companies in China or expand and target the Chinese domestic market specifically. The areas of deep tech, automation, robotics, and AI are most attractive to venture capitalists, even during the unprecedented times of the coronavirus outbreak. The strength of its domestic market, however, is also one of its biggest limitations, making it hard to attract international talent. Some of the fastest-growing startup ecosystems in 2020 were registered in China, with the cities of Shanghai, Shenzhen, Hangzhou, and Guangzhou showing meteoric jumps in the rankings. The economic integration of Hong Kong into the Chinese ecosystem is also set to bring changes to the startup scene with the preferential treatment and policy exemptions between Hong Kong and the US being renegotiated. 

Singapore 

Singapore has long been considered the powerhouse of the startup scene and innovation in Asia due to its stability and favourable business policies. Despite its small size and population, it has retained its reputation as a place to trade goods and has established and profitable international trading links. Supported by its geographical position, Singapore has invested heavily in its infrastructure creating a strong industrial and financial hub. Singapore is also rated 2nd in the world for ease of starting a business according to the World Bank, just slightly behind New Zealand, and boasts one of the most well-educated workforces in the world. The rapid growth of education in Singapore is a direct result of policy reform that values innovation and leadership, with ambitious standards, excellent teaching, and a desire for improvement and growth, especially in technological areas. In addition, Singapore has retained a multicultural and open dynamic, with a highly competitive job market and cost of living that people nevertheless seek, due to high-paying salaries and the highest quality of life in South East Asia. 

Fast-Growing Startup Cities in Asia  

In addition to the positive momentum of most Chinese cities, especially that of Beijing and Shanghai, and the ecosystem of Singapore, there are many top-performing regional players.

Taipei City 

Tapei has registered one of the most significant jumps in the rankings of our 2020 Global Report, moving by 208 spots to claim the 42nd position. The strong public sector and government support have catapulted Taipei City into the global startup scene, and the focus on growth and new solutions has never been more apparent than during the coronavirus crisis. Taipei introduced digital social innovation software and open data projects, combating the virus from a collaborative and information sharing perspective. With the highest internet speeds in the world, in addition to an increasing demographic of internet users, the tech-savvy population of Taiwan is also a source of high quality and well-educated tech and engineering talent. This has lead to continued interest from overseas investors in the region’s potential. Taiwan Tech Arena is one of the leading tech startup hubs in the country, offering new teams, accelerator programs, mentoring, and funding support. 

Manila 

Manila is one of the most densely populated cities in the world, with more than 12 million citizens and the highest English proficiency in Asia after Singapore. In the last 20 years, the Philipines have slowly but steadily entered the tech startup industry, with companies springing up around the city from young entrepreneurs. The fast-rising middle class of the Philippines, and enthusiastically active younger generation of social media users, coupled with a low cost of living, offer great potential for the ecosystem. This is true both for foreign investors looking to base their companies there and tap into an affordable labor market but for local entrepreneurs as well. Having established a warm relationship with the West, Manila is a multicultural, friendly, and open startup ecosystem that welcomes foreign investors and has yet to take advantage of their domestic market, especially in the areas of fintech and agtech. The move from a freelancing and outsourcing to an entrepreneurship hub has been supported by multiple government programs including the recently signed into law, Innovation Startup Act, that will support and push growth in education and innovation across the country and remove obstacles to operation and expansion. In addition, the QBO Innovation Hub, established in collaboration with the public sector and the Department of Trade and Industry has established a strong presence in locations around the country, with startup and incubator programs and consultation services that allow entrepreneurs to navigate government regulations effectively. 

Top 50 Cities in Asia 

Strengths and Limitations of the Startup Ecosystem in Asia 

Overall, the startup ecosystem in Asia includes mature and developed ecosystems that are globally positioned and focused on the West, with a cultural mindset that is slowly becoming more open and very strong economies. 

Limitations 

The biggest barrier of entry for Asian ecosystems into the top leagues are the cultural elements of the countries when it comes to entrepreneurship. Specifically, risk aversion, conformity to traditional values, and hierarchy within businesses are all stalling the rate of growth. In addition, the focus on retaining a good reputation runs contrary to what the Silicon Valley mindset has built its empire on, with a strong fake it till you make it attitude that has not been adapted there. Fear of failure is a bigger motivating factor than success and so there is a slower and more cautious approach to new ideas. 

Risk Aversion 

On a mindset level, the attitude of entrepreneurs in the top-performing Asian hubs, including Singapore, China, and Japan, and also older and mature professionals in general, is somewhat risk averse. This creates a problematic situation for entrepreneurs to access mentoring and be part of an open and collaborative environment that can provide the necessary feedback for new ideas to come forward. In countries like India, a new cautiousness and fear of big risks has been observed, which may stem from previously easy access to funding and a desire to copy Silicon Valley practices. In contrast to previous generations of Indian entrepreneurs relied on dynamic solutions and perseverance despite the lack of capital and support systems. The pressure from family and parents to secure a stable salary through an established company rather than pursue entrepreneurship is another defining factor in places like Japan, whose government has taken steps to counteract the risk averse culture of its older demographic. 

Strengths 

The Asian ecosystem is also well-positioned in terms of its strengths, which can contribute to further development in the region.  

Digital Economy and Consumer Market 

The Southeast region of Asia in particular is in the midst of a digital revolution as consumers are embracing a new era where everything is accessible through the touch of a button. From increases in the use of mobile phones and internet connections to ride-sharing apps and online retailers, a range of new services and products are entering the market and being adopted at record speeds. Coupled with high population numbers and a young demographic that has eagerly embraced social media, governments, and businesses can do a lot to maximize the benefits of this era. Asia also accounts for a large percentage of the developing countries with a dynamic middle-class market that could account for almost 66% of the global population by 2030. 

Government Support 

The apprehension of previous years to forge new pathways in innovation instead of relying on traditional family-run firms and large cooperations is slowly waning off in the region. Most governments are collectively embracing new funding and support mechanisms that will allow business-oriented individuals to operate successfully and are removing obstacles that hinder the ease of being in business. The markets of Indonesia, Malaysia, Philippines, Thailand, and Vietnam are growing in size and potential and taking advantage of their strong consumer market to launch programs that support the startup ecosystems in their regions. Developments in the infrastructure levels and a realignment towards attracting international talent rather than being freelance and outsourcing hubs are all clear signs of the region’s growth and long term potential that has yet to peak.

The evolution of startups – innovative and often internet-based ventures – has brought rapid changes to the global market, as entrepreneurs are looking to introduce new and technologically superior services than what was until now available. 

Regardless of what industry they operate on, startups are based on growth, innovation, and scalability, however, some industries are stronger or more profitable within a certain ecosystem or in general. Quantifying and highlighting the top regional and global performers based on the overall growth of the ecosystem is a complicated job. Startup Blink analyzes data from our algorithm and our global partners, CrunchBase, SEMrush, Meetup, and Coworker to provide rankings for 1000 cities and 100 countries. 

Are you interested in startup innovation and entrepreneurship? Are you looking for more detailed data on Startup Ecosystems in 1000 cities and 100 countries. Take a look at our pro account.

What are startup industries? 

Startup industries, vertical industries, or simply verticals are business niches where the target market or interested parties are much smaller and the focus revolves around attracting a very specific subgroup with specific needs. Some businesses start out with a vertical business model and others will ultimately find it makes more sense to narrow down instead of trying to be a solution to all. This of course will heavily depend on the product and business model. When it comes to the strength of the relevant startup ecosystem, having access to vertical industry data can offer unique insights and a more rounded and informed view. 

How many startup industries does Startup Blink analyze? 

Using Startup Blink data, we are able to quantify and categorize the strength of 11 startup industries or verticals. In 2020, we saw the addition of a 12th vertical brought on by the response to the COVID-19 pandemic. We will briefly explore each one below and offer an overview of the key players in each startup industry. 

E-commerce & Retail 

Startups in the field of e-commerce and retail are moving away from traditional brick and mortar retailers and into a new era of digitization where consumers can shop with a click of a button. This is a vertical with fierce competition, with the Asia-Pacific region leading the way in sales worldwide and the pandemic has increased the already rapid growth of online retailers even further. San Francisco and Los Angeles are leading the way in the top two spots, and the constantly moving market of Beijing (6th globally) in third place.

Education

The education startup industry is another one that has been heavily impacted by the coronavirus pandemic. The digital age was already calling for tremendous changes to the way we learn and teach, as online platforms and gamification learning has started to take place. The global online education market alone is set to reach over $300 billion by 2025, an almost double increase from 2019. The Norwegian game learning platform Kahoot recently announced a $215 million round, compared to a much smaller $28 million earlier this year, that is no doubt due to the acceleration of e-learning in 2020. Russia and particularly the city of Moscow, are leading in educational startups, massively overperforming their overall rank (9th for Moscow, 17th for Russia) and claiming the 2nd position in the startup industry of education worldwide. 

Energy & Environment 

The areas of renewable, clean energy and green tech, are forecasted for exponential growth, due to growing concerns for rising temperature levels and a need for low-carbon alternatives. Green technology and sustainability, in particular, have predicted revenue increases of more than 500% between 2019 and 2030. Russia (3rd), Lithuania (7th), and Finland (8th) are countries with better scores in the energy and environment industry vertical than their global ranking. Edmonton (91st) and Kingston (144th globally) have also paved the way in the energy and cleantech sectors, claiming the 25th and 50th spots on this vertical respectively. 

Fintech 

Technological applications in the financial sector have become the standard, with fierce competition as companies try to provide the easiest new solutions to customers and shape the future of finance. The hypergrowth of neobanks such as N26, Revolut, Tandem, and Atom have resulted in rapid increases of their online customer base while New Zealand based accounting service Xero and payment platform Stripe have made it easier for businesses to manage and operate business transactions. Our Fintech Vertical partners at Findexable have ranked Singapore and Lithuania much higher than their overall startup ecosystem ranking in the leading 3rd and 4th positions respectively, showing their growing status as powerful fintech hubs. Vilnius ranked 75th overall and is at the 29th spot in the fintech vertical and 17th in hardware. 

Foodtech 

The foodtech startup industry is positioned for sustainable growth, as food security, food waste, and the impact of agricultural practices are evolving due to environmental concerns. In recent years, meat-free alternatives like popular vegetable-based Beyond Meat, have attracted wide support from investors and people like Bill Gates and Leonardo Di Caprio. In addition, online grocery services and delivery solutions became crucial due to the pandemic and the need for product tracing, tracking, automation, and management in all parts of the food chain. Key players in the European ecosystem are the Netherlands, Spain, Germany, and Russia. The Sunshine Coast in Australia is one of the subregions with a rapidly increasing food and agritech industry that has also admirably overperformed in the foodtech vertical this year and is well-positioned for future growth. Another regional player that has witnessed significant growth, Santa Cruz de Tenerife in Spain, has repositioned its tourism-based economy with a focus on innovation and tech, and is now in the top 100 spots for this vertical, in 67th position (global 237th). 

Hardware 

A fast and ever-evolving market, revenue from the hardware industry is primarily generated in China, with the US following in 2nd place, as never-ending ways to approach the market, from smartwatches to AI glasses and wearables to 3D printing are constantly being generated. Taipei City is one of the cities with a tremendous difference in its vertical ranking (8th vs 42nd overall) for hardware innovation, with a strong background in manufacturing and an overall impressive focus on AI and big data. Similarly, the city of Shenzhen in China, with a spectacular 3rd spot position in the global market, has been described as the Silicon Valley of Asia and an innovation powerhouse. In the case of Kyoto, a modest 251st global ranking is transformed to position 95, and a place amongst the Top 100 globally for hardware innovation. Kyoto has also announced a startup visa for foreign entrepreneurs that is targeting developments in AI, manufacturing, and a range of other fields.  

Marketing & Sales 

Another industry with no signs of stopping, marketing is about bridging the gap between business and consumer, and when successful can communicate the right message, at the right time, to the right audience to increase revenue and boost brand recognition. Notable startup ecosystems in this vertical are, in the 3rd position, the cities of Tel Aviv – a notable difference considering it is already ranked very high at number 7 on a global scale. Another top contender, Miami’s fastest-growing companies are found in the marketing industry, placing it 21 spots ahead of its global position, at number 4. 

Social & Leisure 

As networking giants, Facebook and Linkedin are losing members, new niche social networks entering the market, like Swiss-owned student-focused Goodwall or creative focused Behance, that was acquired by Adobe back in 2012, are growing in popularity. Community-oriented initiatives are setting the stage all over the world in general. The leisure and tourism industry was heavily hit in 2020 due to the pandemic with a long recovery period predicted ahead. The 2nd and 3rd quarter of 2020 introduced a number of private and government initiatives, aimed towards domestic leisure travellers. While international borders remained close, the shift towards local and family-focused travel activities intensified. The previous gains of startup ecosystems in this vertical will be challenged as we enter a new era of digital leisure and the travel industry reinvents itself. 

Software & Data 

The software and data industry has seen exponential growth in recent years and has become the basis of modern development in areas of cybersecurity, big data, and cloud software services. Big data startups are able to serve a range of businesses across industries like finance, and healthcare but many are embracing a vertical viewpoint, creating solutions that target specific needs as the demand grows. Kiev is one of the cities that has seen increases in its vertical rankings, placing 13th (32nd globally). 

Transportation 

The transportation industry poses a challenge between logistics, shipping, and cost-effective services. The race to take advantage of new and existing technologies, and optimize the current infrastructure is playing out at the same time as self-driving cars, drone delivery, and AI features are being tested. In terms of the rankings, transportation is one of the verticals where irregularities between the top global players and regional players really becomes evident. Shanghai has registered a jump of 8 spots to take 2nd place (10th global) and the growing goods and services ecosystem in Bangalore is represented by its current ranking at number 3, compared to the 14 position it holds on a global scale. Manila is another area worth highlighting for efforts to combat the numerous traffic problems of the sprawling capital. The Manila Area hub is overperforming by more than 60 spots in this vertical at 26. Another notable hub that is overperforming in this area is Vilnius, with the launch of a “sandbox” platform that provides a select number of startups with access to transport data from the Lithuanian Post and Railways as well as Road Maintenance, and test their ideas. Vilnius is at rank 42 compared to the global 75 in this vertical. 

Health 

The health industry is constantly shifting as technological advancements and the IoT (Internet of Things) are revolutionizing patient care, diagnostics, and training practices. Since the beginning of the pandemic, the health vertical is best approached from a general and covid-19 specific distinction. Slovenia is very close to a top 10 position globally in this vertical, overperforming its global rank at 35, as it continues to invest in digital health solutions and social care. 

In response to the changes brought on by the pandemic, Startup Blink in cooperation with our partners, Health Innovation Exchange and the Moscow Agency of Innovations, has launched the Coronavirus Innovation Map. With deeper insights and rankings of 80 cities in 32 countries that have become innovation leaders against Covid-19. Belgium and Italy are some of the leading players overperforming their global ranking in this vertical, with the introduction of smart solutions in the area of provisions, digital solidarity, information, and support initiatives. 

Why Startup Industry Verticals Matter 

Most ecosystems are best served when they bet on a carefully selected number of verticals. This doesn’t mean people are unable to pursue different industry verticals, but we always recommend governments to focus on a few and become champions and experts within that space, especially if there is already an unfair advantage that can be leveraged. The differences between some of the ecosystems mentioned above and their verticals are strong proof of the success of focusing on selected verticals. 

How can we help? 

Startup Blink and our network of global partners can provide in-depth insights into a range of verticals to serve the market needs of your startup ecosystem and provide guidance for future steps. Our Startup Blink PRO clients can access fully customizable data on vertical ecosystems and filters for population and geographically specific data. 

We are constantly looking for partners to create accurate and in-depth reports on specific verticals and consolidate your authority with branded maps covering all aspects of the specific startup industry.